Amazon Vendor Negotiation Q&A - Week 1 with Flying Tiger Partners

Thank you again, Kara and Bruno, for joining us today. Thank you, Daniel. Let's dive right in. So for the folks at home, I'm Andrew Hamada, co-founder and CEO of Reason Automation. We are a data and analytics company that helps vendors spend less time on their AVN data prep and more time on actually getting insights out of it in conjunction with experts like Kara and Bruno here today. Kara, would you like to give us a quick introduction?

Yeah, sure. So I am one half of Flying Tiger Partners. My partner Nick was not able to join after the time change, but hopefully we'll get on for another one. We specifically help 1P vendors sell better on Amazon in the US. We also specialize in helping qualified 3P sellers transition to vendor if it makes sense for their business. And we're both ex- Amazon VMs as well as have led enterprise Amazon teams. So we've got experience on both sides of the house, both inflicting the pain and receiving the pain. So brings us a unique perspective, I'd say.

Yeah, it's great to have you, Kara. What I always end up telling people when I introduce myself as an ex-VM is the first thing I say is sorry.

Like, I'm really not a bad person, I swear.

Exactly.

I like this too.

You just didn't see it.

You stepped out, so that's a sign.

Yes, exactly.

Human came out. Yeah.

All right. And then Bruno, if you wouldn't mind a quick introduction.

Yeah. So I'm Bruno. I'm from Blue Dot. I'm the founder and I started Blue Dot after 7, 8 years managing global vendor account. It's very different now, but at the time it was a huge challenge. Amazon vendor manager don't help vendors to learn the internal setup they need. They get called to an amazing business. It's going to be great for everybody. And 3 months later, no one is talking to them. And I don't even know how to put the labels in the boxes or how to even update a purchase order that I accepted 100 units, but I only have 60. So how do I do that? So Blue Dot helps only the internal setup of vendors. We help to set up the cross-functional team. We help them to create the standard operating processes that are compliant with Amazon Vendor. We even train the teams to be more efficient. We create processes of communication interdepartment. And it's been really cool in this past 3 years to be able to help vendors on this side because I think no one else is helping them on this side, like with questions. That they see in a book where to put this label or what's this chargeback meaning and how do I fix it. So we're having fun helping vendors doing that.

Perfect.

It's really great to finally connect with you, Bruno. Kara, welcome back to another Reason Automation webinar series. And ironically, one question that Daniel just submitted would be a really good one for us to kick off because Kara, you mentioned that you have a US focus and Bruno, you, I know, are more focused on the EU. And Daniel's question here that he didn't submit earlier is that they're looking to launch in Amazon EU. Presumably you're currently in the US, Daniel. And he asks, are there any big differences they should be aware of from the US to the EU in terms of marketplaces? And it sounds like we've got both a US and EU expert here. Bruno, do you wanna start?

Yeah, well, regarding Amazon side, the differences are not that much. What I would always advise is to pay attention and to get a team in place about European compliance on labeling of the product. We have a special mark, CE mark here. I don't know exactly the category, Daniel, but if you're dealing with electronics or anything that contains batteries, we have very specific rules here compared to the US. So Daniel's in apparel. So yeah, I will just advise on the labels. Of course, they will be in English. Just pay attention to different compliances that you might find here in Europe. Another thing that you guys are very used to in the US is Amazon collecting from you. It's very rare here for vendors to have that program, the access to it. It's called WeCollect here in Europe. I think it's the same name in the US, but it's very rare and Amazon does not engage in the same way that they engage in the US. So be ready to prepare to have a logistic expert to put in place a compliant supply chain. Also, if you are thinking not to get your own space, your own warehouse, and your own team, and you're considering a 3PL, you have a lot of very good aggregators here that we can help you if you need. In the beginning to test the water. So you'll just nationalize your stock here and they will take care of everything for you. And that's it. I can't think about major differences unless Kara or Andrea can help with that too.

