By Martin Heubel, Amazon Strategy Consultant at Consulterce
No, Amazon won’t stop asking you for more investment. Not unless you do this between AVN cycles.
There’s no other way of saying it:
If your Amazon margins are under pressure, chances are it’s not just Amazon’s fault.
The real issue? A lack of traction on critical processes between negotiation cycles.
If you want to escape the race to the bottom:
- Prioritise the development of a differentiated e-channel selection. Ensure 20-25% of your Amazon sales come from online exclusives over the next 5 years.
- Identify resellers and categorise them into authorised (“good guys”) and unauthorised (“bad guys”). Unauthorised resellers erode your margins by aggressively pricing products to win the Buy Box. Cut them out.
- Conduct test buys to uncover how unauthorised resellers get your products. Use batch codes if needed to trace how goods from your warehouse end up on Amazon.
Most of all:
Invest in knowing your market share!
Use tools like Flywheel, NielsenIQ, and SmartScout to gauge your importance to Amazon’s category.
If you concede in trade negotiations without this level of insight, you’re giving up leverage when Amazon needs your revenue just as much as you need theirs.
For further information and support, contact Martin Heubel here
