On December 12th, 2023, specialist marketplace and Amazon recruitment consultant, Patrick Mu...
On December 12th, 2023, specialist marketplace and Amazon recruitment consultant, Patrick Murray hosted an event to prepare for Amazon Vendor Negotiations in 2024.
The Amazon Vendor Negotiations (AVN) take place every year between Amazon and their vendor partners. The process, sometimes known as Joint Business Plans (JBP), allows third-party sellers on Amazon to agree trade terms for the year.
Negotiations with Amazon will often take place with a business’ dedicated Amazon team. However, depending on company structure, will sometimes be handled by a sales team or ecommerce team.
This is often known as the hardest part of the Amazon relationship. So, Patrick held this event to help Amazon teams prepare for the year. He enlisted the help of three leaders in the ecommerce and Amazon space to share insight into their processes. Attendees heard from:
Keep reading for our key takeaways from the evening.
Patrick wanted to discuss the topic of AVNs due to the number of people in his network struggling with the process. To kick off the conversation and set the scene, Patrick asked our panellists which pain points they face.
As discussed, there can be a lot of pressure to get Amazon Vendor Negotiations right. So, what steps can an Amazon Account Manager take in order to prepare for the process?
Charlie Merrells, Amazon and Ecommerce Consultant, shared the importance of understanding your metrics across profitability, revenue and the portfolio – considering your margins and Amazon’s margins.
“How do the metrics fit into your long-term strategy?”
The metrics you’re driving at the start of your negotiation are probably not going to be the same in a few months' time. So, Charlie also highlighted the importance of looking at the bigger picture. He advised considering the next 1-2 years rather than just the first few months.
Founder and CEO, Ant Finch, shared the importance of knowing your net PPM inside-out. This will give you added confidence as you go into the AVN process.
Ant advises you to agree with the Vendor Manager on the target for the net PPM at the very beginning of the process. Everything builds from this number:
To be strategic with your negotiations, Ant also shared the importance of knowing your variables.
“Know your data, know your variables.”
For instance, are there any chargebacks that you can bring into the process? Anything outstanding can support your cause and improve Amazon’s offers. However, it’s crucial to know these at the start of the process to use them strategically throughout the process.
With this in mind, Ant advises you to always agree on terms for this year before anything else. Once you close the following year, you lose some negotiating power.
Amazon Lead, Michelle Field, spoke about the work that needs to take place internally prior to negotiations with Amazon.
Many companies lack an understanding of how ecommerce teams operate. To ease pressures from stakeholders, you might find it beneficial to educate members of the business on how the process works. Michelle recommends doing this throughout the year to make sure you have the support of the business heading into the AVN.
One of the key challenges presented by the Amazon Vendor Negotiation process is the time and resources that it requires. As a result, Patrick asked our speakers to share their thoughts on how to speed up the process.
Before accepting anything, you would need to carefully consider everything on offer. It's highly unlikely that you would accept the first terms offered, unless the business is completely aligned and clear on what they’re looking for.
If you do accept the first offer, it’s highly likely that you’re missing a good opportunity.
“You can grow on Amazon, but you don’t necessarily profitably grow on Amazon.”
Some smaller business might find it daunting to turn down multiple of Amazon’s offers. However, our speakers made it clear that you can always say “no” to Amazon if terms do not work for your business.
At the end of the day, the process can be lengthy – there is no escaping that fact.
“Let it take the time, let it breathe.”
While it might be tempting to compromise at the end of negotiations, Ant reminds us that it’s important to stay strong. There is often always a middle-ground that will keep both parties happy.
Building a relationship with them throughout the year will ensure your conversations are far more engaging and make the process run smoothly.
Remember, the work you do with your Vendor Manager is closely linked to how successful they are in their role. So, they want negotiations to go as smoothly and quickly as possible, too.
This event was such a success due to the expertise shared by the panel and attendees. A big thank you to everyone who attended.
Needing to build a team to support Amazon Vendor Negotiations? 3Search can support you with all of your digital recruitment needs. Get in touch and upload a vacancy for the best recruitment experience you will ever have.
