Trade negotiations can feel daunting. They define the commercial performance of your Amazon business for years to come. With U.S. tariffs and rising economic uncertainty, the stakes are even higher.

At the same time, Vendor Managers continue to push hard on Net PPM targets, cost support, and operational improvements. But how aligned are these asks across categories?

Together with market research firm Stratably, I wanted to understand the latest AVN trends in 2026. We looked at Amazon’s priorities, expectations and evolving negotiation strategies.

Today, we’re sharing all our insights with you.

Summary of Key Findings

1. Amazon’s margin focus is weighing on growth, with fewer vendors reporting category-outperforming sales in 2025 (-570 bps YoY).

2. Customer profitability is on the decline, with 40% (+1,400 bps YoY) of vendors reporting that their net margins fall short of internal profit targets.

3. Yet, only 26% of vendors prioritise profit optimisation as the primary goal in 2026 AVNs.

4. Hybrid structures fall short of margin expectations, with only 15% of vendors prioritising a switch from Vendor to Seller Central in 2026.

5. Fewer vendors (54% / -1,000 bps YoY) have received cost price decrease requests from Amazon.

6. Where requested, Amazon is pushing for lighter cost price reductions, averaging -5.4% (+85 bps YoY).

7. Conversely, 41% of vendors plan to increase their cost prices with Amazon, while 44% intend to keep cost prices flat in 2026.

8. Only 19% of vendors expect their trade terms to decrease in 2026. 45% expect flat terms YoY. 36% of 1P brands plan to increase trade investments.

9. Amazon focuses negotiation asks on: higher base accruals (35%), supply chain initiatives (33%), more deal funding (30%), Amazon Vendor Service (26%), AON margin support (24%), and Amazon Business (23%).

10. Key focus areas for vendors are: optimising trade terms (58%), delisting unprofitable assortment (54%), managing profit mix (50%), cutting supply chain costs (43%), and launching Amazon exclusives (42%).

11. 53% of surveyed vendors do not use AI to support their AVN preparation or execution with Amazon.

Amazon’s growth advantage is eroding

Amazon’s growth in 2025 was increasingly constrained by a stronger internal focus on profitability and operational efficiencies rather than demand alone, raising the bar for vendors to unlock outsized growth.

Against this backdrop, it’s unsurprising that volume growth for manufacturer brands on Amazon has softened. A meaningful share of brands that reported ‘much faster’ growth in 2024 now see a deceleration in 2025 (-574 bps YoY).

While 49% of respondents still report Amazon growing faster or much faster than other retailers, 1 in 2 vendors now view Amazon’s growth as merely in line with or slower than the category average, underlining the erosion of Amazon’s historical growth advantage.

Vendors in the Consumables segment reported mostly steady to strong growth, with 78% stating their performance is either ‘average’ (22%), ‘faster’ (40%), or ‘much faster’ (16%) than the category average. Only 15% reported slower-than-average growth, and 7% of CPG brands indicated that their growth was significantly below expectations – a signal of relative stability in essentials-driven categories. Yet the figures indicate increasing reliance on Amazon for growth, underlining the need to diversify beyond the platform.

In contrast, performance in Softlines has been notably more polarised: 46% of vendors reported faster-than-average growth, while 25% reported performance in line with category benchmarks, and 29% reported underperformance. This suggests that a smaller subset of fashion and apparel brands continue to significantly outperform their category, while many others are falling behind, indicating an uneven demand distribution and tighter consumer discretionary spending.

Hardlines vendors were the most evenly distributed: 28% grew more slowly, 30% reported average growth, and 42% grew faster than the category average, indicating a more fragmented competitive category environment.

Profitability pressure is mounting for 1P vendors

Since the beginning of our AVN survey, Amazon has achieved significant improvements in trade investments with 1P vendors. After terms rose by 69 bps YoY in the 2024 AVN cycle, 2025 negotiations led to a further 91 bps increase.

This is starting to show in the results of our early 2026 AVN study. Only 59% of vendors rated their net margin performance with Amazon as ‘healthy’ or ‘very healthy’, down 1,400 bps from the same period last year.

Sales growth remains the #1 priority for manufacturer brands

Yet, the weaker customer margin performance doesn’t appear to be affecting vendor negotiations just yet. In fact, 60% of surveyed brands said sales growth remains their top priority, compared to 59% a year ago.

Only 26% of brands plan to prioritise profit growth in 2026 negotiations, while a further 14% say improving operational processes and supply chain efficiency will be their main focus.

Cost prices are emerging as the central negotiation focus in 2026

Interestingly, cost prices seem to form the main battleground in 2026 AVNs. While fewer vendors (54% / -1,000 bps YoY) have received cost price decrease requests from Amazon, CPD asks averaged -5.4% (+85 bps YoY).

This can be partially explained by the fact that US tariffs and geopolitical uncertainty have had a far lesser impact on selling prices than anticipated. But also shows that Vendor Managers use this newly won certainty to reverse previously accepted cost price increases.

Across product families, Hardlines brands are most affected, with 58% receiving cost price decrease requests, followed by Consumables (52%) and Softlines (40%).

Conversely, vendor cost price strategies are becoming more defensive going into 2026. While Amazon continues to push selectively for cost price reductions, only 14% of surveyed brands plan to concede on front margins.

On the other hand, 44% of vendors intend to keep cost prices unchanged, signalling a clear preference for stability over front-margin concessions.

More notably, 41% of vendors plan to increase cost prices rather than reduce them, using selective CPIs as a mechanism to protect customer margins and offset ongoing trade and operational pressures.

This indicates a growing divergence between Amazon’s cost price ambitions and vendor margin protection strategies, making cost prices a central negotiation focus in 2026 AVNs.

Despite slowing growth, vendors plan for largely stable trade terms in 2026

Expectations around trade terms remain relatively resilient going into the 2026 AVN cycle. Despite softer growth dynamics and rising profitability pressure, most vendors don’t anticipate a material deterioration in their trade terms with Amazon.

Instead, sentiment suggests a preference for stability. 44% of surveyed vendors expect trade terms to remain flat year-on-year, while 36% even plan to increase trade investments to secure growth, visibility, or strategic support from Amazon.

Only 19% plan to tighten their trade terms with the online retailer, highlighting a continued willingness to invest in the Amazon relationship, even as margin pressure starts to unfold in the customer P&L.

Amazon prioritises base accruals and supply chain initiatives in 2026 trade negotiations

Looking at Amazon’s negotiation agenda, base accruals remain the primary lever in 2026 AVNs. 35% of surveyed vendors indicated that base accruals were a key investment request from their Vendor Manager. Reflecting Amazon’s ongoing focus on securing predictable, recurring profitability across its vendor base, rather than relying solely on one-off cost or margin support concessions.

At the same time, supply chain initiatives are gaining importance in negotiations (33%). AVN discussions increasingly centre on improving operational efficiency, inbound reliability, and cost-to-serve economics, positioning supply chain performance as a key contributor to Amazon’s margin objectives.

Deal funding (32%) and marketing services (30%) further reinforce Amazon’s preference for securing its Net PPM performance, while transferring the executional burden to 1P vendors.

Vendors focus on cost, assortment, and media efficiency

On the vendor side, priorities are shifting toward internal optimisation. Rather than relying exclusively on negotiation outcomes, many brands are increasingly focusing on levers they can control directly to protect profitability.

Optimising trade terms (58%), delisting unprofitable assortment (54%), and improving profit mix across portfolios (50%) are among the most commonly cited strategies.

In parallel, vendors are placing greater emphasis on media efficiency, redirecting spend toward more profitable products and audiences rather than increasing budgets incrementally.

Artificial intelligence remains an untapped opportunity

Despite the growing complexity of AVNs, artificial intelligence remains underutilised by most 1P vendors. 53% of surveyed brands still don’t use AI to support their negotiation preparation, performance analysis, or scenario modelling with Amazon.

This represents a clear opportunity gap. AI-driven tools can help vendors analyse large data sets more efficiently, model negotiation scenarios, and identify profit risks across cost prices, trade terms, and assortment decisions.

As AVNs become increasingly data-driven, the ability to leverage AI effectively will likely be a key differentiator between reactive and well-prepared vendor organisations.

Conclusion

This wraps up our survey insights from the early 2026 AVN cycle. If you found value in today’s article, please share it with your team on LinkedIn.

And if you participated in the survey, Thank You! Without your support, this study would not have been possible.

I’m going to run another study on the final results of the 2026 AVN cycle. Subscribe to my newsletter and be the first to know when it is published!

Background of survey and profile of survey participants

The survey was conducted in December 2025 and targeted representatives of first-party Amazon suppliers. A total of 262 survey responses were recorded. The survey was conducted anonymously.

Vendor business size with Amazon

41% of survey respondents reported annual Amazon sales between $0 and $10 million. Another 39% of surveyed participants reported annual Amazon sales between $10 and $50 million. 10% of survey respondents reported annual Amazon sales between $50 and $100 million. 10% reported annual Amazon sales of over $100 million.

Vendor categories of survey participants

46% of survey participants sell items in the Hardlines goods product family, 44% are actively selling Consumer Goods (Consumables), and 10% were manufacturers in Soft Lines (Fashion, Luxury, and Accessories).

Geographical distribution of survey participants

The survey participants were located in multiple regions. 60% of respondents were located in Europe, 38% in North America, and 2% in Asia-Pacific markets.

Disclaimer

The survey is not and was not sponsored by, run, or affiliated in any way with Amazon.com, Inc. or any of its subsidiaries.

The post Amazon AVN Study: Early Insights From 2026 Vendor Negotiations appeared first on Consulterce.

If you sell through Vendor Central on Amazon, you know the call: Every year, the online retailer invites suppliers to participate in annual trade negotiations, also known as Joint Business Plans (JBP) or Annual Vendor Negotiations (AVN).

While most retailers view these conversations as a way to build and maintain relationships with suppliers, Amazon focuses mainly on operational and commercial improvements.

That’s why brands need to handle AVNs with Amazon differently than with their other retail partners.

In this guide, you will learn exactly how to successfully prepare and negotiate trade terms with your Vendor Manager.

This article will cover:

• What is an Amazon Vendor Negotiation?
• Overview of trade terms
• Phase 1: Plan and prepare
  • Gather your data
  • Plan your budgets
  • Know your value
  • Prepare scenarios
  • Have an exit strategy
• Phase 2: The kick-off meeting
  • Meeting structure
  • Required attendees
  • Important Amazon KPIs
• Phase 3: Negotiate with Amazon
  • Negotiation mechanics
  • Negotiating commercial terms
  • How to handle disincentives
  • Utilizing escalation mechanisms
• Phase 4: Control and measure
• Bonus: FAQ

What is an Amazon Vendor Negotiation?

The Amazon Vendor Negotiation (AVN) is what most brands will know as a Joint Business Plan (JBP) or trade negotiation from other retailers.

It’s an annual process where Amazon meets with its largest vendors, shares an assessment of their past year’s performance and proposes the investment structure of any trade terms for the next twelve months.

AVNs with Amazon differ from those of other retailers in that Vendor Managers approach negotiations from a purely transactional angle.

You are likely to negotiate with a different Amazon buyer each year, making it difficult to build a strategic relationship as you do with your other retail customers.

The annual negotiation process typically begins with a kick-off meeting, followed by a series of negotiations on the commercial terms of the deal.