So when I was at Philips Lighting, now known as Signify, some of our biggest headaches when we looked to expand internationally was you know, we get very used to in the US having MAP, minimum advertised pricing, um, laws. They do not have that in EU. So one of our biggest pain points honestly was, I mean, not that we control prices in any way, but you have some recompense if there's issues in the US or Amazon or Walmart doing different stuff. Um, it was a, a kind of a tricky combination of not having MAP plus EUFN, their European Union Fulfillment Network, So for example, Italy, Amazon Italy would do a deal and then resellers would buy it from Amazon Italy and then truck it on over to Germany, you know. And so sometimes you have a vet, and Bruno, maybe you know more, maybe we dealt with vendor managers who was maybe like one for 10 countries. And then on our internal team, we had one poor key account manager dealing with everybody in Europe, and it was very much a logistics nightmare, and it was, it was tough to make it worthwhile from a sales perspective while dealing with all the headaches. I think it's definitely there, but you need to go in and potentially with a partner like Bruno mentioned who knows what to watch out for, because that's, that was, that was a big one for us that made it very challenging.

Yeah, and if you allow me, Andrew, not having a MAP policy in Europe means that it's illegal by law, but Amazon always finds a way to do it and to push vendors against the wall if they don't agree with it. And we all know what that is. Sign here about an agreed average net PPM. And if you don't get it because of whatever, you'll just pay me a lump sum in the end of the year. So that's how Amazon found a way to create a virtual map policy without infringing the laws in Europe.

Yeah, that makes sense.

Yeah. And I'd say too, your US VM won't be of any help. When I was a vendor manager, both me and my business partner, we were always kind of like, we never— and Andrew, maybe you chime in, but we never paid attention to other marketplaces. There's kind of an arrogance there. So if you're hoping your US VM will support you, Maybe, maybe not. I know also Amazon scaling back the global vendor management team. There was a lot of layoffs there. So, you know, don't, don't count on Amazon, you know, helping you with this transition.

Yep, that makes a lot of sense. It was definitely the case when I was there that because of the way Amazon structures their P&L and the way that teams roll up to financial ownership at the company, it's usually geographic. And so, you know, a US team in the US retail will roll up to a different VP, different finance partner, and therefore have different goals. And to Kara's point, it can be very, very difficult to get folks at Amazon to care about things that are not in their lane. And I think that's actually a great segue into another question that we got early on that will probably not surprise either of you, which is getting leverage for retail media in AVN. And I always bring this one up because on one hand, As we all know, vendor managers don't want to give you a single cent of credit for your PPC spend because it doesn't roll up or contribute to their PPM number or their P&L. And yet at the same time, we know that a common tactic is to engage your retail media counterpart and your VM at the same time and potentially leverage those conversations together. So Kara, maybe you can start this time. What are some ways that you can actually get some leverage in your negotiation through your retail media spend?

Well, you know, we were just talking, Nick and I were just talking about this this morning, and it's, it kind of ties into that, but essentially you don't want to be the weakest gazelle in the herd. And what that means is that when your vendor manager is coming to the table with their proposals, they have a target that has been set for them. They have to achieve that net PPM target, um, throughout from their portfolio of vendors. So the more difficult you make yourself, the more gains, or the better it'll go. So for example, you have a tale of two vendors. You have one who's, you know, just kind of signing up for things, you know, getting on top of things. Like, that's more of like an easy target. If you're the vendor, and specifically speaking to Retail Media, who's bringing in their account executive who's putting the account, the AE's bonus at risk by risk, you know, by threatening DSP, right? You're pitting the teams against each other. You're using a tool like Reason Automation to show how your net PPM is actually trending or coming up with kind of creative solutions to what you think is Amazon's problem. Like, the more difficult you make yourself, the better it will go for you. And the more you can pit internal Amazon teams against each other, the more success I've had, for example, especially dangling something like, hey, you know, we had planned to do this big Prime Day activation. We're going to sign up for a sponsorship. We want to see our dollars actually going somewhere. Putting that on the line, that's going to directly contribute to your AE's bonus, especially because that DSP is what really what they get bonused on combined with, you know, top line targets within the team. You know, especially if you have other teams that you talk to at Amazon, like the more you can make it like a Rubik's Cube, versus just like a, you know, just an easy win for the VM, the better. So it's not just talking about retail media, but the other piece too is that when Amazon has come to— when I was on the vendor side, Amazon came to us with like big profitability gaps and it was honestly our channel distribution issue. So we were complicit, but instead of— we found a way instead of just cutting them a check every quarter for nothing, we negotiated using an Amazon internal tool that was called, um, Confirmed Fit. It was actually part of the automotive program, but we found a way to use that tool to make sure that the products that we sold, the accessory products, were compatible with the hub that the customer had for smart lighting in this case. So, you know, sometimes you're gonna have to fork over some cash, but make sure you're getting something for that. And sometimes it involves creating a pretty complex response to the ask, and all these things have to be connected.

