If you’re an Amazon vendor, then you know that the terms negotiations process can be daunting. Vendors are invited every year to its annual trade negotiations, also known as Joint Business Plans (JBP) or Annual Vendor Negotiations (AVN). It’s important to get the best deal possible for your business, but it can be difficult to know where to start. In this blog post, we will provide 10 tips for creating a successful Amazon vendor agreement.
The Q1 period can be a stressful time for vendors. It’s the time of year when Amazon reviews and renegotiates annual vendor agreements. Experienced vendors may be more comfortable and able to get the most out of the negotiation process. Inexperienced vendors should understand the terms, and how the system works before jumping in. Be aware that your revised agreement could mean higher percentage allowances for marketing, returns and other related terms. Remember, this is not exactly a list of demands, but a negotiation that you can effect. Consider these tips for getting the best out of your negotiations.
Table of Contents
What is an Amazon Vendor Negotiation?
Amazon Vendor Negotiations help to improve Amazon seller terms. Amazon Vendors can improve their Amazon vendor agreement by negotiating with Amazon for a better listing, improved payment terms, and other Amazon benefits. Amazon Vendors use Negotiations to improve their business on Amazon. Amazon Vendors that improve their listing on Amazon find that their products sell better and they make more money. Amazon Vendors that negotiate improved payment terms with Amazon find that they save money on fees and are paid faster for their products. Amazon Vendors use negotiations to improve their business on Amazon because it is the best way to get what they want from Amazon.
You are likely to negotiate with a different Amazon vendor manager each year, making it difficult to build a strategic relationship as you do with your other retail customers.
That being said, there are a few key things to remember that will help you get the best possible outcome from your Amazon vendor negotiation:
- It’s important to understand what’s important to Amazon, and what they are looking for in a vendor.
- Remember that you are not the only vendor that Amazon is negotiating with, and that Amazon has a lot of leverage.
- Be prepared to give up something in order to get something else that you want.
- Don’t be afraid to ask for what you want, but be realistic about what you are likely to get.
- Try to find a compromise that is acceptable to both parties.
If you keep these things in mind, you will be in a much better position to get the best possible outcome from your Amazon vendor negotiation.
Negotiations on trade terms follow a typical sequence of phases.
They begin with a request preparation for proposal (RFP) from Amazon, in which the online retailer outlines its current trade terms and requests that vendors submit their best offers.
Vendors then have an opportunity to revise their offers based on feedback from Amazon.
The next step, the negotiation phase, is usually a face-to-face meeting between representatives of both sides, during which they discuss the proposals.
A vendor may also be asked to provide a written counter-proposal at this stage.
The final stage is the agreement phase, in which the terms of the deal are finalized and both sides sign on the dotted line. Every once in a while things do go into an extended phase called the escalation phase.
Amazon is known to be a very tough negotiator, so it’s important that you come to the table prepared.
During each of these phases, there are a number of things that vendors can do to improve their chances of getting a favorable outcome.
By understanding the process and being prepared, you can increase your chances of getting the best possible deal from Amazon.
Here are some tips to help you get the most out of your Amazon vendor negotiation.
Preparation and strategy
Any business owner knows that preparation and strategy are key to success. This is especially true when selling on Amazon, where the competition is fierce and the rules are constantly changing. As an Amazon vendor, it’s important to stay up-to-date on all the latest changes and developments. Amazon Advertising is a great way to get your products in front of potential customers, but you need to know how to use it effectively. With so many moving parts, it can be difficult to keep everything straight. That’s why we’ve put together this helpful guide. By following our advice, you’ll be able to develop a winning strategy for your Amazon business.
1. Know your terms
As an Amazon vendor, you’ll be asked to agree to a set of terms and conditions. These terms govern everything from how you list your products to how you handle customer returns. It’s important that you understand all the terms before agreeing to them. If you don’t, you could end up in hot water further down the road.
2. Be reasonable
When it comes to negotiating your Amazon vendor terms, it’s important to be reasonable. Amazon is a massive company with deep pockets, so you’re not going to be able to get everything you want. That being said, you shouldn’t just accept the first offer that they make. Instead, try to come up with a compromise that works for both parties. By being reasonable, you’ll stand a much better chance of getting what you want out of the negotiation process.
