By Martin Heubel, Amazon Strategy Consultant at Consulterce
Stop making Net Pure Profit Margin (PPM) the North Star in your trade relationship with Amazon.
Vendor Managers love this metric because it allows them to focus commercial discussions on two things:
- Cost Prices
- Trade Terms
The problem with this?
Vendor Managers are searching for the path of least resistance.
It’s easy to ask 1P Vendors to lower their cost prices or increase their trade investment.
However, you must leave Net PPM behind to develop a sustainable trade relationship.
Things like:
- Packaging improvements
- Supply chain initiatives
- Free cash flow growth
…are not part of Net PPM.
So next time your Vendor Manager wants to talk Net PPM, don’t get bullied into improving cost prices or trade terms.
Instead, let them know you need to discuss a more holistic approach to improving profit margins.
For further information and support, contact Martin Heubel here
