Can you reduce terms with hashtag#Amazon in your upcoming vendor negotiation?

✅ Yes, you can.

✋ 𝗕𝘂𝘁 𝗼𝗻𝗹𝘆 𝗶𝗳 𝘆𝗼𝘂 𝗰𝗮𝗻 𝗯𝗿𝗶𝗱𝗴𝗲 𝘁𝗵𝗲 𝘀𝘂𝗯𝘀𝗲𝗾𝘂𝗲𝗻𝘁 𝗡𝗲𝘁 𝗣𝗣𝗠 𝗶𝗺𝗽𝗮𝗰𝘁.

That's because your Vendor Manager is targeted on this key margin metric.

So instead of cutting down investments and risking Amazon to stop ordering on your account …

… make sure you prepare your game plan.

You can bridge the resulting Net PPM impact by:

𝟭- 𝗗𝗿𝗶𝘃𝗶𝗻𝗴 𝘆𝗼𝘂𝗿 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗺𝗶𝘅

When you activate products through advertising or price promotions, you are likely not only stimulating growth.

Instead, you're also driving an impact to your overall account Net PPM. So if you can reliably sell more of your margin-accretive items, this net margin benefit allows your teams to position a reduction in trade terms to your Vendor Manager.

𝟮- 𝗟𝗮𝘂𝗻𝗰𝗵𝗶𝗻𝗴 𝗹𝗼𝗴𝗶𝘀𝘁𝗶𝗰𝘀 𝗶𝗻𝗶𝘁𝗶𝗮𝘁𝗶𝘃𝗲𝘀

Reducing the cost along your shared supply chain with Amazon is another way to reduce trade terms. While Vendor Managers ask for investment in logistics initiatives by default, your teams need to pause and evaluate which side is actually saving costs.

For example, setting up a Vendor Flex or Direct Fulfilment node should almost always be compensated through 1) an increase in cost prices, or 2) a reduction in trade terms.

This is because you, as the vendor, bear a greater share of the variable handling costs that Amazon saves because it does not inbound the items in its warehouses.

𝟯- 𝑰𝒎𝒑𝒓𝒐𝒗𝒊𝒏𝒈 𝒚𝒐𝒖𝒓 𝗽𝗿𝗶𝗰𝗲-𝗽𝗮𝗰𝗸 𝗮𝗿𝗰𝗵𝗶𝘁𝗲𝗰𝘁𝘂𝗿𝗲

This point is particularly important for CPG brands: If your product portfolio includes many low-ASP items, your Amazon buyer must command higher trade terms to offset the cost of handling and shipping these items to end customers.

So if you launch SIOC/FFP-eligible products or introduce new value bundles at higher price points, you can ask for a reduced trade investment in exchange for listing these items on Amazon.

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What other ways can you think of to reduce your terms with Amazon?

Let me know in the comments!