3. Payment Terms
When it comes to payment terms, Amazon is always looking for ways to reduce their costs. One way they do this is by asking vendors to agree to longer payment terms. This can be a major sticking point in negotiations, as vendors generally want to receive payments sooner rather than later. In order to get the best deal, you need to be prepared to negotiate this point.
One way to get around this is to offer Amazon a discount for agreeing to shorter payment terms. For example, you could offer them a 5% discount for agreeing to pay within 30 days. This would save Amazon money, while also providing you with the liquidity you need to run your business.
Another option is to offer Amazon a discount for early payment. This is known as a “prompt payment discount.” By offering this discount, you’ll be able to get paid sooner while also saving Amazon money.
4. Marketing Allowances
As an Amazon vendor, you’ll be asked to agree to a marketing allowance. This allowance is used to cover the costs of advertising and promoting your products on Amazon. The amount of the allowance will vary depending on the products you sell and the category in which they’re classified. In order to get the best deal, you need to be prepared to negotiate this point.
One way to get around this is to offer Amazon a discount for agreeing to lower marketing allowances. For example, you could offer them a 20% discount for agreeing to a lower allowance. This would save Amazon money, while also providing you with the flexibility you need to run your business.
5. Freight Allowance
As an Amazon vendor, you’ll be asked to agree to a freight allowance. This allowance is used to cover the costs of shipping your products to Amazon’s warehouses. The amount of the allowance will vary depending on the products you sell and the category in which they’re classified. In order to get the best deal for freight allowance, you need to be prepared to negotiate this point.
6. Customer Returns
As an Amazon vendor, you’ll be asked to agree to a customer return policy. This policy governs how you handle returns from customers who are not satisfied with their purchase. In order to get the best deal, you need to be prepared to negotiate this point.
One way to get around this is to offer Amazon a discount for agreeing to a more lenient return policy. For example, you could offer them a 20% discount for agreeing to accept returns within 30 days of purchase. This would save Amazon money, while also providing you with the flexibility you need to run your business.
7. Damage Allowance
As an Amazon vendor, you’ll be asked to agree to a damage allowance. This allowance is used to cover the costs of damaged products that are returned by customers. The amount of the allowance will vary depending on the products you sell and the category in which they’re classified. In order to get the best deal, you need to be prepared to negotiate this point.
It’s important to remember that the damage allowance is not a fee charged by Amazon. It’s simply a way for Amazon to recoup their losses if a customer returns a damaged product. As such, you should only agree to an amount that you’re comfortable with and that you feel accurately reflects the cost of damaged goods.
8. Subscribe and Save
Amazon’s Subscribe and Save (SnS) program is a great way for customers to save money on their favorite products. Under the program, customers typically receive a 10% discount on their first purchase, with an increased discount of 15% for any subsequent orders. vendors can either pay a flat percentage for participating in the program 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 program. However, brand owners need to be careful when setting up their promotional strategy, as the SnS discount also applies when a product is on sale.
9. Amazon Vine Program
Amazon’s Vine Program is a great way to get your products in the hands of Amazon customers. By purchasing credits for the program, you can send product samples to Amazon customers who have been selected to participate in the program. Amazon customers who receive product samples can then write reviews of the products they receive, which can help to promote your products on Amazon.com. The Amazon Vine Program is a great way to get your products in front of Amazon customers and to generate positive customer reviews.
10. Volume incentives
Amazon Vendor Negotiations can be complex, but understanding volume incentives is a key part of the process. Volume incentives (or: Volume Incentive Rebates, VIR) is a fixed or tiered percentage that Amazon pays back to a brand for buying additional volume from the brand. They incentivize Amazon to buy additional volume from a brand. In order to receive a volume incentive, brands must sell their products at a discount to Amazon. The Amazon Buy Box is the key driver of sales on Amazon, so it is important to consider how Amazon’s algorithms will value your product in relation to competitor products when negotiating volume incentives. Amazon Vendor Managers are experienced in these negotiations and can help you reach a fair agreement.