By Martin Heubel, Amazon Strategy Consultant at Consulterce
Focusing on the short term will kill your Amazon business. Quite literally.
And it’s the #1 reason why vendors struggle with low vendor margins.
They manage Amazon like any other retailer, leading their teams to focus on short-term sales cycles that don’t reflect how the online marketplace operates.
Which leads them to:
- Grant matching compensation
- Fund cost support agreements
- Move to a hybrid or 3P strategy
The problem is:
None of these actions address the structural defects that led to low profitability with Amazon in the first place.
- Lack of distribution control
- No channel-specific assortment
- Competing P/L ownership structures
So, in reality, the only silver bullet to lasting profitability with the online retailer is to focus on the long term.
Which means that brands need to start setting targets beyond a 12-month horizon with the online retailer.
You can do that by:
- Asking Amazon for a 3-year Joint Business Plan
- Initiating workstreams to increase distribution control
- Setting long-term targets for your account management
- Evaluating cost-saving opportunities with your logistics team
- Ensuring e-commerce-specific items are added to your NPD pipeline
For further information and support, contact Martin Heubel here
