By Martin Heubel, Amazon Strategy Consultant at Consulterce
For many brands, the scariest time of the year has arrived. No, I’m not talking about Halloween. I’m talking about Amazon Vendor Negotiations (AVNs).
With Vendor Managers tasked to improve margins and reject cost increases, how can your teams effectively prepare for it?
Here are five things to keep in mind:
- Amazon will bombard you with data points to underline their negotiation narrative.
Make sure you bring your own data to challenge and underline your positioning. - Expect Amazon to anchor its first ask high. Vendor Managers know this achieves far better results and gets them closer to their ZOPA (Zone of Possible Agreement).
When confronted with their investment requests, keep your emotions in check. Ensure you address any questions and let your Vendor Manager know what you need to evaluate their requests. - Your Vendor Manager will apply pressure on you and your teams. Made-up deadlines or threatening to pause orders are just a few of the tactics used by Amazon in trade negotiations.
Ensure your teams are trained to withstand and counter these methods. It’s important that you call Amazon’s bluffs and understand their actual red lines. - Amazon wants to close negotiations fast. They want to move on as quickly as possible to the next account.
Become aware that time is on your side. Don’t feel pressured to agree on anything you haven’t fully understood or where you don’t see the ROI justified. - Amazon will have no problem escalating your account when Vendor Managers cannot achieve their original negotiation targets, threatening overall business continuity.
Make sure to inform your leadership teams about the potential escalation risk with the online retailer. Plan ahead and map out a RACI to facilitate top-to-top discussions when your negotiation is gridlocked.
For further information and support, contact Martin Heubel here
