2025 Annual Vendor Negotiations with Amazon

This article reveals how Amazon and Ecommerce teams can prepare for the Annual Vendor Negotiations. With top tips from leaders in the industry, this is a great resource for those planning for 2025. 

On Wednesday, 20th November 2024, leading Amazon and Marketplace recruiter, Patrick Murray, held a seminar event discussing the Annual Vendor Negotiations (AVN). Attendees heard from a panel of Ecommerce Leaders: 

• Charlie Merrells, Amazon and Ecommerce Consultant 
• Michelle Field, Ecommerce Lead at Alliance Pharmaceuticals Limited 
• Ant Finch, Amazon Consultant at Vendor Rocket 

Together, they discussed the stages of the AVN process, including: 

1. Preparation
2. Kick-off
3. During negotiations
4. Closing the deal

Keep reading for key takeaways from their conversation. 

How to prepare for Amazon Vendor Negotiations

Effective preparation is key for successful negotiations with Amazon. As they say, fail to plan and you plan to fail! This stage is all about aligning internal priorities, understanding Amazon’s expectations, and crafting a robust strategy. This will position your business for success. 

Here's how our speakers approach planning for AVNs... 

1. Dive into data 

The first step in planning is to gather your data points. To negotiate confidently, businesses must start with a thorough analysis of both internal and external metrics. This includes: 

• Internal metrics: Examine key performance indicators like traffic to understand what’s working well and where improvements are needed. 
• Amazon retail metrics: Leverage the retail metrics Amazon provides, such as Net Pure Profit Margin (Net PPM). Identify trends and deviations to anticipate Amazon’s goals during the AVN. 

You should also investigate third-party data outside of Amazon. Assess how your product category is performing in the broader marketplace. If your category is growing but your business isn’t, it signals a potential issue. But, if you’re outperforming the category, you may be in a stronger negotiating position. 

2. Set clear objectives 

The negotiation process isn’t just about numbers. It’s about defining your business priorities for Amazon success. Key questions to answer include: 

• What are your non-negotiables? 
• What areas are you willing to compromise on to reach a deal? 
• How do these objectives align with your long-term business strategy?

Aligning these priorities across all stakeholders helps avoid mid-negotiation challenges or blockers. 

3. Engage internal stakeholders 

This stage is crucial for a successful negotiation process. Michelle Field recommends that Amazon Managers engage as many senior stakeholders as possible, educating them on timelines and potential challenges. This avoids unrealistic expectations about quick results. 

Secondly, it’s important to define escalation paths for critical sticking points. This prevents any disruption to the negotiation process or business operations.  

Ultimately, regular communication with leadership is essential for maintaining support and focus. 

4. Build relationships with your Vendor Managers 

Strong relationships with Amazon Vendor Managers (VMs) can significantly impact the outcome of your negotiation. Treat your VM as a strategic partner. Understanding their goals and challenges can open doors to mutual benefits.  

“Your job is to make your Amazon Vendor Manager look brilliant. If you can do that, they will keep giving you more opportunities.” 

Of course, it is common to have a frequent turnover of VMs at Amazon. Ant Finch emphasised the importance of planning to onboard new contacts quickly. Having detailed internal documentation helps you avoid starting from scratch each time. 

Kicking off the AVN process

Once you’ve planned your approach for the year, it’s time to kick things off! Our panellists shared some top tips for starting Amazon Vendor Negotiations (AVNs). 

When is the right time to start AVNs? 

There is no “right” time to start your AVNs. Each Amazon business is unique, and you should approach negotiations when you’re ready for them. Ensure your team is fully prepared with data, insights, and leadership approval. If you’re not ready, pushing to start early could jeopardise your position. 

However, timing can influence the success of your negotiations. For example, for smaller vendors, starting early might secure more attention from Vendor Managers before they shift focus to larger accounts.  

Organising kick-off meetings 

Kick-off meetings set the tone for the entire process. So, what is the best way to organise and run them?

Our panellists were big advocates for face-to-face kick-off meetings. This format creates an opportunity to build rapport with your Vendor Manager. It will allow you to establish a personal connection and demonstrate commitment to the partnership. However, they are becoming rarer since the pandemic.

Virtual meetings are increasingly common nowadays, as Amazon looks to make the discussions more efficient and streamlined. 

Regardless of the format, use this initial meeting to: 

• Lay out your objectives clearly 
• Set a cooperative tone while standing firm on key priorities 
• Request a detailed explanation of Amazon’s proposed terms 

Responding to Amazon’s initial offer 

Amazon typically starts negotiations by presenting their desired terms. These often include cost price reductions, margin improvements and higher investment commitments. 

Thanks to your earlier preparations, you should be able to respond with confidence: 

• Counter strategically: Avoid immediately accepting or rejecting terms. Instead, respond with data-backed counterproposals that align with your goals. 
• Control the narrative: If Amazon’s terms feel unrealistic, request supporting data or reasoning to justify their demands. This can sometimes highlight areas where you can push back.

Presenting your case 

You might consider presenting your terms first if you’ve identified specific changes you want. This can shift the power dynamic, forcing Amazon to react to your position. When doing this, make sure to highlight areas of mutual benefit.   

Most importantly, always avoid making rushed decisions. Take the time to evaluate Amazon’s feedback and proposed terms. If you’re under pressure to decide during a meeting or call, ask for time to review internally. 

Negotiation stage

At this point, you’re heading straight into negotiation. Here’s some advice on this stage from our panellists to ensure you come out with a deal that works for your business.  

Pacing the process 

Negotiations with Amazon often take months to conclude.  

Don't be concerned that yours are taking a long time – maintain a deliberate, measured approach to avoid making hasty decisions. Charlie Merrells recommended that if you feel uncertain, meet others in your category and compare notes. This should help you understand how everyone else is progressing.  

Feel free to take your time and push back if you feel pressured to agree to Amazon’s terms immediately. Use the time to review proposals and gather internal input. 

Communicate with senior leaders 

In your planning stage, you will have informed the senior leadership team on how long the process takes. However, it can be useful to remind them of the timelines you set out when processes continue. 

“Take them on that journey with you and over-communicate.” 

Regular updates ensure they remain supportive of the negotiation strategy. If leadership pressures you to close prematurely, remind them of agreed priorities and the potential long-term consequences of rushing. 

Escalation as a strategic tool 

Ant recommended keeping senior leaders out of the process until you absolutely need to. If progress stalls, leverage your General Manager to escalate the situation. However, make sure you communicate thoroughly with them beforehand. Ensure they are clear on the current situation and what you’re looking for from escalation. 

Closing the deal

When compromises have been made, and agreements are finalised, it’s time to close the deal. 

Last minute adjustments 

At this stage, you might come up against some last-minute adjustments from Amazon over 1-2%. Ant warned against agreeing to this change. While the percentage is low, it can make all the difference to your profit margin when you sell on Amazon. 

When is the right time to close the deal? 

There's a sweet spot to close the deal when everyone is happy. You know it’s time to close when you’re aligned with the goals you set out before negotiations began. 

If you’re ahead of schedule, don’t hesitate to close early. The AVN is crucial to the success of your business on Amazon. It's not worth risking the terms you’ve worked so hard to negotiate unfolding. 

Success in AVNs 

When you close your 2025 AVN, it will be time to prepare for next year’s already! Your team will be monitoring and gathering data to influence next year’s strategy immediately. Be sure to save this guide for when you need to start all over again. 

A big thank you to our speakers for your contributions to this discussion. If you need support in growing your Amazon team, be sure to get in touch with our recruiters to find out how we can help.