By Martin Heubel, Founder and Director of Consulterce, a strategy consultancy for B2C Household & CPG brands.
What is the biggest mistake 1P Vendors make when defining the margins for Amazon?
They think they can buy their Vendor Manager.
They increase the margin for Amazon on strategically relevant products in the hope of getting better placements or promos on-site.
But then… nothing happens.
A mistake?
Why doesn’t Amazon push products with above-average margins?
Well, the answer may disappoint:
Your VM can’t actually do that much.
They don’t have access to advertising tools. And they cannot add a product feature to the homepage.
So passing on your margin to your VM only leads to one thing:
A high margin for Amazon on a product that doesn’t sell.
So instead, make sure you distribute your margins evenly:
Give Amazon enough profit not to delist your product. But keep enough margin yourself to fund all the activations needed to increase the product’s sales performance.
Remember:
Brands drive their category and sales development, not Amazon.
Make sure your teams adopt this mindset.
For further insight and support, contact Martin Heubel here
