By Martin Heubel, Amazon Strategy Consultant at Consulterce
It’s a common trap for Amazon vendors: They think once deal ASINs and budgets are aligned, Vendor Managers won’t return to the negotiation table.
The problem is:
Amazon will often ask for additional funding support at the last minute. This happens in two scenarios:
- Your account falls below Net PPM targets
- Your promo ASINs get price-matched before Prime Day
Amazon defines its funding requirements based on the lowest price offered in the last 60 days. For example:
- Previous lowest T60D price: £50
- Forecasted promo price: £35 (30% off)
- Vendor funding: £15
If the product gets price matched to £48 before Prime Day, Vendor Managers will request additional funding from the brand:
- New T60D price: £48
- New promo price: £33.60 (30% off)
- New funding request: £16.40
In the above example, Amazon will seek to offset the price matching that has occurred through an additional funding request to run the deal at a 30% discount.
So here’s what to keep in mind:
- Ask Amazon to self-fund deals on Net PPM accretive items
- Don’t offer more funding if Amazon has already bought the inventory
- Define your margin floor and be ready to pull products from the deal
- Suggest including overstock ASINs in the deal
- Shift budgets away from high-margin ASINs
Remember: Vendor Managers are also under pressure to hit their Prime Day targets. So make sure you stand your ground during last-minute negotiations.
For further information and support, contact Martin Heubel here