Wow, super deep insights there, Kara. I appreciate that. To your point, not just applicable to retail media, but really any sort of ask that originates outside of the retail org and can potentially be leveraged in that direction. Bruno, anything to add?

You know, Andrew Hamada, this is not exactly what we do, but I will just contribute what Kara just said. It's like, I always tell the teams that I train, for every ask on Amazon side, be prepared to ask for bullet point. So if they ask to increase damage allowance, we'll ask for things in return to get it. And it can be a reduction of a cost. It can be help on peaks. They can give you access. Peaks is a good program on the operation side, can help you. Depending on the distribution of the FCs that you're serving can really help to save you some cash or at least to align your P&L on a more structured way because you will have fixed cost with your carrier. And that's it. It's just push Amazon because they keep pushing vendors.

So just find a way to push them for every ask, ask for things to Yeah, I'd also add on to Amazon starting to wake up to the impact of TikTok and affiliates. So make sure that any investment you're making to drive traffic to Amazon or to benefit Amazon in any way is being reflected in whatever, you know, you're putting back. Like maybe I saw someone said they're in the automotive category. Maybe you're doing a big partnership with Ford or something and you're going to be talking about products, right? You're going to be doing offsite media, anything like that. Like you need to have like a laundry list of all the things that you're doing to to help improve your Amazon business, even if it's not directly tied. Maybe you're doing a huge PR campaign that we know that most of the time the number one source of traffic is going to be Amazon, whether it's PR or TikTok or otherwise. So I think it's just kind of like you want to overwhelm them with all the things that you're doing because one of those things in isolation is not going to make a difference, but it's almost the volume of everything you're doing and make sure you're getting credit for all of it.

That's a huge call out from both Bruno and Kara. The way that I frame this in my own conversations with my team is claim value. You know, don't just do things for free and then expect someone to notice and say, oh wow, thank you so much for doing all of those things. Look at this report of all of the cool things you did for us this year. Like they're never going to do that. You have to be the one that brings that laundry list to the table and says, by the way, you know, I was so glad to be a partner this year of doing this list of things. Now imagine how much better a partner we can be next year if we do this much longer list of things. And by the way, for that to unlock, we need certain things from you.

Well, and one more thing there, Andrew, just one more comment is that when you have an internal team that's looking to do big optimizations, whether it's like a logistics overhaul, a packaging overhaul, try to time it where you can get credit for it in ABN and use it as a concession. So for example, I had a brand that was like, yeah, we're turning our whole catalog into ships in own container. And I'm like, wait, we need to use this, right? You can keep doing it, but we're not just going to go do it in the sidelines and whatever. Like we actually use that as a as a give specifically around returns issues or, excuse me, issues around packaging, right? So the products are being damaged and they were going to like, okay, well, we're going to fix the packaging anyway. I'm like, no, we need to use this strategically to offset what they're asking for, which is double your damage allowance.

That's a great point. Excellent. Really quick note, I'm seeing more people stream in. Welcome, everybody. We're working from a pre-submitted list of questions, but please feel free to submit your own additional questions using the Q&A tool here in Zoom. Uh, uh, we'll, I'll be reading those as we go along, but otherwise we'll keep rolling through the very excellent lists of questions that you've all been submitting. Um, so now, uh, just to keep us on this topic around, uh, you know, investing across, uh, different teams and particularly around retail media, uh, maybe this one's for Kara then. Um, we had a specific instantiation of this. Uh, somebody asked, so they're underfunded in advertising. They have less— they're spending less than 3% of their point-of-sale revenue in ads. So they got a lot of opportunity to increase there. But they don't want to do that unless they can also reduce co-op accruals, which are currently sitting at 7.2% in order to allocate that to their ad budget. Is that something that they can do? And how could they model that conversation with Amazon?