The online retailer is known for putting a hefty price tag on a projected growth scenario, often without a clear plan on how to achieve it.

And that’s when the negotiation begins.

Process overview

Negotiations on trade terms follow a typical sequence of phases.

They start with a preparation phase in which both the vendor and retailer review the account’s performance and prepare their negotiation strategy.

The following negotiation phase is then marked by an exchange of several commercial proposals and counter-proposals.

If both parties cannot reach an agreement, they may move to an escalation phase. In this phase, meetings may be held with senior stakeholders, and both parties may introduce measures to underline their position.

Once an agreement is reached, the negotiation concludes with the implementation and controlling phase.

Types of European Vendor Negotiations

In recent years, Amazon has increasingly focused its ambitions on aligning trading terms on a pan-European basis. This allows the online retailer to pool its resources and compare terms across marketplaces.

If you are an Amazon vendor selling in Europe, you will likely be subject to one of the following three types of negotiations:

1. Local,
2. Pan-European Coordinated or
3. Pan-European Managed Negotiations.

Local negotiations

Local negotiations are the simplest form of AVNs. Your local Vendor Manager will negotiate trade terms for only their market.

For example, if you’re selling products exclusively on Amazon.co.uk, you will likely enter trade negotiations with a local UK Vendor Manager.

Coordinated Pan-European negotiations

Coordinated pan-EU negotiations have become the preferred choice among 1P Vendors in recent years. That’s because Amazon often only appoints one Vendor Manager for a brand across the European markets.

As a result, your Vendor Manager will expect you to consolidate and coordinate your negotiations through an appointed lead-market or European Key Account Manager (EU KAM).

In this setup, the EU KAM coordinates the asks and proposals with your local market teams first before consolidating them into a holistic EU5 or EU10 offer.

Brands that don’t move towards a coordinated EU negotiation setup risk that smaller countries with lower revenue contributions to lose access to their Vendor Manager.

Managed Pan-European negotiations

The managed Pan EU setup is the most centralised model. Here, a regional KAM team takes on the planning and execution responsibility for the Annual Vendor Negotiation process, including supply chain initiatives, joint business planning, and EU-level performance reviews.

One of the key advantages of this setup is the deep expertise that develops within the central European team, which can lead to a more strategic and consistent engagement with Amazon.

However, shifting to this model often requires a disruptive reallocation of resources and can result in organisational misalignment, particularly when trying to secure local budgets based on Amazon’s P&L performance.

Overview of Amazon terms

Now that you know about the different types of EU negotiations, let’s understand the trade terms you’re likely to come across in your Amazon AVN.

Vendor Managers will often refer to them as base terms. These generally fall into one of three main categories:

• Marketing Allowances,
• Service Programme Fees, and
• Operational Investments.

Note that investments in Amazon Advertising are not part of the annual term negotiations with Amazon Retail. However, investments into deals and promotions may be subject to your retail negotiation.

Vendor Managers will focus on the base terms of your account, as these investments directly impact Amazon’s Net PPM.

So let’s take a closer look at each of them.

Marketing Allowance

Amazon offers two types of marketing allowances: Automated Marketing and Retail Marketing.

Automated Marketing (or: Co-op) is often referred to as a listing fee that gives vendors access to the Amazon marketplace. They use the funds for on- and off-site product placements and to re-target customers, e.g., on social media, search engines like Google, etc.

Retail Marketing, also called Amazon Balance, is an investment that gives vendors access to scheduled on-site banner placements on a category page. The campaign slots can be booked via Vendor Central.

Subscribe and Save

Subscribe and Save (SnS) is Amazon’s loyalty programme to ensure that customers make repeat purchases of replenishable products on its marketplace.

Typical examples of eligible products are dishwasher tabs, hand soap, or toothbrushes.

Customers typically receive a 10% to 15% discount for the first purchase and an increased discount of 15% to 20% for any order thereafter.

Vendors can either pay a flat percentage for participating in the programme or opt for pay-as-you-go financing, i.e., they receive an invoice for the actual subscription costs of their portfolio.

In recent years, Amazon has made it a requirement for brands selling consumer goods to opt into the SnS programme.

However, brand owners need to be careful when setting up their promotional strategy, as the SnS discount also applies when a product is on deal.

Amazon Vine Programme

Vendors can purchase credits for Amazon’s Vine programme, which lets them send product samples to selected Amazon customers.

In exchange for receiving the item free of charge, these customers commit to publishing a review on the Product Detail Page, helping brands to build trust with other customers.

Amazon Vendor Service (AVS)

The Amazon Vendor Service (AVS), formerly known as Strategic Account Service (SAS), is a paid programme that gives suppliers access to a dedicated contact to assist with operational matters such as ordering or the catalogue.

Although the AVS is often sold as a strategic programme, it is more of a day-to-day contact for brands to answer their questions and coordinate product launches and promotions.

Vendors that choose not to invest in AVS risk being moved into Amazon’s mass vendor management (Vendor Success Programme) and losing access to a dedicated Vendor Manager contact.

Volume Incentives

Volume Incentives (or: Volume Incentive Rebates, VIR) are granted either as a fixed or tiered percentage. They incentivise Amazon to buy additional volume from a brand.

Amazon often optimises its free cash flow by setting a high sales target that suppliers pay for throughout the year. If this target is not reached by the end of the cycle, the accrued investment is refunded.

Damage Allowance

The Damage Allowance, also known as liquidation fee, is a commercial trade agreement to compensate Amazon for damaged goods received from customers within the warranty period.

It is one of the more controversial terms of trade that Amazon charges, as the data behind them is rarely shared, and brands have no way of judging the legitimacy of the fee.

Vendors of electronic items may also be asked to opt into Amazon’s Warranty Repair Programme. It allows customers to get repairs from a certified service centre without having to contact the manufacturer.

Freight Allowance

Next to commercial allowances, Amazon also offers many logistical solutions to enable its vendors to distribute goods more effectively.

This directly integrates into the flywheel model that Amazon is known for, as reducing distribution costs enables the retail giant to structure its margins more effectively.

To access these supply chain programmes, vendors have to pay a Freight Allowance. Some of these solutions are known as PICS, Direct Import, Direct Fulfillment, Pallet or Full Truck Load Ordering.

Return Rights

Return Rights allow Amazon to send back purchased goods to a supplier. There are various reasons for returning stock, including defective, damaged or overstocked goods.

Vendors can either grant full return rights or define the type of reasons for which they are willing to accept returns from Amazon.

Payment Terms

As with any other retailer, Payment Terms are part of the commercial negotiations with Amazon.

Different payment terms are possible, but most brands will typically have these set at 2% 60 days EOM.

This means Amazon receives a 2% discount if it pays the invoice before payment is due at the end of the second month following the month of the invoice.

Want to estimate how Amazon’s payment terms affect your cash flow? Use my free payment terms calculator.

Phase 1: Preparing your Amazon Vendor Negotiation

Now that you know what terms will likely be part of your Annual Vendor Negotiation, it’s time to roll up your sleeves.

Amazon’s negotiation cycle usually begins in early November, which means you should start your preparations during the slower summer months.

I strongly recommend starting the process no later than mid-August so that your teams have enough time to review and build their business case.

Gather your data

As we discussed earlier, Amazon treats the annual negotiation process very transactionally. So it’s critical that you know your numbers.

Tip: Make sure you know your revenue, margin and operational figures for the last 12 months before entering a discussion around trade terms.

Bonus tip: Register your brand with Amazon Brand Registry. This will give you access to Amazon’s Retail Analytics in Vendor Central, which allows you to see enhanced sales reports.

But don’t just review your past top- and bottom-line performance. Also make sure your teams review the concrete agreements you have made with Amazon in the past.

Has Amazon kept its promises and delivered on the set targets over the last twelve months?

Look at things like:

• Supply chain improvements.
• Promotional partnerships.
• Successful NPD launches.
• Out-of-stock performance.
• Cost savings.

You want to get a crystal-clear picture of whether you have achieved the goals for which Amazon has set the trading conditions over the last twelve months.

This exercise will also give you a better understanding of what your business specifically needs.

For example, if you think that a closer collaboration with Amazon will benefit your teams, you may want to negotiate access to their Amazon Vendor Service.

Plan your budgets

Once you’ve reviewed your Amazon account performance, it’s time to take a look into the future.

Based on your account’s past growth trajectory, you should model your growth forecast for the upcoming year. From there, you can work with your finance teams to build an investment plan.

This is where a lot of smaller vendors get it wrong. They wait until Amazon presents them with an investment plan and then scramble to understand whether the ask is justified.

That’s not a position you want to find yourself in. Instead, take a proactive approach and plan your targets upfront.

Tip: Align with your VP of Sales and Commercial Directors to ensure they understand that Amazon is neither a typical retailer nor marketplace. Investments often have to be made upfront to see the desired results, which is different to the rest of your retail partners.

Know your value

By now you should have a pretty good understanding of your past performance with Amazon and a first understanding of your future budgets.

The next step is to identify your brand’s position in the Amazon category. This allows you to better understand your negotiation power.

If you’re one of their top ten brands, you will have more leverage than a vendor that ranks outside the top in any given category.

So where do you find that info?

You’re likely already working with the leading market research company in your industry. It’s crucial that you’re leveraging their reports.

For example, Nielsen offers tailored category landscape reports that will help you understand key category trends and identify which subcategories, manufacturers, brands and items play the biggest role in driving sales.

Tip: The value of your brand goes beyond your category position. You may have gained insights into the importance of your brand from previous strategy conversations with Amazon. Remember that selection not currently offered to Amazon is only one of many levers to play within your annual negotiation.

Understanding your value is a key step in the preparation phase, so do your homework properly. It will largely determine your negotiation strategy and thereby your commercial success with Amazon.

Prepare scenarios

Amazon spends a lot of time preparing and planning the annual vendor negotiation process. So you should too!

Once you’ve gathered your data and know what budgets and value you bring to the table, start preparing different scenarios. You should be clear about how an ideal, realistic, and worst-case scenario would look in your AVN process.

For example, what is your contingency plan if Amazon asks for a 5% increase in trade terms? Or: What if Amazon stops selling your products due to low profitability?

Scenarios like the above may sound unrealistic at first but believe me when I say that they happen all the time.

So you and your teams need to plan ahead. You should know whom you have to inform in your logistics, finance and sales department if things fall out of place.

Start drafting your scenarios by keeping the following points in mind:

• Your Amazon negotiation strategy
• Timelines of the negotiation
• Escalation stakeholders
• Escalation roadmap
• Contingency budgets
• Red lines of your negotiation

Have an exit strategy

Once you have prepared your negotiation scenarios, you will naturally come across the following question:

What if you can’t reach an agreement with Amazon?

The answer depends a lot on the importance of Amazon to your business. If they only account for a small proportion of your total sales, you may be able to shift your focus to other retailers instead.

But if the online marketplace is a major gatekeeper for your online growth, you need to consider other options.

Instead of shutting down your Amazon business, switching from a 1P to a 3P or hybrid relationship can help manage your profitability.

Whatever your situation, an exit strategy will help you assess how flexible you can or cannot be if negotiations stall.

Having clarity about possible scenarios before the actual negotiation begins ensures that you don’t make the wrong decisions later on due to time or commercial pressure.

Phase 2: Kick-off meeting

After finishing your preparations, it’s time to get serious. Around the fourth quarter of each year, you will likely receive an email from your Vendor Manager asking for a meeting to discuss the joint business.

