Within the overall Amazon vendor negotiation process, there are certain points that can be addressed and negotiated, and others that are essentially non-negotiable. Understanding the critical elements of Amazon vendor agreements, including which ones vendors can and cannot push back on, will enhance your preparations for 2025.
In this article, we’ll review expert insight to provide tactical, timely advice for vendors preparing for their Amazon AVN.
Key Insights
- Approach your AVN as a joint partner with Amazon.
- There are multiple negotiation points where you can push back with your own terms.
- Likewise, there are certain points on which there is no room for negotiation.
- Understanding these points and using them to prepare for your Annual Vendor Negotiation in advance goes a long way toward a successful outcome.
The Roadmap
As you begin preparations for negotiations, it’s worth remembering that, as an Amazon vendor, the Annual Vendor Negotiation (AVN) represents a roadmap for the coming year for both you and Amazon. Also called a Joint Business Plan, it’s a chance each calendar year to reach agreements and plot strategies together. As such, these negotiations set the terms of your relationship with Amazon.
Frame your plans and expectations within this reality. Although at times it may seem that your objectives are competing, they are, in fact, more aligned than not. Amazon wants your products to succeed; you do too. The flip side is that you both want to see as much of the profits from that success as possible.
This is where an understanding of expectations comes into play.
Similar Objectives, Different Approach
It helps to compare what Amazon is after as compared to what you, the vendor, desire as an outcome. A few overarching examples:
| Amazon Wants | Vendors Want | Approach |
| High sales volume for your products | High sales volume for your products | Aligned |
| Competitive pricing, unique product offerings, early access to new products | Exposure for new products, price points that beat the competitors, yet are profitable | Aligned, but room for negotiation |
| Operational efficiency | Operational stability | Potential points of negotiation in order to satisfy both parties |
| Increased marketing allowances and service fees | Marketing results but lower fees | Points of negotiation |
| A transactional approach | Relationship building | Vendors can help build that longer-term agreement by maintaining a strong relationship with Vendor Managers |
As you align your approach to work with your Amazon partner, it’s essential to be aware of what you can and cannot push back on.
What You Can Push Back On
A few key areas where vendors can negotiate:
- Marketing Allowances: demonstrate the effectiveness of existing marketing strategies and negotiate for better visibility in exchange for your investment.
- Operational Investments: vendors can push back on requested cost contributions by pointing to efficiency metrics and low chargeback rates. Get a free audit from ChargeGuard to learn your exact metrics.
- Service Program Fees: these can be negotiated, especially if you’re able to show strong organic sales performance that does not need these programs.
- Net PPM (Pure Profit Margin) Growth: demonstrate how your pricing aligns with industry standards (if indeed it does) in order to negotiate this point.
- Shipped COGS: vendors can push back on expectations here by comparing market trends and projecting sales forecasts.
When negotiating Marketing Allowances, leverage data to justify your position. Use data to:
- Demonstrate ROI
- Negotiate for better placement
- Highlight successful alternative marketing
- Push for performance-based agreements
What You Can’t Push Back On
There are then these areas which are non-negotiable:
- Product Quality Standards: requirements for product quality and regulatory compliance cannot be pushed back on.
- Delivery Expectations: certain operational and logistical requirements must be met without exception.
- Operational Fees: things like storage, shipping, product photography and others are often fixed.
- Other Mandatory Requirements: familiarize yourself with the expectations on which Amazon insists.
“(Carbon6) provided talented strategic thought leadership as well as excellent tactical execution at a time when LifeWay needed to improve our presence on Amazon.”
~Lifeway | Media and Publishing Company
Your Strategy
Preps begin in Q3. To be ready for the AVN in the first Quarter, your strategy begins in Q3 and spans into Q4. Categories of prep include:
- Preparation & Data Gathering
- Preparing Strategic Negotiation Tactics
- Relationship Management
- Operational & Marketing Investments
Data like chargeback trends, shipped COGS growth and Net PPM are metrics you’ll want to gather and have ready. Know your available escalation methods and be ready for your AVN when it comes.
Things You Can Do
A few final points to help with your negotiations.
- As noted, cultivating a strong relationship with your VMs can help in negotiations. Work on that throughout the year.
- Work out reasonable freight terms and chargeback reductions to minimize unexpected costs.
- Strategically invest in marketing allowances and service program fees to improve visibility.
When it comes to gathering the data you need for your AVN, and in fact when it comes to demonstrating efficiency and low chargeback rates, the team at Carbon6 stands ready to help you increase your recovery rates and position your company for the best possible outcome in your Amazon negotiation.
Post-Negotiation
Once negotiations are complete and you’ve reached your Amazon vendor agreement, you’ll then want to do two main things.
1) Track & Monitor
Ensure compliance with the negotiated terms and monitor their impact. Keep tabs on things going forward.
2) Adjust Strategies for Next Year
Use the insights gained from your AVN to refine your approach and prepare for future negotiations. Strategic planning is everything.
In this way you ensure you adhere to and maximize your agreed-upon Amazon vendor terms and conditions, even as you build upon the experience gained to elevate your AVN game for the next round.