That'll be tricky. I don't know what category that's in, but 7.2 is a pretty darn good co-op accrual. Um, typically you see it sitting at around 10%.

Uh, it would be apparel.

Apparel. Oh yeah. Okay. And Amazon's not typically willing to go backwards. Um, I would, because there's just, I think it's using a couple different levers. I would have a con— if it was me in that seat, I'd have a conversation with your AE first and say, hey, We want to increase our advertising investment from 3% to 6%, but we can't because retail is not going to budge on 7%. So instead of going through Amazon Advertising, we're going to spin up a TikTok account. We're going to do influencers. We're going to do all this stuff that's going to benefit our business, but it's not going to benefit you and you're not going to get any, but you're not going to get any kind of help from it because there are other ways to drive your business on Amazon that's not just ads. And putting it back in the pocket. So I'm not saying that that'll necessarily be the silver bullet because the AE will have limited pull, but I think it'd also look at your— the different mix within your program of, you know, are there any pain points that Amazon's seeing that you can help resolve? So for example, damage allowance returns, I believe, is pretty high for apparel typically. So what type of operational improvements can you institute in collaboration with saying, hey, we want to drive more traffic. Because if you already have like issues with net PPM or ops or returns, they're not going to want you to like unleash the traffic until that's fixed.

That's a really good call out about, um, your last point there. I just want to double down on that. Like, they don't want you to unleash traffic until your ops are fixed because then you're just throwing a ton of water into a very leaky bucket that may actually exacerbate not only Amazon's problems but your own. You know, imagine that you have a PPM problem and suddenly you're throwing a ton of traffic at skew with that problem and now you've exacerbated your own issue, um, let heading into a negotiation season. But also that, um, the buckets don't have to look similar when you're trading money across them. Uh, the question was originally about getting, uh, moving money from, uh, co-op funding or accruals into advertising or vice versa. But, um, to Kara's point, uh, Amazon doesn't necessarily need to have it positioned that way. It could come from other buckets of money. And by making those requests, you can often figure out what areas of investment are more strategically important to Amazon and your vendor manager that year. The phrase that I've heard used a lot is, where is a dollar worth more or less than a dollar this year? Because sometimes somebody's got a goal somewhere that says they got to get category DA up half a point and you're the big lever for that.

That's a good point, Andrew. And between you and Daniel also made a good comment in the comments. Daniel said he was able to kind of achieve that by shifting into deal funding. The other piece I'd say is that My prediction for 2026 is Amazon is going to start clawing back on cost increases that came through from tariffs. I personally would rather get a co-op reduction and have a cost down than maintain co-op or increase co-op because you can always like cycle in and out new products. You can set new, you know, margin tiers that can be part of future negotiations. So to Andrew Hamada's point, like it's really important to understand what the VM's biggest pain point is, what they're trying to solve. And then instead of using their solution for it, come up with your own.

Perfect.

And I think that's a nice dovetail into some more profitability questions. We had several questions, including one in chat now about PPM and benchmarking, several questions about, you know, what does a benchmark look like, what targets are Amazon aiming for, etc. And I think there's probably a lot of good answers here. So, Cara or Bruno, would one of you like to start telling folks about how they can think about NetPPM benchmarks by category?

Well, I'll leave the benchmarks for Cara. It's more on her side. I would just say the message that I've been trying to spread in the last 3 years is that I see vendors still worrying too much about the Amazon side because, because they are pushed to it. Why should I care about net PPM on Amazon if I'm losing money with my internal net profit? And it's my strong belief that vendors are spending more time focusing on increasing sellout, investing in PPC and everything they can do. And I call it, they don't clean the house first. And that's where inefficiencies can cost them money. Chargebacks, shortage claims. I've dealt with big vendors that started to include a percentage based on last year losses from PQV, from shortage claims in their prices that Amazon didn't accept. I think the best ways for a vendor to start aligning his internal processes with Amazon compliance and start saving that money. I'll give you guys an example. Last year I helped a vendor from Denmark and they wanted to pass a cost price increase to Amazon around 6%. I told them it will be very hard for Amazon to accept that. We tried with the automatic tool through Vendor Central. We went to the vendor manager. Of course he rejected. And then at some point I was like, let me review the supply chain. And I found a way to save 8%. In the setup that he had. So we didn't pass the cost price increase to Amazon that they didn't accept, but they were saving money just for finding efficiencies and making things compliant. A good example of that is usually vendors because no one trained them. Vendors set up their cataloging units and then they start fighting to have an MOQ, but If we set up our catalog based in master pack, because I'm selling an item and the box is 4, so I'm setting it in multiples of 4. And then that's when I go and I say my pallet size is this, because if it's a volume ASIN, then you can move to a pallet ordering program. And if you start in the right way, because the catalog is the bread and butter of the vendor. If you align it there from start, everything will be a bit easier. And minimum order quantity is based in the way that you set up your catalog. So this is just an example that I think vendors should start looking to their profitability too and start cleaning their house with their supply chain.