Some Amazon buyers will call it a “Joint Business Plan”, while others will not give it a name altogether. Whatever the wording – this meeting marks the start of your annual trade negotiations.

So let’s take a look at what you can expect from it.

Meeting structure

Your Vendor Manager will either invite you to their office or hold the kick-off meeting virtually. These meetings can last between two and up to six hours. Either way, expect Amazon to lead the meeting.

The typical meeting agenda of an AVN kick-off looks like this:

1. Overview of Amazon initiatives and category trends
2. Review of the joint account performance
3. Priorities for the next 12 months
4. Growth target incl. a proposal for future trading terms

Although you may be used to presenting your product innovations to your other retailers in such meetings, don’t expect your Amazon buyer to reserve any time for that.

Amazon negotiates very transactionally and typically shows little interest in your product roadmap. It’s frustrating, but that’s the way it is.

Required attendees

Before you accept the meeting invite, it’s always a good idea to ask for a list of Amazon meeting attendees. This will help you mirror Amazon’s stakeholders at a similar seniority level from your side.

For example, if a Senior Vendor Manager is leading the meeting, you should mirror them with a Senior Account Manager from your side, and so on.

Tip: Limit your team’s attendance to as few participants as possible. That way, you can bring in more senior leaders if negotiations stall later on.

Amazon’s Key Performance Indicators

During the kick-off meeting, your Vendor Manager will use a handful of KPIs to make their business case. So let’s take a look at the metrics you should know about:

PCOGS or Shipped COGS

Short for Product Costs of Goods Sold. It is a revenue figure that takes your cost price to Amazon and multiplies it by the volume sold to their customers.

Vendor Cost Price * Volume Shipped to Amazon Customers

Net Receipts

Similar to PCOGs, but this metric multiplies your cost prices with the volume that you as a vendor have shipped to Amazon warehouses.

Vendor Cost Price * Volume Shipped to Amazon Warehouses

Net Pure Profit Margin (Net PPM, or: Procurement Margin)

The main profitability metric that Amazon refers to when talking about a vendor’s bottom-line performance. It takes the average selling price, deducts the cost price and adds your back-end terms.

Revenue – PCOGs + Terms

Note that back-end terms exclude investments into Amazon Advertising and any chargebacks. You can also find a detailed Net PPM definition here.

Lost Buy Box (LBB)

Lost Buy Box measures the number of times Amazon could not win the Buy Box because other marketplace sellers could beat its price.

The lower the percentage, the better your direct reach to Amazon’s customers.

Number of lost buy boxes / Total number of detail page impressions

Procurable Out of Stock (ROOS)

ProcOOS measures the availability rates of Amazon. It’s an output metric that indicates the operational performance between vendors and Amazon.

Having your ProcOOS value below 10% is great. If it is below 5%, it is considered best in class.

Number of times Amazon was out of stock / Total number of detail page impressions

How to deal with the first Amazon ask

After reviewing your brand’s performance and future priorities, your Vendor Manager will close the meeting by presenting you with an initial growth forecast.

This forecast is typically derived from your previous growth trajectory but is unlikely to consider your actual growth potential through, e.g., new product launches or product mix changes.

Still, Amazon is likely to put a price tag on that growth. Investment asks of four to eight per cent are common. The approach is to anchor high so that there is enough room to negotiate over the following weeks.

At this point, the number one rule is to stay calm and not get emotional. Once you see the figures, follow a pragmatic approach. Ask how and why the proposal was structured the way it was presented and make note of the answer.

Tip: Disagree early on if statements made are not correct. Make your Amazon buyer aware of any missed targets from previous negotiations. Raising these issues early will help you position yourself.

Again, I would not recommend agreeing or disagreeing with the terms presented during the session.

The kick-off meeting is mostly about Amazon launching the negotiation process. Your Vendor Manager is likely to have a few of these meetings in the same week they meet you.

So after Amazon has explained its proposed terms to you, end the meeting and agree on the next steps and expected timelines. That’s all there is to it!

Phase 3: Negotiating with Amazon

Now it’s finally time to negotiate. After your Vendor Manager has sent over their investment proposal, review it in detail.

Here’s where the quality of your preparation comes into play. If you’ve done your homework, you will be able to easily assess whether the proposed investment areas align with your growth ambitions.

If they do, then great! Your job is now to ensure you’re paying a lower than the proposed price for the added benefits.

But if the proposed investment structure does not reflect your strategic ambitions (or worse, isn’t commercially feasible), you need to prepare for a much tougher round of negotiations.

Tip: Amazon does not expect you to accept their first proposal as is, but they expect you to provide feedback promptly. So make sure you respond to their first email within five to ten days.

Negotiation mechanics

For many, negotiating feels like a very complicated process. There are many pitfalls, and the outcome often seems unpredictable.

Experienced negotiators know that this is not the case. However, the secret to a successful commercial alignment is to know the underlying mechanics.

The ZOPA framework

When two parties come together to negotiate, they will typically present each other with a so-called anchor.

Each anchor represents the best-case scenario for that party to which the other is unlikely to agree with. Therefore, it sits in the Zone Of No Agreement (ZONA).

It’s a bit like a Turkish bazaar: The seller anchors with their highest selling price (e.g. $20), while the experienced buyer asks for a much lower one (e.g. $10).

If neither party moves from their original offer, it is unlikely that the negotiation will conclude successfully. Therefore, a negotiation typically involves several iterations in which both parties approach the Zone Of Possible Agreement (ZOPA).

The Zone Of Possible Agreement is the area where both negotiating parties can find common ground. In other words, they will compromise and reach an agreement in this area.

In our bazaar example, both parties may agree on a final price of $15, as it still returns a profit for the seller and provides enough value to the buyer.

So how does this translate to your annual negotiations with Amazon?

When Amazon presents their first ask (i.e. anchor), it is unlikely that you as a vendor will simply agree to it. This is because their first ask likely sits in your Zone Of No Agreement (ZONA).

Conversely, Amazon is unlikely to agree to the first proposal you present because they assume it is your best-case scenario and does not reflect your true willingness to invest.

As a result, you should always anchor your counter offer at a much lower base than where you want to close the negotiation.

Negotiating commercial terms

You’ll remember me saying that negotiating with Amazon can feel a little different than with your other retail customers.

But what does that actually mean?

Put simply, there will be a lot of emails going back and forth between you and your Vendor Manager. They don’t have much time to spare, so don’t expect to have a lot of phone calls or face-to-face meetings with them.

That’s why your response to Amazon’s first proposal must clearly position your central asks.

These could be cost price increases, a reduction or a restructuring of existing trading terms.

In any case, you should outline where your business has invested in the joint partnership over the past twelve months:

• Have your costs to serve Amazon gone up?
• Have you delayed a mid-year cost price increase?
• Etc.

Try to quantify this impact on an annual basis and express it as a percentage of your Amazon sales. Highlighting these investments will help you build your case and positioning in your negotiation.

Want a tried-and-tested tool to track and quantify your AVN results? Check out my Excel-based negotiation calculator. ^NEW

You should always insist on getting an overview of the margin development of your account by month for the past year.

This information will help you understand whether any commercial support requested is justified. If Amazon does not share this information, you know that it’s probably a bluff.

As you can see, persistence and creativity are key to successfully aligning trade terms with Amazon. But even if you take the most rational approach, you sometimes find yourself confronted with a Vendor Manager who wants to get it their way. They may choose to “escalate”.

How to handle disincentives

Every now and then, Amazon may take measures to speed up the annual negotiation process. This happens mainly when commercial discussions have been ongoing for several weeks without significant progress.

Amazon is known to use various tactics to accelerate negotiations, ranging from suspending the Buy Box to redirecting traffic or even pausing orders entirely.

Regardless of the punitive action, you should know that these are usually short-term measures to escalate unresolved commercial issues between both companies.

Note that there are a couple of red lines that may trigger punitive actions against your account, such as:

• Deliberately delaying negotiations,
• Showing little commitment,
• Asking for a significant reduction in terms,
• Blocking their teams from reaching out to your leadership team,
• Not agreeing to backdate terms.

Amazon wants to conclude negotiations with its vendors as quickly as possible so they can move on to other pressing tasks.

If you find yourself in a situation where Amazon has introduced measures against your brand, be prepared for a short-term sales disruption and work with your Vendor Manager on the sticking points.

Know that Amazon will not typically uphold these measures for a long period of time, as they have an equally negative impact on their CX.

However, it is of utmost importance that you take these measures seriously. Only then will you be able to resolve and conclude your negotiations.

Related: Defensive Strategies for Amazon Vendors: How to Protect Your Sales and Profits Margins

Utilising escalation mechanisms

While you could see an escalation as something you strictly want to avoid, think again.

Earlier in this article, we discussed that Amazon purposefully integrates the escalation phase into its negotiation process. Why?

Because it allows Amazon to access more senior stakeholders on the supplier side.

Let that sink in for a moment.

If you think about it, this is pretty great news for you as well. Because it also gives YOU the chance to access their senior leadership!

Most vendors have no idea who sits above the Category Leader of their Amazon category. This can make it tricky to build a truly strategic relationship.

So depending on your situation, escalations can be an effective way to bring Amazon’s leadership to the table.

… which in turn can help you leave detailed discussions behind that your Vendor Manager would otherwise always come back to.

Phase 4: Measure & Control

The last step in the Amazon negotiation process is to put your new trading terms into action.

Your Vendor Manager will typically send you all agreements for your confirmation via Vendor Central.

But before you start confirming those contracts, there are a couple of things you need to consider.

First, ensure your Vendor Manager sends you a written overview of the agreement structure, including a clear summary of which of the existing contracts are to be amended and which are to be terminated.

Second, make sure that your contract period matches the period of service provision. For example, if you enter into an AVS contract, make sure that the contract start date matches the actual service start date.

Third, don’t sign anything you’re not 100% clear on. I know, it sounds like a no-brainer. But I’ve seen it too often that account managers confirmed agreements without understanding them entirely. Don’t do that!

Once your new arrangements have been set up, ensure that your audit teams have access to them via Vendor Central.

Tip: Let your audit teams review the Amazon account figures on a monthly basis. That way you can be sure that any deviations from the agreed terms will be discovered early on, giving you time to address and rectify these issues during the current contract period.

Conclusion – Take ownership of your Amazon business

Annual trade negotiations can quickly become very complicated. Every negotiation is different, and there is no one-size-fits-all approach.

However, I hope this guide has given you an insight into how to prepare, negotiate and control the outcome of your Annual Vendor Negotiations with Amazon.

If you found value in today’s article, please share it on LinkedIn or any other social platform.

Need help with your Amazon negotiation?

Want a blueprint that shows you how to effectively prepare and conduct your negotiations with Amazon? I can help your team navigate the complex process and achieve the desired results.

Explore: Amazon Annual Negotiation Training (AVN) Workshop

Bonus: Frequently Asked Questions

The above outlined process illustrates the typical stages of an Amazon vendor negotiation. However, I also want to share some tactical advice to help your 1P business get ahead.

If you have another question I should answer, ping me on LinkedIn.

The post How to Negotiate Vendor Terms With Amazon in 2026 [Complete Guide] appeared first on Consulterce.

They’re wrong.

You might disagree, so hear me out.

