How to negotiate the best Vendor terms for your brand – advice from the Experts
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.
Useful Links:
“Help! We just can’t make the right level of profit on Amazon…”
Boosting profitability is an age-old problem for Sellers and Vendors on Amazon, and it’s a cry for help that our CEO Andy Banks must have heard a thousand times!
So where do we look when we hear this marketplace lament from clients?
Andy says profitability problems normally stem from one of three places…
1. The Architecture behind your Product Range
When it comes to profitability problems, range architecture is so often a key culprit.
If you’re simply selling the wrong assortment on Amazon – whether that’s in terms of market fit, unit economics or another factor – it’s crucial to step back, assess and pinpoint what’s really going to perform for you.
How can Venture Forge help?
To meet growing demand in these profit-pinching times, we’ve just launched our Product Range Optimisation Service.
Our service reviews your entire offering in the context of:
- The market
- The competition
- Your existing sales
- Unit economics
The result?
You’ll be able to ensure you’re taking the right range that will drive the right profit outcome to Amazon.
2. Your Selling Model
The Vendor vs Seller vs Hybrid debate is undoubtedly one of the hottest Amazon topics around this year, and it’s one we’ve covered a few times already (see below for the links you need).
The current Amazon environment is seeing lots of brands knee-jerking from Vendor to Seller as they look to overcome their profit challenges.
But should you be doing the same?
Truth be told, we think many of those making snap decisions will find it’s not the right one – but there’s definitely no “one size fits all” approach to this incredibly fundamental Amazon question.
This is a big move, and deciding what’s right for your brand needs careful, considered thought.
You need to evaluate why you’re facing challenges, grasp the unit economics of your business (and Amazon’s) and assess your own operational capacity to deliver on the different models – all before you take any action at all.
Need expert guidance? Ask us about our Selling Model Evaluation service
3. Inefficient Operations
From back-office inefficiencies to shortages and chargebacks, if your internal processes are leaking profits, you need to plug the gaps now to protect your margins.
How do you do that?
From defining your cross-functional team to ensuring your processes are as robust and compliant as possible; leveraging your Amazon partnerships for better service levels to introducing constant monitoring and improvements for internal performance, you need to be deep in the detail to boost your operational profitability.
But it’s worth it.
As our CEO Andy Banks says, “if you plug the leaks, it stays in your P&L from the outset.”
Can we help you do that? You bet we can.
To find out how, drop us a line today.
Useful Links:
- Follow our CEO Andy Banks on LinkedIn
- Watch our Expert Masterclass “How to supercharge your brand’s Amazon presence in 2024”
- Read our blog breakdown
Hurry – Applications close soon for the Amazon Sustainability Accelerator!
If you’re planning to enter your brand for the 2024 Amazon Sustainability Accelerator programmes, it’s time to get your skates on because applications close on April 4th!
Why we love the Accelerator
Designed to give a big boost to start-ups driving sustainable innovations, the Accelerator is an equity-free programme that gives entrepreneurs specialist tools and training to help them develop their skills and scale their businesses.
This year, Amazon has partnered with Europe’s leading climate hub, EIT Climate-KIC, and innovation strategy consultants Founders Intelligence to provide workshops, mentorships and bespoke programmes for the initiative, which in previous years has helped the likes of eco-toothbrush company Suri and insect-based pet food pioneers Grub Club to thrive.
And for 2024, it’s not just about consumer products – there’s a new cohort, the Amazon Pilot Challenge, which is for post-prototype European climate-tech start-ups in waste management, circularity and buildings efficiencies who can pilot their technology with Amazon as it works to achieving net-zero carbon emissions by 2040.
How does it help participants?
We’ll let Suri and Grub Club’s results do the talking…
According to Suri Co-Founder Mark Rushmore, participation when their start-up was still at concept stage helped them increase their gross revenues to over £10 million in the last 12 months, as well as “providing unparalleled access to resources and expertise”.
And Grub Club cites a massive year-on-year growth of 290% after participation in 2022, with co-founder Alessandro di Trapani adding that they still share office space with 4 startups from their cohort – a testament to the “amazing network” they’ve gained access to.
The benefits in full
- Monetary grants in the form of cash and Amazon credits
- Specialised Mentorship from relevant experts
- Tailored curriculum including workshops, bootcamps and expert speakers
- Flexible access across the UK, EEA and Switzerland, featuring with virtual events alongside in-person attendance
- Climate Impact Assessment that includes management strategies and external validation
- Events and community, both while participating and through alumni and network events post-graduation
The links you need…
- Learn more
- Apply for the Consumer Products programme
- Apply for the Amazon ClimateTech Pilot Challenge
3 things we love about the Amazon Big Spring Sale
As Amazon brings a “Big Event” feel to the Spring sale, we highlight the 3 benefits that excite us about the prospect of this becoming an annual thing…
A Spring sale is nothing new, but this 2024 version has seen a real ramping up in the marketplace’s attitude to their pre-Easter deals.
Why do we see this as a good thing? Here’s our 3 top reasons…
It’s a good time for bargains
Traditionally, the end of March through April marks the time that shoppers look to spend again after the splurge of Christmas and the dirge of winter.
The arrival of warmer weather leaves people eager to refresh their homes, gardens and wardrobes; the spring cleaning mentality is in full force – happy news for sellers of cleaning products and storage alike – and seasonal holidays like Easter bring opportunities for gift-giving.
But, whatever your own consumer’s driving forces might be right now, the one thing that’s always going to make your products more attractive is a good deal.
And, by throwing the power of an Amazon event into the mix, the marketplace is serving up an excellent opportunity for brands to take advantage of increased traffic and visitors with strong purchase intent at another key time of year for retail.
It’s not limited to just Prime members
By opening up offers to every Amazon shopper, Sellers and Vendors can look to create deals that pull in a wider audience, with the opportunity to create new customer relationships and expand your brand’s reach to new audiences.
And Prime members won’t feel left out, because…
Brands have the opportunity to pull in Prime members with exclusive “WOW!” deals, with Amazon dropping discounts across different categories throughout the sale period.
We’re intrigued to see the results from this first big Spring event – and of course, we’re already helping clients plan for the Prime event in July!