I think it's a really good point. I'll get back to benchmarks in a second, but just to double down on that, I've seen that on both sides now. Too often I see vendors who treat Amazon as the problem, like Amazon's so unprofitable, oh, our programs are so expensive. But then you look at their channel strategy and it's still based on like what works best to sell to Home Depot 15 years ago. They've not optimized their supply chain. They've not renegotiated their costs with their factories based on new MOQs or future. I think right now is also a really good time to negotiate because everyone's hurting a little bit. If you structure your entire business towards what works best for Amazon, especially if that's like the largest volume, that's the hard work that no one really wants to do. But Amazon will show you all the problems in your business, but it's not necessarily the root cause. So to Bruno's point, you have to go and do your own due diligence and clean up your own house. I'd say the same thing with your PIM, your product information management. Like, I've— there's most of the time it's just a mess. But there's little things you can do to offset that in the short term.

But Cara, if you allow me, I have— because vendors are still not noticing that Amazon didn't train them and they are making money because of their lack of knowledge of the compliance. And because Amazon vendor is B2B, and I've been saying this for a couple of years now, it's an amazing analogy. I tell my new clients, look, if your best friend is a world champion of poker and you never played poker in your life, you don't even know the rules, but he invites you for a game and you accept, what will happen? You will lose. Is it your fault that accepted or your friend that invited you? I think it's your fault because you accepted to play your game without knowing the rules. And I see this happening consistently with vendors. Because Amazon sells themselves very, very, very well. I'm gonna take your brand globally. This is a global window. We'll be supporting you. And then a couple of months down the road, nothing is like that anymore and they don't have the support. That's why I'm so proud of the work that we've been doing in the past 3 years helping vendors to start seeing that the success with vendors, the profitability comes from aligning the sell-ins And they need to keep in mind that if they have very good people helping them to increase the sellout, everything that comes wrong from the sell-in will increase too. So if you're receiving $100 chargebacks a week for an ASIN and you were selling 10 units, you start selling 100 units and it will grow exponentially if you don't fix it. But vendors didn't receive the proper training to know how to fix it. So don't play a game. I usually say this, don't play a game if you don't know the rules, learn the rules first and then start playing it.

Yeah. Or bring on the right coach, right? To get you there, which is what we also have been doing. But coming back to benchmarks, apologies. It's, you know, Amazon doesn't share that externally, but I can tell you, and you know, Andrew, we've talked about this a lot, you know, Net PPM is how the vendor manager discusses with the vendor. but it all goes down to their contribution profit or their contribution margin. So it's very category dependent. So for example, when I was at a large mattress manufacturer, the biggest pain point was outbound shipping. Historically, we had been doing mostly DI, but the shift had come to where Amazon was like, hey, you know, we bring this in for a really low cost, but it still doesn't offset our cost to get it to the customers or get it to other FCs. So we're going to need a 50% net PPM to offset that. But if you guys start doing dropshipping, we can take it down to 25% or 30%. So it's really, it's very specific to the category and it's like the underlying pain points within the category. So maybe you're heavy bulky or maybe you're really high turns, low cost, like in grocery or maybe apparel with lots of returns. It just depends. And what's happening is that your target for your brand is built based on the overall need for the category. So what they'll do is they'll say, okay, I have to improve my profitability by 6 points. But they'll then say, okay, of all these vendors, this is what I'm going to get from this one. This is what I'm going to get from this one. Maybe they just focus on the top 5 and then the rest just get, you know, the kind of more ice machine automated asks. But they'll look at a mix of how they need— what they need each vendor to contribute. If you again are not the slowest gazelle and you make it really challenging for them— yay, Nick was able to join! If you make it really challenging, we're just talking about NetPPM benchmarks. If you make it really challenging for Amazon and you push back with data using reason, they're going to need to reshuffle their asks potentially to others. So it's more about solving Amazon's problems on the side of the inputs than necessarily focusing on a net PPM target. Because even they can say, you can say, oh, I'm doing your backwards math and you should only need 38%, but you're asking me for 50%. You're not going to understand the logic coming from your perspective because they've got a different logic they're not talking to you about.