A few weeks ago, I found myself presenting to the board of a Fortune 500 company. Their business was performing well on Amazon. They were on track to reach their annual growth targets, maintained healthy margins, and executed a robust strategy to navigate the current macroeconomic uncertainty.

Yet despite their success, almost all board members – including the CEO – remained uneasy about Amazon. And it didn’t take long until I understood why.

Only a few minutes into my presentation, the CEO asked:

“Why isn’t Amazon interested in partnering with us across all retail channels? Why are we left with the same tools and processes than our competitors, despite our significant position in the category?”

As I reflected on this question, I realised why so many leadership teams struggle with the online retailer:

They believe there’s a hidden partnership opportunity that their teams simply haven’t been able to unlock.

The truth, however, is much more revealing.

The illusion of a partnership

In its pursuit of building the Everything store, Amazon has turned into an algorithm-led, transactional retailer.

Its leadership team has long recognised that traditional retail ‘partnerships’ often come at the cost of lower margins and performance defects – compromises that would prevent Amazon from scaling beyond its competition.

And while their Retail team may attend your QBRs and leadership meetings, don’t mistake this for a partnership.

It’s solely because you command meaningful market share or category relevance. In other words, Amazon is interested in the status of your brand and the value it offers to your shared customers.

They’re not talking to you because they ‘like’ you or your teams.

This is thinking stuck in the early days when Amazon was more dependent on brands than brands were on Amazon.

Today, the reverse is true.

Why partnerships with Amazon won’t work

If you seek a partnership approach, trying to develop tailored strategies, brand campaigns or brand days/weeks, you’re overlooking an important point:

Amazon seeks standardisation, which unlocks automation and cost efficiencies. Not partnerships that increase the complexity of managing the joint business by ignoring SOPs and automated processes.

Most brands that claim to have a strong ‘partnership’ with Amazon really mean the online retailer bends the rules for them in exchange for additional trade investments.

The moment you remove the word ‘partnership’ from your Amazon vocabulary, you start building a strategy that works with the marketplace – not against it.

The post Why You Don’t Have a ‘Partnership’ With Amazon appeared first on Consulterce.

So of course, they all have their unique way of doing business with you. Some sell directly to consumers, others sell to smaller retailers. And some may even sell your brand in countries where you don’t want to conduct business in yourself.

As a result, your incentive models have turned complex, too. Retailers placing large bulk orders qualify for greater discounts, while smaller distribution partners may benefit from longer payment terms with you.

Whichever the case: some of these resellers will ultimately start selling your products on Amazon. They see the potential of your brand and they get the product directly from the source. So why wouldn’t they sell it on one of the largest online marketplaces in the world?

The Cost of Inaction

Most brand leaders don’t recognise the problem that comes with others selling their products on Amazon. After all, your brand still gets the sale, right?

Wrong.

By allowing others to sell your products on Amazon, you lose control over three critical components vital to your reputation as a brand:

• Pricing
• Content
• Inventory

This enables others to directly compete with you for Amazon’s Buy Box, leading to a downward spiral in price that hurts your brand positioning and may introduce further consequences for your own business with Amazon.

Just ask your sales team about the margin compensation requests they receive from Vendor Managers whenever your account falls below Amazon’s Net PPM target threshold.

But even if you don’t actively compete with resellers on Amazon, your brand may take a hit. That’s because many distribution partners will look first and foremost after their own business.

This means they will prioritise their speed-to-market by uploading outdated or incomplete content to your listings and not paying close attention to inventory levels. Which ultimately leads to an inconsistent customer experience, causing shoppers to consider other brands in the market.

It’s what I call the ‘Lost Buy Box Fallacy’ – you think you get the sale anyway. But at what cost?

The post The Lost Buy Box Fallacy appeared first on Consulterce.

If you’re looking to improve your vendor margins on Amazon, chances are you plan to increase your cost prices. After all, Amazon will simply pass the cost increase on to the end customer, right?

Wrong!

Amazon is a price follower, meaning it will match the lowest price of a product in the market. Cost increases make it harder for Amazon to maintain a margin, so their Vendor Managers are likely to reject your cost increase right away.

But there are ways to increase your chances of getting a CPI approved.

Here’s the process we’re going to cover:

1. Bundle cost price increases
2. Upload cost changes to Vendor Central
3. Inform your Vendor Manager
4. Negotiate margins and dates
5. Leverage your alternatives

Step 1: Bundle cost price increases

As with any retailer, you can expect cost price negotiations to be a lengthy and complex matter to deal with.

Amazon has developed sophisticated playbooks to counter cost change requests of their vendors.

Vendor Manages are likely to demand detailed information about the cause of the cost change and use tactics to delay cost negotiations altogether. They also often do not engage in cost negotiations outside of your annual vendor negotiations.

So if you want to increase your chances of a timely review, I always recommend submitting a single CPI request for as many products as possible.

You should also tie CPIs to your negotiation ask during your JBP discussions, as Amazon is unlikely to accept any cost changes in the months thereafter.

Related: ASP Compression Analysis: Calculate Your CPIs with Amazon

Step 2: Upload new cost prices to Vendor Central

Next, upload your new cost prices for all line items to Vendor Central.

However, don’t be surprised if Amazon rejects your CPI request after just a few hours or days. Their systems are known to reject many cost increases by default, while cost decreases are often approved immediately.

So why do this step in the first place?

Because your Vendor Manager can later override the system and manually approve your uploaded cost changes in Vendor Central.

They also want to see that you’ve exhausted the tools available to you. So make sure to complete this step to avoid any delay in the discussions with your Vendor Manager.

Related: Profit Margins: Definition, Formulas and Examples

Step 3: Inform your Vendor Manager

Now it’s time to inform your Vendor Manager about the upcoming cost changes. Make sure to send them an email with the exact cost changes for each line item and include the following information in your email:

• Average CPI increase in %
• Reason for the cost change
• Effective date of the cost change

It’s important you highlight that the cost change is driven by a sustained increase in your own cost structures and not by a short-term fluctuation in costs.

That’s because Amazon is likely to be concerned about increasing its long-term cost structure by accepting CPIs that short-term trends may cause.

Accepted reasons for changes in the cost structure include:

• Increase in shipping costs
• Rise in raw material costs
• Movements in currency exchange rates
• Etc.

Lastly, inform your Vendor Manager that your teams will reject any items on orders placed after the effective date of the cost change if their price has not been adapted.

Amazon is known for placing orders at the old cost price and not retroactively compensating vendors who fulfilled those orders at the lower price.

Informing your VM about the timeline and the prospect of availability issues creates a sense of urgency that will give your CPI request a higher priority.

Related: How to Negotiate Vendor Terms with Amazon

Step 4: Negotiate margins and dates

Now that you have entered the negotiation phase, your Vendor Manager will try to fend off the cost increase. They are likely concerned that your account’s margin will plummet, as their pricing strategy will still follow the market.

Most brands get it wrong at this point because they don’t use a data-driven approach to substantiate their CPI request.

Vendors that can demonstrate that the margin of their account is unlikely to be affected by the cost change will significantly increase their chances of a successful negotiation.

Proven ways include:

• Demonstrate MSRP/RRP increases in line with CPI.
• Highlight CPI is due to permanent reasons (raw material prices) vs. short-term reasons (temporary cost increase).
• Illustrate that other retailers have already accepted the increase.
• Indicate how Amazon can maintain its margin %.

If your Vendor Manager is still concerned about the impact on their margin, consider offering them a final bulk order at the old price in exchange for accepting the cost increase.

Related: How to Increase Your Average Selling Price on Amazon

Step 5: Leverage your alternatives

So what if Amazon does not agree to any of your cost changes? If all fails, you should immediately stop shipping affected items until Amazon accepts the CPI.

Depending on your negotiating leverage, stopping deliveries may cause your Vendor Manager to reconsider their decision.

However, if you do not get any positive response from Amazon after two weeks, consider pursuing an FBA/3P strategy. In other words, set up a 3P account and start selling directly to consumers.

While the latter requires your teams to learn the skills needed to run a 3P account, it makes you less dependent on Amazon accepting your CPIs in the future.

Related: Moving from Vendor to Seller Central with Amazon

Final thoughts

Raising cost prices with Amazon is anything but a piece of cake. However, following the tips from this article will significantly increase your chances of getting your Vendor Manager to approve your CPIs.

Be sure to leverage your negotiation position and consider ceasing shipments, as these measures also increase the pressure on your VMs’ decision not to accept your cost increase and may lead them to return to the negotiating table.

Need help with your cost price negotiations?

If you want to learn more about CPI negotiations with Amazon, get in touch. I offer tailored advice to help you navigate the discussions with your vendor manager.

I also run a leading negotiation training that teaches you how to secure better deals in your next JBP with Amazon.

The post How to Successfully Negotiate Cost Price Increases With Amazon appeared first on Consulterce.

Yet most brands struggle because their teams either lack visibility into their own performance or cannot connect it with Amazon’s.

Dashboards can help, but data alone won’t move your business forward. What matters is enabling your teams to act by escalating blockers quickly and realigning priorities across the business.

So today, we’ll explore how to structure, prepare, and deliver high-impact Amazon Business Reviews that help you move the needle and win the buy-in of your leadership team.

We’ll cover:

• What a business review is
• Why they are important
• When to hold business reviews
• How to run effective business reviews
• Common pitfalls to avoid

What is an Amazon business review?

You can think of an Amazon Business Review as a structured reporting that combines commercial, operational and strategic data points to evaluate how your business is performing on Amazon.

Unlike standard dashboards or ad-hoc reporting mechanisms, business reviews translate data points into insights about existing challenges and opportunities for leadership and functional teams within your organisation.

As a result, these reporting workflows allow you to review your performance versus plan, understand key blockers to budget targets and inform leadership teams about any intervention areas to bring the business back on track.

Why should you run regular business reviews?

Running regular Amazon Business Reviews gives you the visibility and structure to manage the customer account proactively instead of reacting when it’s too late.

This is important, as spotting performance trends early allows your teams to identify where intervention is needed to protect your bottom line or where positive trends can be amplified to drive sales growth.

Vendors that run regular business reviews also support building the muscle to respond to Amazon’s Vendor Management in a more informed and data-driven way. That’s important, since Net PPM targets, margin compensation requests, and annual negotiations require your teams to think on their feet.

Last but not least, regular reviews break down silos across sales, marketing, finance and supply chain. By showing how each function impacts the Amazon performance of your brand, you create the structure to escalate blockers quickly, secure resources and gain buy-in from senior stakeholders who need to see why Amazon deserves attention.

When should you run a business review?

Business Reviews work best when they are part of a fixed schedule. Ad-hoc reporting may highlight urgent issues, but it rarely builds the consistency and accountability you need to manage Amazon effectively.

I strongly recommend running weekly, monthly and quarterly business reviews, and here’s why:

Weekly Business Reviews (WBRs)

WBRs are short, focused reporting mechanisms to track the latest developments in your Amazon business and flag areas that may need immediate intervention.

Tip: Limit the time your teams spend on a WBR to no more than 45-60 minutes. Reviewing only one week doesn’t allow you to draw meaningful conclusions from any data spikes you might experience. Instead, focus on immediate intervention areas.

Monthly Business Reviews (MBRs)

MBRs allow for a deeper look at your performance versus plan and budget forecasts. They connect the dots between sales, logistics and marketing, allowing you to discuss key blockers and opportunities across divisions.

