By Martin Heubel, Founder and Director of Consulterce, a strategy consultancy for B2C Household & CPG brands.
A wave of change is sweeping through Amazon’s vendor landscape.
Vendor Managers (VMs) are becoming a rare breed, and brands must adapt to thrive in an increasingly automated environment.
To cut costs, Amazon is pushing ahead with its offshoring initiatives and starting to shape its future without account-specific Vendor Managers:
- Layoffs have reduced the VM community by -15%
- AVS is getting offshored to Eastern Europe and India
- Amazon actively pushes account management tasks to brands
- Automation is now driving pricing, listing, and CRAP decisions
- Pan-EU and North American regionalisation is here to stay
Interestingly, most vendors I talk to ignore this trend altogether. They think their brand is too important for Amazon to neglect.
Yet Amazon quietly transfers most of the manual account management tasks to the brands and automates the rest, leading to a future where algorithms hold the reins.
How should brands respond?
By focusing on 3 key areas:
1. Lean Account Management
Amazon has already increased its regionalised management of European vendor accounts. Instead of a dedicated buyer contact by market, brands mainly navigate their business at pan-European level.
Given Amazon’s recent round of layoffs, it’s unlikely that more VM resources will be deployed on vendor accounts anytime soon. Instead, brands must adapt to this regional focus to ensure they don’t duplicate tasks across markets, when only one Vendor Manager sits on the other side.
This almost always means that some form of re-organisation has to happen. Whether it’s impacting your wider digital commerce unit or not will depend on the existing org structure.
2. Channel-Specific Portfolio Development
With automation becoming Amazon’s NorthStar to develop its retail business, vendors must review and adapt their portfolio strategies with the online retailer.
Ensuring your NPD pipeline aligns with a healthy ASP, and Net PPM ambition from Amazon is already and will become even more critical. It is good practice to follow a selective portfolio approach by focusing on listing those items with a healthy RRP to ASP ratio.
3. Offshoring and Automation
With Amazon deploying fewer headcount resources per account and offshoring tasks to brands, vendors are faced with higher headcount requirements to manage these processes from their side.
Identifying labour-intense tasks should already be high on the priority list of vendors. Manually downloading data, disputing chargebacks, or listing items should be outsourced at best and eventually automated.
Amazon’s profitability focus will reduce and eventually remove the Vendor Manager function.
The question is: Is your business ready for an algorithm-led future?
For further insight and support, contact Martin Heubel here
