By Martin Heubel, Amazon Strategy Consultant at Consulterce
Good luck increasing cost prices with Amazon in your upcoming vendor negotiation (AVN):
- Freight container prices are down 44% vs July 2024
- US inflation is down 19% YoY
- UK inflation is down 32% YoY
- Raw material prices have normalised
Unless you’re trading cocoa or coffee (their commodity prices trade at near all-time highs), I can almost guarantee that your Vendor Manager will ask for a cost price reduction for 2025.
For good reason:
In recent years, many vendors used cost increases to “right size” their margin or enforce a national CPI. Resulting in slower volume growth and lower margins for Amazon.
Brands looking to fuel growth in 2025 should prepare to:
- Defend their existing cost prices to Amazon
- Develop a more efficient price pack architecture
- Delist items if margins become unsustainable
- Drive a profitable portfolio mix through ads/promos
- Review ASIN-level cost support to avoid CRAP
Most of all? Vendors should pursue cost price increases with caution. Most of the time, the math doesn’t work out in favour of the brand.
For further information and support, contact Martin Heubel here