Quarterly Business Reviews (QBRs)

QBRs are strategic reporting mechanisms that zoom out from the reactive Amazon account firefighting. They inform about your progress against annual plans, evaluate major initiatives and any adjustments to the strategy for the account. Most QBRs run half a day with leadership and cross-functional teams present.

How to run effective Amazon business reviews

Chances are you’re already running some form of business review. But ask yourself: do these sessions truly drive action beyond your sales team, and influence functional leads to make better decisions for your Amazon business?

A business review should never be just a box-ticking exercise. Instead, it should help your teams understand the drivers of your Amazon performance, translate those insights into actions and assign clear ownership of any defined follow-up steps.

If you want to establish high-impact business reviews in your organisation, I recommend following my P.R.I.M.E. Reporting Framework:

• Plan your budgets and priority KPIs
• Ready your tools and automate the data delivery
• Implement clear ownership and escalation paths
• Maintain a regular reporting schedule
• Establish standardised reporting processes

1. Plan your budgets and priority KPIs

The first step in running effective Amazon Business Reviews is deciding what you actually want to measure. Too often, brands look at weekly, monthly, or year-over-year trends without benchmarking their performance against their own commercial targets.

This leads to a lot of reporting activity, but no clear sense of whether the business is on track to hit its goals. You can avoid this by defining annual budget plans that inform your quarterly targets across three KPI pillars:

• Top Line (Sales)
• Bottom Line (Margins)
• Operational Performance

Below are some examples of which KPIs fall into each category:

2. Ready your tools and automate the data delivery

Amazon is the world’s most data-driven retailer. But that doesn’t mean you will find every data point in Vendor Central’s Retail Analytics. On top of that, Amazon’s API changes almost every month, introducing data accuracy issues that require entire tech teams to resolve.

A better approach is to use tools that handle the complexity for you. Solution providers like Pacvue Commerce, Reason Automation or Catapult are built to keep pace with Amazon’s updates and give you reliable (Power BI) dashboards to understand your vendor performance.

Let me be absolutely clear: Automating your data delivery isn’t a luxury. If your teams still spend hours downloading reports from Vendor Central or fixing broken Excel files, you are wasting valuable time that could be used to improve the performance of your business.

Instead, use service providers to manage data accuracy and update dashboards whenever Amazon’s API changes. That way, your teams can focus on what really matters: analysis, decisions and actions that drive your sales growth and profitability.

3. Implement clear ownership and escalation paths

Once your data delivery is automated, you want to think about the ownership of your Amazon business reviews. Without clear accountability, reviews turn into endless reporting sessions where no one takes action.

Your sales team should take the lead by owning the content and narrative of the review. They deep dive into the KPIs, understand trends and provide the key insights that frame the discussion.

Functional leads such as finance, marketing and logistics should not be left out of this conversation. Instead, have them attend your MBRs and QBRs to ensure that reviews don’t stop at topline results but also address profitability and operational realities.

One important rule is to always assign single-point accountability for each action item, since shared ownership quickly leads to inaction.

Defining a RACI model (Responsible, Accountable, Consulted, Informed) can help maintain clarity, especially when preparing for leadership escalations or when priorities need to be realigned.

4. Maintain a regular reporting schedule

Now, reporting consistency is what turns reactive data deep-dives into a proactive mechanism that informs your team’s decision-making on Amazon. This doesn’t have to be time-consuming either.

Hold your Amazon reviews early in the reporting cycle, ideally on the same day each week, month or quarter. This creates a routine that helps your teams know when it’s time to evaluate your account and make course corrections before it’s too late.

Then, track KPIs at the aggregated account and brand level, but also have your teams drill down to the ASIN level where needed. This balance allows you to understand the full picture of your account performance and spot specific issues in your assortment.

Use Weekly Business Reviews (WBRs) to monitor progress and resolve ad-hoc issues. Involve finance, marketing and supply chain in Monthly (MBRs) and Quarterly Business Reviews (QBRs) to align on profitability, operations and marketing plans. These cross-functional sessions ensure your Amazon strategy stays connected to the broader business priorities.

5. Establish standardised reporting processes

With Amazon offering an overwhelming number of metrics, business reviews can quickly spiral into hours of analysis. Worse, without structure, these sessions often turn into lengthy reports that describe performance but add little value to the profitable development of the account.

Thankfully, there’s an easy fix: Define standardised templates that reflect your business priorities and help your teams prepare business reports faster.

When reporting KPIs, use different levels of detail depending on the audience. Senior leadership often only want to understand topline sales, margin and key risks, while cross-functional teams should see detailed drivers at brand and ASIN level.

Each review should combine the following three layers of reporting:

1. Status Description

Example: In August, total Shipped Revenue (SREV) was $216MM, +$47MM (+28%) YoY and +$9.1MM (+4.4%) vs. plan.

2. Detailed Explanation

Example: Growth was driven by 1) GVs up +31% YoY from paid search traffic (+100bps), 2) ROOS down by -532bps YoY, which boosted growth of [product series], and 3) LBB down by -131bps YoY due to higher investment levels after the AVN.

3. Forward-Looking Actions

Example: To maintain topline growth, we plan to 1) [Action 1] (CTC +Xbps), 2) [Action 2] (CTC +Xbps), and 3) [Action 3] (CTC +Xbps).

This simple format keeps your reporting focused, ensures every metric is explained and ties insights directly to forward-looking actions with clearly assigned ownership.

Common pitfalls when running Amazon reviews

Even well-prepared business reviews can miss the mark if they overlook the commercial realities of your trade relationship with Amazon.

Too often, Amazon business reviews focus too narrowly on the net sales (sell-in) and gross margin performance of the brand. These metrics matter, but they only tell one side of the story.

Instead, you also want to monitor Amazon’s KPIs such as sell-out revenue (consumer demand) and Net PPM, as these give you visibility into what your Vendor Manager is optimising for and which levers are most likely to shape Amazon’s behaviour in and outside annual vendor negotiations.

Another common challenge is that vendor teams end up reporting into a void. Remember: Follow-up actions without alignment and accountability won’t create much impact.

You want to define priority KPIs with your leadership and Amazon’s Retail team so that every reporting drives decisions, improves your operational performance and increases the chances of winning the buy-in for initiatives that support the profitable development of your account.

Final thoughts

Running effective Business Reviews doesn’t come naturally to most executives. It requires a structured process that helps your team cut through complexity, align on the right priorities and take actions that protect your profit margins with Amazon.

But when reviews are supported with clear KPIs, automated data delivery, clear ownership, a regular cadence, and standardised format, they become a tool for influence rather than a box-ticking exercise.

Want to level up your performance reporting on Amazon?

Whether you want to upskill your team or overhaul your reporting process, I offer tailored consulting services that help 1P brands run a profitable business with Amazon. If you want to learn more, get in touch.

The post How to Run Effective Amazon Business Reviews (Step-by-Step Guide) appeared first on Consulterce.

Geopolitical tensions and newly introduced U.S. tariffs have added pressure to already complex vendor negotiations. These external shocks have forced many brands to revisit their investment strategies and cost structures with Amazon.

But despite the macroeconomic uncertainty, Vendor Managers remain focused on protecting Amazon Retail’s bottom line.

For my latest study, I partnered with Russ Dieringer and Claire McBridge from Stratably to unpack how this year’s negotiations played out for 1P suppliers and what shifts we’re seeing unfold in the vendor landscape.

Summary of Key Findings

1. Amazon remains a growth channel for 1P brands. 74% of vendors describe growth on Amazon as in line or above the category average.

2. Tariffs and macroeconomic uncertainties negatively impact growth expectations of brands. Vendors forecast an average of 13.1% sales growth with Amazon in 2025, down -315bps from 2024.

3. Vendor negotiations continue to be time-consuming, with the average negotiation lasting 3.2 months.

4. Joint Business Plans remain transactionally focused. Every 1 in 2 surveyed vendors described trade negotiations as either challenging or highly confrontational.

5. Despite margin compression year-on-year, most vendors rate their net margins with Amazon as either healthy (62%) or very healthy (6%).

6. Annual trade negotiations reduced profitability for 49% of vendors, while 40% reported no change in net margins.

7. Cost prices remained stable for 46% of vendors, while 22% accepted front-margin concessions and 33% successfully negotiated cost price increases with Amazon.

8. Trade terms increased by an average of +91bps YoY, compared to +69bps in 2024.

9. Amazon lacked new initiatives for vendors to invest in, leaving brands with limited options to allocate trade spend towards growth-driving activities.

10. Every 1 in 2 vendors experienced punitive measures during negotiations, including Buy Box suppression, order stop ships, and traffic diversion tactics.

11. Hybrid sales strategies are gaining traction among 1P brands. While 63% of surveyed brands still sell exclusively via Vendor Central, 47% say that a hybrid model is becoming increasingly relevant in 2025.

12. 80% of surveyed U.S. vendors expect to pass on tariff-related cost increases to Amazon, with profitable vendors planning the highest cost increases.

Amazon fuels growth for manufacturer brands in 2025

Despite geopolitical shifts and cautious consumer spending amid the introduction of U.S. tariffs, Amazon remains a growth channel for first-party vendors.

43% of surveyed brands reported that Amazon’s growth beat the category average, while 31% described growth as in line with category benchmarks. 27% of respondents stated that Amazon grew slower than the category.

When comparing these results with our survey from last year, we can see that Amazon’s growth performance has somewhat slowed. Overall, fewer brands have found Amazon outperforming category growth rates.

Vendors in the Consumables segment reported mostly steady to strong growth, with 72% stating their performance is either average (33%), faster (39%), or much faster (11%) than the category average. Only 18% reported slower-than-average growth, and no vendors indicated that their growth was significantly below expectations – a signal of relative stability in this essentials-driven category.

In contrast, performance in Softlines has been notably more polarised: 59% of vendors reported faster-than-average growth, but only 12% said their performance was in line with category benchmarks, and 30% reported an underperformance. This suggests that a smaller subset of fashion and apparel brands are significantly outperforming, while many others are falling behind, indicating an uneven demand recovery and tighter consumer discretionary spending.

Hardlines vendors were the most evenly distributed, with 32% growing slower, 34% reporting average growth, and 30% growing faster than the category average, pointing to a more fragmented competitive environment in this category.

Tariffs and macroenomic uncertainty have lowered the growth expectations of brands

Despite the introduction of U.S. trade restrictions, surveyed brands still plan to reach an average growth rate of +13.1% YoY with Amazon in 2025.

25% of vendors stated a 0-10% growth ambition, 34% planned with 10-20% growth, 13% expected sales to grow between 20-30%, and 11% of brands budgeted a growth ambition of >30%.

8% of respondents stated no growth plans, while another 8% expected a negative growth scenario in 2025.

Vendor negotiations lasted an average of 3.2 months from start to finish

Amazon remained laser-focused on profitability in trade talks with vendors in 2025. This bottom line focus saw many brands having to negotiate longer than usual, as most Vendor Managers were not ready to accept concessions to their investment demands.

On average, trade discussions lasted 3.2 months from start to finish.

16% of vendors indicated that their negotiations closed within 1-2 months. 73% said their annual trade discussions lasted between 2-6 months. 4% of vendors were in permanent negotiations that lasted longer than 6 months, while only 7% of brands saw negotiations close within four weeks after kick-off.