Yeah, um, the last thing I'll jump in here to summarize, because it's quite a bit of great information, um, is number one, to Bruno's point, don't just negotiate Amazon's profitability. Don't fall into the trap of responding to a net PPM ask just because Amazon throws it out there. They're always going to throw it out there, and PPM always prioritizes their profit. It doesn't take into consideration anything on your side, particularly around operational leaks, etc. So first and foremost, don't just respond to PPM. But then second, to Kara's point, um, that it's not necessarily about a vendor manager trying to increase your percentage from X to Y, and therefore you need to understand what the benchmark is. Instead, it is this category being tasked with improving profitability for the entire category from X to Y, and they're translating that into actual dollars or euros. And then they are trying to figure out, okay, of that €40 million in incremental euros in profit that we need from the category next year, where can it come from, where can we extract that value on a per-vendor basis. They are not thinking about the average of the category, etc. They are looking at your business in isolation and trying to find every spare dollar that they can vacuum up because they perceive you have the ability to give it up. Uh, and from my time at Amazon, I had vendors who in some cases had a 10% co-op program next to another vendor of the same size, the same tenure, and the same strategic importance that had a 22% program. Benchmarking ultimately didn't really help them understand what they needed to do. And to Kara's point, you're never going to get that information either. So instead of trying to worry too much about, you know, what is the benchmark and then how do I, how close am I to that benchmark, focus instead on what is actually defensible in your business from the data, because that's ultimately what Amazon is doing. And the harder that you make it for them to find that easy dollar from you, the more they're going to say, cool, I'm not going to look at this company anymore. We're going to go look at the other ones. The other folks who are not going to take up my time.

Yeah, and I actually had an example of this in action when one of my clients, Amazon came to them to double their damage allowance with no explanation, just double. And we were like, what the hell? What are you talking about? And it turns out it was driven by one ASIN's return jump because of product issues, because of packaging, which we had told Amazon that was an issue and hey, it needs to be over. So Amazon was Amazon's problem. But if we looked back historically, their damage allowance was like 2%, 2 or 3, uh, 2% historically. Um, so they're actually looking to more than double it because up to 6%. Historically, they'd always been about 1.2 to 1.7% damage allowance, so they had always been under their target. And even with this product's issue, they were only at like 2.1%, so just over it. So by laying all that out, plus showing, hey, from a profitability perspective, we are actually improving, and all this stuff, they just kind stopped. And we have the same terms this year as last year. Um, average damage allowance, it definitely is category specific, but I've seen anywhere between 2% and 6%. But again, that's from an operational hygiene perspective, like what Bruno was talking about. You know, you need to understand the root cause of what's yielding that damage allowance, and is it something you can fix? Because otherwise you're just going to keep pouring money into a bucket that's always going to— oh, automotive. Oh gosh, um, that's crazy. I've seen some doozies, uh, because there's also the issue around confirmed fit and whether or not you are getting the right product to the right customer. That is going to go into a lot of like your content, how Amazon's positioning it. So I, I've seen it on the higher side in automotive. I wasn't the VM for that, but I was sitting next to the VM for that, and he was always lamenting it. Um, so I'd say like 6 to 8%, but there's a way to dissect all the root causes and help to understand what you can do to help improve that. Because sometimes if you show Amazon a roadmap and say, hey, these are the investments we're making, we are okay to— can we hit— say it consistent, and then maybe look at a straight pay to offset their historical losses. Versus accepting a higher one. Again, it's that Rubik's Cube idea.

Bruno.

I can, yeah, just, just a funny anecdote about damage allowance. I can't confirm it, but I think I've seen 11% in France at some point, Kara, here in Europe.

