By Martin Heubel, Commercial Advisor to 1P Amazon Vendors at Consulterce
Seeing your Amazon 1P profit margins decline? Chances are your teams aren’t negotiating strongly enough.
But it’s not their fault.
It’s caused by conflicting targets and outdated incentive structures.
For example:
- Quarterly sales bonuses pushing teams to accept unprofitable bulk orders with Amazon
- Market share targets leading to overfunded tentpole deal events
- NPD and brand targets that lead teams to grant cost support for items with a price-pack architecture not designed for the virtual shelf
You can put the best negotiators in the room, but if their incentives are tied to targets that conflict with your profitability ambitions, your bottom line will suffer.
Sales teams need incentive structures that help them withstand the pressure from Vendor Managers threatening no deal participation or suppressing products unless their demands are met.
Without them, your profit ambition quickly turns into theory.
And that’s exactly where margins are lost.
So if you want to build a sustainable vendor business, make sure your incentive structures reflect the reality of selling on Amazon.
For further information and support, contact Martin Heubel here