2 in 3 vendors consider annual vendor negotiations as challenging or confrontational

With brands and Amazon trying to protect their profit margins, nearly half (49%) of all surveyed vendors found AVNs to be challenging or very confrontational in 2025.

22% of vendors had a neutral sentiment towards trade discussions, while 24% found them generally positive, and 5% highly collaborative.

Despite the overall negative sentiment, fewer brands found Amazon to be very confrontational in trade discussions compared to last year. While there was a general uptick in brands that found negotiations challenging to deal with, more vendors perceived the discussions to be positive than in 2024.

Amazon remains a profitable sales channel for majority of 1P brands

Although 2025 AVNs were tougher than in recent years, two-thirds of surveyed vendors still describe their net margins on Amazon as “healthy” (62%) or “very healthy” (6%).

Brands point to Amazon’s consistent traffic, scaled retail media, and lower last-mile costs as the key offset to rising trade terms. Hardlines suppliers report the strongest profitability, while Consumables and Softlines feel a tighter squeeze from higher advertising fees and heavier discounting.

Even so, most respondents say Amazon remains a profitable ecommerce customer once the full customer P&L is considered.

Trade negotiations reduced profit margins for nearly half of all vendors

However, the impact on margins following AVNs is mixed. 49% of suppliers saw a year-on-year drop in profitability coming out of 2025 negotiations, largely driven by higher demands to invest into base accruals, AVS, and retail marketing programs.

Another 40% reported no material change, while 11 % managed to improve margins by trading investment for price increases or by carving out low-velocity SKUs.

Vendors that protected profitability most effectively entered talks with detailed P&Ls, clear walk-away points, and pre-modelled give-and-get scenarios.

Economic pressure led suppliers to keep cost prices stable – but shifts occured at both ends

Cost-price movement was muted overall: 46% of vendors held costs steady despite inflationary pressures.

22% conceded front-margin cuts to secure catalogue stability, typically in lower-priced CPG, while 33% successfully passed through price increases, supported by brand strength or category-wide hikes.

Suppliers that landed increases anchored requests in commodity indices, provided granular cost-to-serve data, and demonstrated incremental media support to protect unit economics for Amazon.

Trade investments into Amazon Retail have increased +91bps year-on-year

On average, brands ceded an additional 91 basis points of margin, posing a sharper jump than the +69bps recorded in 2024. Only 7% of all surveyed brands were able to reduce their trade terms during annual vendor negotiations.

The 91bps in incremental trade terms was largely invested into higher base accruals, the Amazon Vendor Service (AVS), improved payment terms, and bulk-volume discounts to fund sales through Amazon Business (B2B).

1 in 2 vendors experienced punitive measures during trade talks with Amazon

49% of surveyed vendors faced punitive measures during trade talks. Sanctions were reported across all product categories but were especially frequent among vendors in Consumables (47%) and Hardlines (52%) categories.

When penalties were applied, 74% of vendors saw Buy Box suppression applied to their listings, followed by the suspension of orders (29%) and measures to divert traffic from the brand’s product detail pages (27%).

Hybrid sales strategies are gaining traction among 1P brands to reduce sales dependency

Difficult vendor negotiations are seeing brands re-evaluate their reliance on an exclusive 1P distribution model. With 63% of surveyed brands still selling purely via Vendor Central, 47% say a hybrid (1P + 3P) model is becoming “increasingly relevant” to their 2025 strategy.

22% of surveyed vendors operate a hybrid selling strategy, either through their own 3P account or a 2P distributor. 7% of respondents indicated the utilisation of a holistic multi-channel approach, using both distributors and their own 3P account to reduce their reliance from Vendor Central.

The rise of hybrid strategies in 2025 is driven by the desire for pricing control, margin protection, and channel resilience and is often intended as a buffer against sudden product delistings and promotional constraints imposed by Amazon Retail.

The most common playbook is to shift long-tail or innovation SKUs to a controlled third-party seller account to avoid CRAP designation and reclaim pricing agility, while keeping high-velocity core lines in 1P for scale and advertising efficiency.

63% of brands expect U.S. tariffs to directly lead to higher consumer prices

When asked about the expected impact from U.S. tariffs, 76% of US-based brands cite higher cost of goods as primary concern, followed by rising consumer prices (63%) and reduced margins with Amazon (54%).

Nearly half of vendors (44%) are actively considering or already shifting production out of China to mitigate cost exposure. Meanwhile, softer indicators like reduced promotional spend (35%) and lower growth forecasts (36%), reflect the expected commercial headwinds from trade policy uncertainty.

Only 15% of surveyed U.S. brands expect no meaningful impact on their business from U.S. tariffs, confirming the widespread disruption.

80% of vendors plan to pass on tariff-related cost increases to Amazon

Facing tariff-linked cost increases, most U.S. vendors plan to pass through at least part of the pressure. Rather than clustering around moderate increases, vendors are split between two ends of the spectrum: either opting for no increase at all or planning aggressive cost price hikes.

One in three vendors (33%) are preparing to increase cost prices to Amazon in the range of 5-10 %, while another 22% expect to raise prices of more than 10%.

Only one in five brands plan to hold prices flat, showing that cost pass-through is quickly becoming the norm to offset macroeconomic headwinds in 2025.

Profitable U.S. vendors lead the way in tariff-driven cost hikes to Amazon

Among brands profitable on Amazon, 19% do not intend to raise prices, while a striking 57% plan to increase cost prices by more than 5%.

A similar trend can be seen among unprofitable vendors. While 27% plan no changes, 50% anticipate price hikes above 5%.

Notably, moderate adjustments between 1% and 5% remain a minority view across both groups, suggesting that few brands believe marginal adjustments are sufficient to offset the tariff impact.

Instead, vendors are pursuing either a wait-and-see approach or bold adjustments to protect margins, reflecting the level of uncertainty in the current tariff environment.

Conclusion

This wraps up our recap of the 2025 Annual Vendor Negotiation cycle. I hope you found the presented insights useful for the further development of your Amazon business.

If you found value in today’s article, please share it on LinkedIn or via email with your coworkers.

And if you participated in the survey, Thank You! Without your support, this study would not have been possible.

Background of survey and profile of survey participants

The survey was conducted from May to June 2025 and targeted representatives of first-party Amazon suppliers. A total of 180 survey responses were recorded. The survey was conducted anonymously.

Vendor business size with Amazon

29% of survey respondents reported annual Amazon sales between $0 and $10 million. Another 46% of surveyed participants reported annual Amazon sales between $10 and $50 million. 8% of survey respondents reported annual Amazon sales between $50 and $100 million. 17% reported annual Amazon sales of over $100 million.

Vendor categories of survey participants

48% of survey participants sell items in the Hardlines goods product family, 42% are actively selling Consumer Goods (Consumables), 9% were manufacturers in Soft Lines (Fashion, Luxury, and Accessories), and 1% in Media (Books, CDs/DVDs, Video Games) categories.

Seniority of survey participants

The seniority of survey participants ranged from mid-level to C-Suite. 24% of participants said they were mid-level managers, 48% were senior managers, 18% were executives, and 10% were part of the C-Suite or owners of the company.

Geographical distribution of survey participants

The survey participants were located in multiple regions. 56% of respondents were located in North American markets, 44% in Europe, and 1% in Asia-Pacific markets.

Disclaimer

The survey is not and was not sponsored by, run, or affiliated in any way with Amazon.com, Inc. or any of its subsidiaries.

The post Global Amazon Survey: Key Insights From Annual Vendor Negotiations in 2025 appeared first on Consulterce.

Whether you’re managing a brand in the US, Asia, or Europe. The recent introduction of U.S. tariffs has already brought a great level of uncertainty to most manufacturing brands. Currency fluctuations and supply chain volatilities are once again becoming the norm.

J.P. Morgan now predicts a 40% chance of a global recession in 2026:

Protecting your 1P vendor margins is difficult enough in a stable economy. But in times of uncertainty, your teams must apply an extra layer of commercial rigour – or else lose profitability very quickly.

So today, let’s take a closer look at how Amazon 1P vendors can prepare for an economic downturn.

1. Gather your benchmark data

Before you can strengthen your business, it’s critical to know where you stand. Start by capturing the status quo of your most important KPIs – before market conditions shift further.

Tools like Stackline, Profitero, or commerceIQ can help your teams monitor real-time profitability metrics such as Average Selling Prices, Net PPM and gross margins at the ASIN level. This also allows you to pay close attention to any negativ mix effects that pose headwinds to your customer P&L.

Equally important is defining your addressable market on Amazon. Thankfully, virtual shelf analytics providers allow you to build a clear picture of your target market, whether through keyword-based monitoring or Amazon browse nodes.

Use this data to map your brand’s category share over the last 6- and 12-months. This extended lookback period helps eliminate seasonal demand fluctuations and short-term effects of consumer behavioural changes.

Once your benchmarks are in place, pressure-test your commercial plans through scenario planning. For example, have your teams define key priorities to increase market share beyond price promotions, e.g., through offsite traffic via social media campaigns.

Questions to ask yourself and your team:

• Do we have visibility on our baseline profit metrics by region, channel, and hero SKUs?
• Have our teams access to reliable and real-time market share data on Amazon’s virtual shelf?
• Do our teams have an action plan for when market share declines, beyond price promotional activities?
• Do our teams monitor product selling prices on Amazon and other e-retailers?

2. Protect margins with off-cycle negotiations

Now, I get it. If you’ve just closed your annual vendor negotiation with Amazon, chances are you don’t want to disrupt your trade by reopening discussions about cost prices and trade investments.

But the truth is: Keeping your old cost prices most likely does a disservice to your business. That’s because tariffs and other trade restrictions were not factored into your 2025 budget.

If your landed costs have increased due to import duties that put your margins under pressure, it’s vital that you factor this new reality into your Amazon cost price base.

While Vendor Managers often claim that cost prices can only be changed during the AVN, know that this is a tactic, not a rule. Don’t let it stop you from renegotiating your cost prices with Amazon mid-year.

To make it easier for your Vendor Manager to accept cost changes, consider offering a cost support agreement limited to a maximum of 60 days.

Questions to ask yourself and your team:

• Are our current trade terms profitable enough to wait until the 2026 AVN?
• Are there any products that we may need to discontinue without a cost price increase?
• Can we divert sales to other retailers in case Amazon rejects our cost increase?

3. Rationalise your product portfolio

Next, let’s take a look at your assortment. Times of economic uncertainty can be a great opportunity to reassess your portfolio strategy with Amazon. Now is the time to prioritise high-margin, high-velocity SKUs and remove products that drag your bottom line.

You can use my AVP Matrix to segment your portfolio by net margin and Amazon’s Net PPM. Consider delisting products that Amazon aggressively price-matches and hold little strategic value for customer acquisition. The same goes for products subject to constant chargebacks, shortages, or logistical issues.

These decisions also unlock negotiation leverage. In CPG categories, Amazon often pushes for access to low ASP (“Nielsen”) selection that is widely distributed but structurally unprofitable. Consider making access to these products subject to conditions that improve your cash flow or trade investments.

Looking ahead, it is equally important to apply the learnings from your portfolio audit to new product launches. You may cancel or delay the launch of innovations with low velocity projections until market conditions stabilise.

