From the very beginning of your Vendor relationship with Amazon, it’s crucial to take time and secure the best terms you can for your brand – but how? We asked a panel of Vendor veterans…
In our recent Vendor Mastery webinar (watch again here), our panel of experts were asked whether Vendor negotiations are still a fundamental pillar for a brand’s long-term success – and the reply was a resounding “yes!”.
Not only that, but one of the most important points that came out of the discussion was how essential it is to stay strong right from your very first round of talks.
“It’s key to take a measured approach from the very beginning,” explains our very own Matt Briggs, Senior Account Manager and all-round Amazon maestro.
“Lots of Vendors commit to terms they don’t understand and then they’re fixed in their account.”
Your first terms are the basis for every round that follows
And this is something many new Vendors don’t grasp – that the first terms they negotiate will form the basis for the round that follows, and so on.
But, with our experts agreeing that the onboarding process can be incredibly confusing for those who don’t know their way around all the acronyms, programmes and trade terms, how do they suggest Vendors approach their negotiations to get the best result?
Here are their 5 best tips:
1. Keep your commercial hat on
Vendor Rocket’s Ant Finch was the first to highlight the importance of keeping a keen commercial mindset throughout.
The key is to only add products you know will bring real value to your topline.
“Many Vendors start out and list all their products – not a lot of commercial thought goes into that,” said Ant.
If a product’s not delivering to your topline sales, don’t launch it. Be very clear about adding the things that will bring you value.”
2. Be clear about your long-term objectives, and take your time
“The key is knowing what you want to achieve in terms of your long term strategy,” explained Matt.
“Your terms should be specific to your brand – for example, if returns are a particular issue to you internally, include a damage allowance.
“Take the time to look at everything and follow the data. You don’t need to rush into any decisions or agree to anything blindly.”
3. Make sure you fully understand what’s on the table
It’s important that you completely understand what Amazon is offering so you can ensure you’re investing in the right places.
“A Vendor needs to go in with an open mind, but fully understand what Amazon is offering them before they pass judgement,” said Ant.
As an example?
“AVS can be interesting for brands if used correctly, but you need to dig into what it will do for you, how it will work, how you will manage it internally and will it definitely add value to what you’re doing.
“Amazon will always find ways to take your money – you have to make sure you’re investing in the right areas to boost your profits and sales growth.”
4. This is just a classic Buyer-Seller negotiation
“You have to remember that Amazon’s vision for Vendor Central has always been about long-term partnership,” said Bruno Ferreira of Bluedot ECommerce.
“It’s a “we relationship – ask for something in return, don’t just give.”
“I think sometimes people confuse what a Vendor is,” agreed our own Andy Banks, Venture Forge CEO.
“Don’t miss that, at either end, it’s just two people – one selling, one buying to sell on.
“You can get wrapped up in the platform and the acronyms and the negotiations – but it’s about creating a holistic, long-term partnership.”
5. Get expert help where you need it
In the perfect summing-up phrase, Bruno described Vendor negotiations as being “like a poker game”.
“And if you’re playing an expert without knowing the rules, you’ll lose.”
“It’s very rare a Vendor is sophisticated enough, and Amazon are quite ruthless and experienced at taking advantage of that lack of knowledge, so having a team behind you that understands the negotiation process is crucial,” agreed James Wakefield of WAKE Commerce.
“Go in blind and Amazon wins.”
With ramifications that can impact your Vendor account throughout its lifetime, our panel wholeheartedly agreed – if you don’t have the real internal know-how to handle your Vendor negotiations, it’s key to look for expert help elsewhere.
Know you need help, or just want to chat with any of our expert panel? Get in touch today.