By Martin Heubel, Amazon Strategy Consultant at Consulterce
Most 1P Vendors are planning to increase trade terms with Amazon by +73 bps in 2024.
This finding of our recent study reveals that most brands struggle to navigate the online retailer. And they treat the annual negotiation process like JBPs with other retailers.
The problem is:
Amazon isn’t interested in building strategic partnerships. Their teams want to improve the margin situation in their category instead.
This means that brands need to do their homework between negotiation cycles, by:
- Launching exclusives
- Tightening distribution control
- Focusing on supply chain improvements
- Optimising product packaging (SIPP/SIOC)
- Etc.
Those vendors who work on stabilising their Net PPM during the year have it much easier to raise cost prices or reduce trade terms.
Those who don’t will enter a profitability death spiral: And hand over more investments year after year.
For further information and support, contact Martin Heubel here