I would not be surprised, especially because you follow compliance issues in different markets and different, and Amazon with EUFN, they might be selling a product that's designed for a French car in Germany.

Yeah. And the thing is, it's all about content. Like you mentioned, just nail it in the bullet points. Just put the number of the part. Just put the brand and you will receive less returns. But what I would like to add is that one of the things that really turns me on the bad side is how Amazon is telling vendors about the damage allowance. So they base the damage allowance based on the return of the product. They say it, but then that's when vendors need to step in and do the internal setup and to have a proper cross-functional team trained for this type of things because it's B2B, guys. It's like Amazon, we sold 1,000 units of an item to Amazon and Amazon from those 1,000 items sold 100. From those 100, there was 10 products returned. That's a 10% return rate. But this is B2B, guys. We sold them 1,000 units. 10 products from 1,000 is 1% damage allowance. It's 1% return rate. So Amazon is actually telling vendors, I have a 10% because I sold 100, but you bought 1,000 from me. So I think vendors need to start bringing this thinking and analyzing the data as they should, because that's what Kara said a few minutes back, it's like Amazon should not be treated differently as you treat all your other B2B. It should be considered different because of the supply chain and all the compliance and processes, but treat them like you treat the others because you will never accept that one of your other B2B clients, some tool shop or some sports shop, was telling you that they bought 1,000 and it's a 10% because they sold 100. You would immediately tell him, No, it's 1% return rate because I sold you 1,000. Why aren't we telling this to Amazon in the negotiation too?

Yeah, and I think that's been the challenge for vendors is that Amazon doesn't make that data readily available or easy to see. So then leveraging a tool like Rezen gives you that unfair advantage that they're not expecting you to be able to see the data the way they see it.

Just don't be the slowest gazelle in the pack.

Everybody write that one down. We've heard it now from multiple experts. All right. By the way, welcome Nick, our other presenter from Flying Tiger Partners, another former vendor manager from Amazon. He had a conflict because of my own timing error. So thank you again for joining us today.

We'll get him on another one too, because he's got some awesome anecdotes. From his time at Amazon as well.

Yes. And, you know, we will bring folks back as often as they are willing to come throughout the series to add other voices, kind of like Bruno is doing here today. Just to keep us back on the questions that got submitted today and for, I believe, this session, last one is specifically about baby registry. Amazon is asking a brand to invest in baby registry. How can they model the impact of that and understand if there's any incrementality associated with it at all?

Uh, it's extremely challenging. Amazon will give you what's called a proof of performance report, which is kind of BS. I would say make sure you're using it as leverage, so don't just sign up for it. Make sure you're getting some kind of cost offset, or maybe you're extremely specific with what that includes. Like, how— two pieces. One, what placements— how is Amazon driving traffic to it? Because, for example, if you have a baby registry page within Amazon, it does nothing if there's not traffic being driven to it. So understanding, okay, are you guys sending emails? Are there pop-up notifications? What's your targeting strategy? They won't tell you in detail, but you can say like, what and how much traffic are you expecting to drive to this? Like, is it, is it a big deal? What do you do about peak events? Like, understanding how they're marketing it themselves, because sometimes they'll say, oh, well, we expect vendors to drive traffic to it. It's like, okay, well then I'm paying you on two Why wouldn't I just go and connect with 1,000 great baby parent influencers and have them drive traffic and give them that analysis? Be like, hey, if I go with these thousands of influencers or Amazon Creator Connections, I'm going to get this much return. Understanding that those affiliate return, affiliate ROI is actually quite strong because you only pay a percentage of whatever they end up selling. And have them give you the data of why they think this is better. Because from being on the VM side, anything that's an on-site placement, unless it's like gateway takeover, is just padding Amazon's checkbook. Checkbook, I just dated myself. Padding Amazon's wallet.

As a gold rule, sorry, just quick one. As a gold rule, I always tell the teams that I train If Amazon is proposing you something, it's for them to win. So be aware of that. Because the good things that can be good for a vendor, like Paletot Ring Code, Picks, Super Picks, that kind of program, they don't come to you for you to engage in them.

Yeah. Go ahead, Nick.

