Optimizing Amazon Vendor Agreements and Pricing
Transcription
It is important from the beginning that you react as soon as you receive the initial email from Amazon notifying you of their recommended increases or updates to your standard agreements. Look at your current margins on all of your products and see how much overall you can afford. If Amazon is wanting to increase your agreement deductions by an overall rate of say 4.3, 5%.
show moreBut you can only allow for an increase of 2.75% overall before you risk running at a loss or needing to do a cost increase, then you should look at the individual recommendations. Amazon has sent you and opt to give into some and suggest lesser increases on others. Save for instance, they want to increase your basic rule from 10% to 11.5%.
Your damage allowance from 2% to 3% and your freight allowance from 5% to 6.82%. You could go back to Amazon and request an increase from 10% to 11% only for basic rule, 2% to 3% for damage allowance, a complete acceptance of the one agreement to buy good faith. And then request, North 0.7, 5% to the freight allowance.
Instead, you may still have to bite the bullet and accept an additional 1% on the freight allowance, but you won’t have to on the 1.8, 2% original increase, all of these small amounts do end up adding up after a year of trading. And don’t forget that in a year’s time, you will be negotiating further increases on each as well.
some items to consider along with your response to the original suggested updates Amazon sends you are as follows. How big a client are you to Amazon overall? What is your relationship like with your buyer or vendor manager? Can you offer anything else in your negotiations such as more promotions or deals or perhaps additional product listing?
And how bad would it be if your renegotiation fails, Amazon is looking for the best options for doing business with you. So be sure to maintain a good relationship with them throughout some vendors have been known to be upfront with Amazon in their renegotiations when revealing they will run at a loss or break, even if they accept all their suggested increases or have requested, then that they can have a cost increase approved soon.
If they agree to the new terms in full, or have even gone to the extreme of stopping all purchase orders to Amazon, to force renegotiation. This latter example is not recommended unless you are a powerhouse client of Amazon’s and you can stop all of your product being sold to Amazon through all other distribution channels.
Remember that you can catch more bees with honey. So taking an honest and respectful approach to your negotiations is always better.