Questions to ask yourself and your team:

• Which SKUs are unprofitable once all Amazon fees and allowances are considered?
• Do we have a clear framework to prioritise high-margin, high-velocity SKUs and is our budget focus aligned across sales and marketing teams?
• Have we considered maintaining low ASP/Nielsen selection only if Amazon agrees to re-negotiate trade terms and deal funding?
• What informs our decision to delay or cancel the launch of low-velocity innovations?

4. Expand sales growth via Amazon Business

With sales expected to slow during an economic downturn, many brand leaders turn their attention to ROAS and price promotions. But that shouldn’t stop you from going after the low-hanging fruits right in front of you.

Amazon Business can be such an opportunity. It offers a dedicated B2B platform for businesses looking to streamline their corporate purchases, offering bulk order options and industry-specific discounts.

You may not have realised that Amazon already lists your entire B2C range on Amazon Business. So if you haven’t yet tried investing in bulk order discounts or introduced your B2B-specific selection on Amazon, this could be a low-cost opportunity to boost sales.

Questions to ask yourself and your team:

• What portion of our revenue currently comes from B2B buyers – and is it growing?
• Have we requested to run a trial on bulk discounts for B2B customers?
• Do we understand the existing customer segmentation of Amazon Business customers?
• Can we introduce B2B packs, pricing, or bulk configurations to drive volume?
• Are we promoting Amazon Business internally as a strategic priority?

5. Invest in portfolio differentiation strategies

With margins under constant pressure and Amazon’s price matching algorithms designed to keep consumer prices low, differentiating your assortment has never been more important.

Launching exclusive products is one of the most effective ways to reduce your exposure to pricing volatility. When paired with a distribution control strategy, it can limit the number of unwanted 3P resellers and let you invest in sales growth without dragging down account margins.

That said, developing exclusives can be expensive. But it doesn’t have to be: A simple but effective tactic is to keep your top selling end-of-life products exclusively available for Amazon. Which also helps you balance the profitability of your non-exclusive portfolio.

There are other low-effort ways to differentiate your assortment. For example, creating multipacks, bundling high-velocity SKUs, or slightly modifying pack sizes can help reduce margin pressure and escape Amazon’s similarity price matching.

Questions to ask yourself and your team:

• What differentiates our product from cheaper alternatives on Amazon?
• Are we investing in features, formats, or claims that justify a higher ASP?
• How exposed are we to Amazon price-matching or vendor contributions on undifferentiated SKUs?
• What price-pack architecture is needed to improve Net PPM with Amazon?

6. Control and reduce your operational costs

While commercial negotiations can yield structural margin improvements, most organisations will see the largest cost savings from operational efficiency improvements.

Start by working with your finance teams to understand the individual cost centres of your Amazon customer P&L and pay attention to your logistics setup. Having Amazon directly pick up goods from your warehouse (WePay) in full pallets (Acapulco) or full truck loads can significantly reduce your logistics cost footprint.

Chargebacks and shortages are another area worth your attention. These deductions don’t just hurt your bottom line – they tie up working capital and add unnecessary friction to your supply chain. Addressing their root cause and running regular audits can help identify recurring issues and reduce their impact on your margins.

And don’t forget about your packaging! Even a small reduction in pack size can often shift products into a more favourable cost tier or reclassify non-sortable products as sortable. This can significantly lower the margin pressure for both – you and Amazon.

Questions to ask yourself and your team:

• Where are we incurring the highest chargebacks or shortages – and what’s driving them?
• Is our order confirmation rate at least 85% and if not, how can we improve it?
• Are our logistics and packaging processes optimised for Amazon’s current fulfilment priorities?
• Which cost centres in our Amazon customer P&L (freight, prep, co-op) have grown without scrutiny?
• Can we identify quick wins in supply chain efficiency or vendor compliance?

7. Realign organisational ownership structures

Finally, let’s discuss the most difficult part: reviewing your organisational setup with Amazon. Of all the levers available to vendors during an economic downturn, this is the hardest one to execute – but also the most impactful.

If your business still manages Amazon through local market teams, you’re likely duplicating efforts and misallocating resources across commercial, operational, and marketing functions. This leads to misaligned trade terms across markets, cross-border sales and operational friction that all eat into your margins.

Meanwhile, Amazon has moved to a Pan-European vendor management structure, in which brands have lost their local buyer and now negotiate with a Pan-EU Vendor Manager who oversees the EU10 region.

Introducing a regional EU KAM team can help manage Amazon more efficiently, despite offering a different brand selection across markets.

A unified team can negotiate more holistically, align promotional calendars across markets, and secure regional supply chain efficiencies that individual countries would struggle to access on their own.

Yes, shifting from local to regional ownership takes time. But during times of an economic downturn, the business case for a Pan-European management structure has never been stronger.

Questions to ask yourself and your team:

• Are our Amazon teams still operating in local silos – and at what cost?
• Could a regional (coordination) structure improve our negotiation leverage or resource allocation?
• Where are we duplicating efforts across markets that could be centralised?
• Do our commercial and supply teams have shared KPIs at the regional level?

Conclusion

Preparing your Amazon business for an economic downturn may feel daunting at first. But it’s also an excellent opportunity to review cost structures, prioritise your portfolio and eliminate process duplications across markets.

Need help building a resilient Amazon strategy?

If you need help to prepare your Amazon business for an economic downturn, get in touch. I offer tailored consulting services that can help future-proof your commercial and organisational strategies with the online retailer.

The post How to Recession-Proof Your Amazon Vendor Business in 2026 appeared first on Consulterce.

But they won’t necessarily buy again from your brand. Your rivals compete on price and for similar keywords in the search on Amazon. Increasing the risk of losing the sale to one of your competitors.

Does this mean you have to spend millions of dollars to win search placements on the virtual shelf?

No it doesn’t.

Thankfully, Amazon offers a programme called ‘Subscribe and Save’ to help keep existing customers loyal to your brand.

So in today’s article, we’ll cover:

• What Subscribe and Save is
• How 1P Vendors can leverage SnS
• How to assess your SnS performance
• Frequently Asked Questions (FAQ)

Let’s get to it.

What is Subscribe and Save?

Subscribe and Save is a customer retention programme that allows shoppers to setup auto-scheduled deliveries in exchange for a discount.

The programme is designed to let shoppers easily opt in or out of a subscription. Buyers can decide how often they would like to receive their products. SnS order intervals range from every 2 weeks to every 6 months.

SnS discounts range from 5% to 15% on most products and up to 20% on selected items (e.g., diapers).

Shoppers typically receive an initial 5 or 10% discount on their first order and 10 or 15% for every order thereafter. Shoppers also qualify for a 15% discount if they subscribe to at least five products sent to one address.

While default discount structures are determined by Amazon, brands can chose to offer additional Coupon savings to stimulate SnS orders.

Why should brands consider Subscribe and Save?

Offering Subscribe and Save can help reduce your dependence on deals during sales events and also reduce your customer acquisition costs.

Instead of having to retarget shoppers via expensive ad campaigns, you can offer them a discount to automatically repeat the purchase from your brand.

Categories with consumables or single-use products that need replacement promise the best return of investment in Subscribe and Save.

For example:

• Grocery
• Beer, Wines & Spirits
• Luxury Food & Drink
• Pet Supplies
• Health & Wellness
• Beauty & Personal Care
• Baby Care
• Household & Home Care
• Office Supplies
• Automotive Parts & Tools
• Home Improvement

But Subscribe and Save isn’t just a sales tool for sellers and vendors!

It also allows Amazon to pool orders of otherwise individually sold items, reducing the variable handling and shipping costs for the online retailer.

How can 1P Vendors invest in Subscribe and Save?

Amazon will ask vendors in relevant categories to invest in Subscribe and Save to maximise their growth potential. So let’s take a closer look at the contractual options and types of SnS investments:

Flex Agreement vs Fixed Accrual Percentage

Vendor Managers can offer you two ways to invest in SnS: Either via a Flex Agreement or Fixed Accrual.

A Flex Agreement compensates Amazon for every SnS discount redeemed by end shoppers. This means that if a shopper receives a 5% discount, Amazon will bill you for the equivalent dollar value.

With the Fixed Accrual, Amazon bills you a fixed percentage of your net sales to activate Subscribe and Save.

The main advantage of a fixed accrual is that Amazon assumes the risk if the redeemed discount value exceeds the funding amount during the contract period.

For example, if customers redeem SnS rebates worth 6% of your total net sales, but you have only compensated Amazon with a 5% trade term, Amazon will foot the bill for the 1% difference.

This makes fixed accruals an attractive option if you have not previously invested in SnS and wish to limit your initial investment during Annual Vendor Negotiations.

Vendor Powered Vouchers / Coupons

Next to the default SnS discounts, vendors can choose to run Vendor Powered Vouchers (VPVs), otherwise known as SnS Coupons.

VPVs allow you to increase subscriptions by offering an extra saving on the first sale or rewarding existing SnS customers to maintain a subscription.

You can request their setup through your Vendor Manager or AVS. If you don’t have a Vendor Manager, you can request the setup of VPVs in Vendor Central under Contact Us » Promotions and Marketing » Subscribe & Save.

Caution: Any coupons or other promotions also apply to your Subscribe & Save products. For example, if you run a promotion offering a 20% discount on a product that is also available through Subscribe & Save, that discount will be added to existing subscriptions and will result in a total customer discount greater than 20%.

Understanding your Subscribe and Save performance in Vendor Central

Amazon offers a detailed dashboard that allows you to analyse your SnS performance at account and ASIN level. To acess it, navigate to Vendor Central » Merchandising » Subscribe and Save.

Once you’re in the dashboard, you can select the vendor code, product code, category, subcategory, and ASIN you would like to analyse. Vendor Central also lets you define the exact date range for any metrics to review.

The dashboard is split into five reports:

1. Sales Performance
2. Coupon Performance
3. Funding Performance
4. Inventory Performance
5. ASIN-Level Performance

Sales Performance Report

The Sales Report displays your SnS revenue and number of active subscriptions. It lets you easily spot seasonality effects and how your subscription business performs year over year.

The revenue penetration trend allows you to assess the SnS share of total revenue on selection enrolled in the programme.

Amazon also lets you dive deeper into the profile of subscribers. You can gain insights into the subscriber lifetime value by customer segment in the last 24 months. Amazon considers existing Subscribers ‘established’ after 12 months, and otherwise as ‘growing’.

Additionally, Amazon shows you the number of customers who have cancelled their subscription after just one delivery and those who remain subscribed or have received 2 or more SnS orders.

A KPI you want to keep close attention to is your Subscriber Retention Rate. Specifically, Amazon allows you to track the number of SnS shoppers that stay subscribed for more than 30 and 90 days.

A good benchmark is to keep your retention rate at or above 90% after 30 Days and above 75% after more than 90 Days.

Funding Performance Report

The funding strategy report grants vendors insights into the revenue conversion and performance of Subscribers vs Non-Subscribers.

You can access information about the Revenue Penetration and Subscription Signup Conversion by Discount Tier. The latter describes the percentage of customers subscribing to your items (vs. placing one-time purchases).

Lastly, the dashboard allows you to assess the Average Revenue per Subscriber, as well as the Average Number of Reorders of each customer group.

Coupon Performance Report

The Coupon Performance Report lets you assess how much SnS Coupons contribute to your SnS revenue over a given time period.

Vendor Central also displays the Share of Coupon Subscriptions. In other words: How many customers choose SnS for your brand because of coupons versus the standard discount on the product detail page.

