By Martin Heubel, Amazon Strategy Consultant at Consulterce
Here’s the biggest difference between Amazon 1P Vendors that get their cost price increases (CPIs) accepted vs those that don’t:
They don’t use downstream arguments.
In other words, these vendors avoid price negotiations based on arguments like:
- Costs have gone up year-on-year
- Net PPM has improved year-on-year
- Inflation and tariffs have led to higher COGS
This leads Vendor Managers to reject your request outright. Because you’re effectively asking them to accept lower margins.
There’s simply no upside for them.
That’s why vendors that consistently negotiate effectively take a different approach:
- They communicate the cost price increase with clear SKU-level price lists and timelines. Not only with Amazon but with every retailer.
- They use ASP and Net PPM data to support their cost increase rationale.
- They don’t negotiate the CPI. They negotiate solutions. For example, accepting one last bulk buy at the old price. Or offering temporary cost support.
The difference is subtle but powerful:
The negotiation focus is on communicating the CPI. Not on defending it.
This also means that if you want Amazon to accept your price increase, you must hold your ground and accept short-term disruptions to your sell-in metrics.
But keep in mind:
- The above assumes you have leverage with Amazon. If you have a Vendor Manager, you likely do. However, understand your market share to assess Amazon’s dependency on your account.
- Leverage comes from having options. You can’t be in a stop-ship with every retailer. Choose your hard.
- Have leadership alignment. If your management fails to back you when sales get disrupted, you’ll only teach your Vendor Manager to dismiss future CPI requests.
For further information and support, contact Martin Heubel here