And just from a negotiation tactic standpoint, if they're pressuring you hard to participate in marketing programs and it's not something you want to do, just ask them for data, for projections. You'll find them coming up empty-handed and their arguments quickly dissolve. And then you can focus on the things that actually matter.

Yeah, and you might find out that, oh, you get the placement and then you also get to pay to drive traffic. Oh, or another way too is to lean in on the AE, your Amazon, like the Amazon Ads person. Make sure they're aware of it because sometimes they don't even know about it, and say, well, how many credits am I getting for this? How much free advertising am I getting? Loop them all in.

Really get great responses. Um, just to summarize, you know, that in general it is going to be hard to track the performance of any of these incremental program investments because Amazon's not going to share direct program performance data with you. They're going to share what they call the proof performance document, which is, you know, indexed and pseudonymized and just as hard as possible to get value from. So instead, try to extract something in return and ask them for proof of performance in actual data projections and ask around incremental traffic, whether that's from this team or claiming that value from your AE partners. The last thing I'll add there is that I was formerly head of marketing for a category at Amazon. So I designed and managed the pro— these programs, and I can absolutely confirm that they exist as negotiation levers and as margin soaking sponges, first, second, and third, and as traffic drivers and brand exposure tools, like very dead last, unless it is strategically important for you with some leadership stakeholder to have your name on a certain page of Amazon's storefront, like those placements are generally not worth your time or money. They should be treated as negotiation levers and that's it.

Yeah.

All right. We are almost at time. So I want to get to one last question, more of a general strategic one. How transparent should vendors be during AVN? Does Does oversharing ever backfire?

I mean, it's kind of the thing where it's like, don't share anything that you don't want to be— have used against you. You know, like, I'd say if you're sharing their own data and your challenges, that's fine. I think it's all about timing too, because like I said before, if you have a roadmap towards moving all your products to, you know, Shipson-owned container compliance, You can share that, but share that it is a contingent on X. So you have to think through, it's like a game of chess with Amazon, knowing everything you share can and will be used against you in the court of Amazon and needs to be put as a contingent upon, not a, hey, we will go and do. Otherwise I've seen this and I've had this done to me and I've done this. Hey, you said that you were going to da da da da da da. Amazon, there's a reason there's always those long email threads, right? They put everything in writing, they document everything for a reason. And that's also where you need to do the same back. So expect that it's going to get used against you and have that same mindset. Because I'd say Amazon's not a partner, they're a platform. You're dealing with a robot.

Yeah. Really just make sure whatever you're sharing with them serves your purposes. Yeah, you wouldn't want to share anything about your actual own internal profitability. That's just leaving money like out there tempting to steal. That should never ever be discussed. Amazon doesn't discuss their profitability. Neither should you. If it's something that is bad, the only reason to share with Amazon is to help mitigate any kind of bad responses that could be coming down and make things less disastrous. For example, like production outage issues, things where you can plan collaboratively, but otherwise don't show them dirty laundry if you don't have to.

Treat every communication like a negotiation. Because it is.

Yeah, I will just add through my analogy, don't show them your cards even if you know the rules of the game.

The last thing I'll say just to close this out here is that I often hear from brands like, hey, we're gonna bring this additional like category insight information or an industry analysis as like an incentive for Amazon in this meeting. And you know, we're gonna drop this on them as though it is really strategically important, earth-shattering information. And Amazon vendor managers will always talk a big game of like, oh wow, thank you so much. They will take that information, they will extract all the value from it, and they will give you absolutely no credit for it in your negotiation. It's not an input, it's not a financial terms thing. So do not trade information like that for points on a contract or anything of this nature, expecting like an actual quantifiable return. All right, thanks very much, everybody. We are at time. I'm dropping a note here in the, in the chat in case you want to follow up with Flying Tiger, Nick, or Kara. Their website is there. And then I also dropped Bruno's website, blue.ecommerce. Thank you very much, Kara, Nick, and Bruno for attending today and dropping in all of that insight. Apologies again for all of the time confusion this week, but going forward, I hope this is a lot smoother. Every future session will be at 8 AM Pacific, 11 AM 4:00 PM GMT. Look forward to the next one, and if you have additional questions, please don't hesitate to submit them using the tools in the meeting invite. Otherwise, have a great day, everybody. Thank you again for your time and attention.

Thanks. Bye-bye. Bye.