Inventory Performance Report

The Inventory Performance Report displays the impact of stockouts on Subscribe and Save. Specifically, it highlights how many product units were out of stock and the resulting revenue loss in dollars.

Vendors should avoid running out of stock where possible, as this prompts customers to cancel their subscription and look for alternatives.

ASIN-Level Performance Report

Need more granular data at product level? Amazon has you covered. The SnS dashboard in Vendor Central now allows you to view and download a detailed list of your ASIN performance.

Available metrics include:

• Revenue Penetration
• Subscription Revenue
• Subscriptions
• Subscription Units
• Not Delivered due to OOS
• Discount Tier

Frequently Asked Questions (FAQ)

Need help assessing your vendor performance with Amazon?

If you need help to understand your vendor performance with Amazon, get in touch. I offer tailored vendor audits to uncover your full margin potential with the online retailer.

The post Subscribe and Save: The Complete Guide for Amazon Vendors appeared first on Consulterce.

It’s a question many business leaders are asking. Both models have changed significantly in recent years. And with a surge of new sellers during the pandemic, third-party sales on Amazon have reached all-time highs.

In 2024, 61% of all sold units on Amazon came from third-party sellers. But this doesn’t mean it’s also more profitable.

So in today’s article, let’s explore when you should consider moving to Seller Central and what to look out for when pursuing this strategy.

This article will cover:

• Why move from 1P to 3P on Amazon?
• When to move from Vendor to Seller Central
• How to make the switch to Seller Central
• Challenges of switching 1P to 3P

Why move from 1P to 3P on Amazon?

The reasons why vendors think about becoming third-party sellers usually fall into three categories.

They either want to…

1. Improve their margins,
2. Control their product prices, or
3. Take back control over their inventory management.

The frustration many brands have with the 1P Vendor model stems from the fact that it’s become more complex and expensive to manage.

Today, most Vendor Managers refer brands to self-service tools or the case system in Vendor Central, leaving suppliers without much human interaction to manage their Amazon accounts.

At the same time, vendors are subject to annual trade negotiations, or Joint Business Plans (JBPs). Brands often see these negotiations as lengthy and difficult, adding a bitter taste to the 1P sales model.

With more transparent rate card fees for 3P Sellers than for 1P Vendors, switching from Vendor to Seller Central can present a cost-saving opportunity that brands should consider when selling on Amazon.

¹ Note that the Amazon Marketplace Fair Pricing Policy may restrict the Buy Box if offered 3P prices are not competitive.

When to move from Vendor to Seller Central

There are many reasons for opening a 3P Seller Central account. However, it’s vital to understand the scenarios in which switching to a hybrid or 3P selling model can offer real benefits. Let’s take a closer look at each of them:

Scenario 1: Amazon has given up on you

If you don’t have access to a dedicated Vendor Manager and rely on raising cases in Vendor Central to resolve issues, chances are you’re being managed by Amazon’s Vendor Success Program (VSP).

Their job is to manage brands with low revenue figures at scale, while keeping direct human interaction to a minimum. It’s not uncommon for VSP managers to handle several hundred vendor accounts simultaneously.

This makes it difficult for 1P brands to get dedicated support for managing inventory levels, operations or questions about their catalogue.

On the other hand, Amazon invests significantly in the support for its 3P sellers. They can regularly speak to an account manager on the phone and receive well-documented instructions on self-serving their seller account.

So if Amazon isn’t showing much interest in your 1P business or sent you a termination notice, opening a 3P account will likely give you access to a better support system that your teams can use to develop your marketplace sales.

Scenario 2: The cost to serve Amazon has become unsustainable

Poorly managed trade and cost support negotiations can quickly erode your vendor margins. That’s because these investments aim to support Amazon’s profitability but often don’t return any revenue-attributable growth for your brand.

Add rising media costs, chargebacks, and price or quantity variances to the equation and your customer margins quickly become unsustainable.

In this case, you can either negotiate an increase in your cost prices or a reduction in trade terms. However, both are lengthy and complex discussions that your Vendor Manager won’t readily accept.

Another option is to move unprofitable selection to 3P/FBA, while keeping your vendor account. This hybrid setup ensures you can continue to sell your entire portfolio while working with your Amazon manager to find a long-term solution.

Scenario 3: Amazon erodes your prices

Before we get to this point, let me say one thing right up front: It’s unlikely that Amazon is eroding your prices. Instead, chances are your incentive structures with other retailers, wholesalers and distributors is causing the issue.

For example, if you’re a brand that offers volume discounts to wholesalers who also sell on Amazon, you’re effectively funding your direct competition that will undermine your prices to win the Buy Box.

As a result, switching to Seller Central is unlikely to be an effective solution. You’ll need to update your selling policies and introduce a selective distribution first.

However, if Amazon pursues a price-leading strategy on your portfolio, switching to 3P will be your only option to regain control over your product’s prices.

Note that Amazon’s Marketplace Fair Pricing Policy may suppress 3P Sellers in the Buy Box if their product price is deemed uncompetitive. So you still need to ensure that your 3P price is competitive compared to other retailers.

Related: How to Increase Your Average Selling Price on Amazon

Scenario 4: You want to diversify your Amazon business

Another scenario in which you may want to move to Seller Central is to reduce your dependency on Vendor Central.

In this case, a 3P Seller account serves as insurance if anything drastic happens to Amazon’s vendor ecosystem, such as introducing higher fees, margin pressure, or serving a termination letter to your brand.

Brands will typically open a 3P account to familiarise themselves with the systems but do not (yet) see it as the primary route to selling on the Amazon marketplace.

This allows brands they assemble the right teams, acquire the necessary knowledge and train their employees to eventually switch to 3P without losing sales.

How to make the switch to Seller Central

Brands that want to pursue a move from Vendor to Seller Central should first consult their legal team and review their terms and conditions with Amazon.

Amazon often includes a manufacturer clause that can prevent vendors from becoming sellers without Amazon’s written approval.

It’s advisable that you discuss the move with your Vendor Manager and let them know that you intend to open a 3P account.

You can then follow these steps to migrate from Vendor to Seller Central:

1. Open a Seller Central account
2. Register with Brand Registry
3. Set up a Seller Central Amazon Ads account
4. Choose a fulfilment option (FBM/SFP/FBA)
5. List your products
6. Set your product pricing
7. Manage your inventory
8. Manage product content

Vendors generally have two options to become 3P sellers: They can either take a 1) hybrid approach or 2) make a hard switch to Seller Central.

Hybrid approach

A hybrid approach enables brands to maintain control over key aspects, like pricing and inventory, while also strategically leveraging Amazon’s infrastructure in areas such as fulfilment and marketing on key products.

As my recent industry study shows, 1 in 3 vendors have expanded their business beyond Vendor Central, leveraging both, distributor (2P) and third-party (3P) selling models.

The advantage of a hybrid approach is that vendors can choose which distribution mix is most profitable for their business.

For example, unprofitable products in Vendor Central can often be sold at a fraction of the cost through 3P, increasing their profitability in a brand’s P&L.

This makes the hybrid approach also an effective alternative to continue selling products for which Vendor Managers have refused to adapt cost prices.

Brands should generally consider a hybrid approach if they:

• Struggle with Amazon regularly running out of stock;
• Want to speed up NPD launches;
• Lower their cost structures;
• Want to become more agile when testing new products;
• Sell seasonal products their Vendor Manager refuses to buy.

Vendors gain more control over their brand and customer experiences when leveraging data insights from the first- and third-party models.

However, not every brand wants to continue selling via Vendor Central. Their alternative is a hard switch to Seller Central.

Hard switch

Transitioning from 1P to 3P requires brands to effectively transform their internal capabilities to cater to the third-party model.

After all, a hard change also risks interrupting existing revenue streams if not planned carefully.

In such cases, brands should consider hiring external agencies or consultants to bridge any knowledge gaps in their organisation.

The hard switch is suitable for brands that:

• Struggle with high trade terms in Vendor Central;
• Receive small PO volumes that don’t justify the cost to serve;
• Sell a wide portfolio range across multiple product categories;
• Focus only on private-label products;
• Want to use Amazon as a DTC channel instead of a wholesaler;
• Seek to avoid annual vendor negotiations.

Challenges of switching from 1P to 3P

Moving to Seller Central comes with many challenges brands need to be aware of. The following highlights the most common hurdles organisations face when considering leaving the 1P Vendor model.

1. Amazon may hinder your move to Seller Central

Amazon introduced their first-party business to ensure the availability of critical products at low prices. Leaving Vendor Central poses a direct threat to the online retailer’s Flywheel.

If you consider yourself a category-critical brand, you can expect your Vendor Manager to exhaust their options to keep you on Vendor Central.

Amazon’s Standards for Brands Policy states that Amazon can prevent you from creating a 3P account or listing products previously available through 1P.

In these cases, a switch to Seller Central needs to be carefully executed.

The hybrid model will almost always be the preferred option as it allows you to list future products through 3P while selling your existing portfolio in Vendor Central.

Alternatively, you can also consider appointing a distributor to sell part of your range on Amazon’s marketplace. This can often still be more profitable than selling through Vendor Central alone.

Related: Amazon Standards for Brands Policy: The Complete Guide

2. Your distribution strategy gets in the way

Brands that sell to multiple retailers know that Amazon will follow the price of the cheapest option in the market.

This becomes even more difficult when your teams sell to wholesalers who are themselves third-party sellers.

In such cases, switching to Seller Central means that you’ll be competing with your own distribution partners on the Amazon marketplace. But without the benefit of being prioritised as a vendor in the Buy Box.

3. Amazon may suppress the Buy Box

One of the biggest misconceptions about moving from Vendor to Seller Central is that brands regain full control over their product pricing.

Let me be absolutely clear: This is not the case.

Instead, Amazon will suppress your Buy Box offer if you set an uncompetitive product price. So if another retailer sells your product at a lower price than what you’re offering it for, Amazon will remove your offer from the product detail page.

See also: Amazon Marketplace Fair Pricing Policy

4. Amazon imposes tough requirements on sellers

Lastly, brands that aren’t operating efficiently will struggle to meet the expectations of customers and Amazon alike.

Amazon strives to provide an exceptional experience for its customers. For this reason, all third-party sellers are expected to meet a set of minimum performance goals:

• Order defect rate: <1%
• Pre-fulfillment cancel rate: <2.5%
• Late shipment rate: <4%

If brands fail to meet these requirements, they risk having their seller account deactivated and being left without a revenue stream on Amazon.

Therefore, business leaders need to ensure their organisations can meet the operational requirements of a 3P Seller model before ending their 1P relationship.

Final thoughts

Moving from Vendor to Seller Central has become the holy grail for many marketing agencies out there. They consider it an attractive alternative to the expensive vendor model.

However, brands should be aware that the transition to 3P requires a very different set of skills and knowledge from their teams. Seller Central lacks most automated supplier systems such as order, price or inventory management, which means brands have to manage these themselves.

As a result, vendors must weigh up the risks associated with moving to 3P and calculate the exact business case to ensure they protect their profit margins long term.

Unsure about switching from Vendor to Seller?

If you’re thinking about moving your vendor business to 3P, we should talk. I offer tailored advice to help you navigate through the complex decision-making process and assess your business case.

The post Should You Move from 1P Vendor to 3P Seller Central with Amazon? appeared first on Consulterce.