Optimizing Amazon Vendor Agreements and Pricing
Transcription
The price protection program policy is as recent as February, 2019 and means that if you reduce the cost price of your products to Amazon, the policy will allow Amazon to automatically apply the lower cost price to all outstanding purchase orders. Products in transit and existing on hand inventory, as opposed to previously, when you had to first approve this policy, the benefit is that if you wish to lower the cost price of all products in the same range or an entire ASIN and family on Amazon, you only need to lower the cost on one child ASIN and Amazon will automatically lower the cost for the rest of the family of ASIN.
show moreThe bad news is that if you don’t want the full family of ASINs to be sold at this new cost to Amazon, you basically can’t stop them from changing the costs for all ASINs in this family of products. Whereas before you would need to approve this cost decrease first, Amazon explains the policy as follows.
Amazon will automatically deduct any amount under the policy from subsequent payments due to you as reflected on price protection documentation that we will send to you due to the new automated nature of price protection. We are eliminating a requirement for you to log onto vendor central and manually approve price protection agreements.
This will reduce the likelihood that you’ll receive returns of high cost inventory, and also allow our systems to incorporate the updated cost price of your product faster and more consistently, which may result in the retail offer. Being the featured offered on the detail page in the agreement itself.
It states that we Amazon will calculate and claim credit for price protection. On the on hand inventory, we, Amazon will pay the cost for the in transit inventory as adjusted for price protection. It is therefore imperative that. Before you calculate your costs per ASIN, that you are aware of how this policy works, as well as understand and know what your goals are with regards to the profit you wish to achieve per ASIN that you sell to Amazon in order to limit future adjustments and position products at competitive retail price points on Amazon and across the Amazon marketplace.
You must know what your base profitability is first, and then add on a buffer to accommodate discounts, promotions, and the event of a price protection policy being issued on a family of ASIN. You can find more information on the price protection policy, going to the support center on your vendor, central dashboard, selecting the help tab. Clicking on policies and agreements and then automatic price protection.