Amazon Vendor Negotiation Q&A - Week 8 with Jared Egge

Joining us today, everyone, is Jared Egge from Wave Commerce. Jared and I know each other from college, actually. We're mutual graduates from University of Washington, the business school there. And then we both joined Amazon. At the time, it was— Amazon wasn't doing a ton of recruiting out of undergrad. We were part of a very, very early wave of hiring called— God, I don't even remember what it was called. But Jared, you were actually in an area in an FC doing area management first, right?

Yeah, I was. Yeah, I don't know if they have that program anymore, hiring undergrad into the area manager. I broke the, broke the system. But no, it's quite the job having a 22-year-old go and manage 40 and 50-year-olds in an FC environment and actually I don't know if they've restarted. For a period of time they did stop because it's— I don't— maybe it was considered a failure or something, but it's, um, it's— it was, it was quite a— I don't know if you want me to jump in in my experience and background, but, uh, please, please do it. I started, uh, yeah, I went to Allentown, Pennsylvania, ABE2, if anyone's familiar with the FC codes, um, and I was in inbound operations. Did that for a couple of years. So my team would have been the ones that were writing the chargebacks. So from that standpoint, the evil guys, but I know a little bit about the how the sausage is made from that standpoint. And then from an Amazon standpoint, made a pretty big pivot. In fact, it was, it was kind of difficult to, to make that change, but I'm As we were talking earlier, I'm from the Seattle area. And so at the time, now there's offices everywhere, but the time the main HQ was Seattle. So I wanted to get back and pivoted over to retail and being a vendor manager kind of in Andrew's world and did that for the second half of my tenure. I did about 5, just under 5 years at Amazon, maybe 4 and a half. Half in the FC, and then I was in BIS, uh, Industrial and Scientific, um, for my time as a vendor manager doing multiple different categories. Um, and then about— that was over 10 years ago now, and, uh, I left Amazon. Um, I actually really enjoyed being a vendor manager. Uh, like that job. Sometimes that's a question, what was your experience? Um, I did like it. Of course, with every job, there's some things you don't prefer, but I just saw opportunity at the time, you know, different world 10 years ago. Certainly the idea of an Amazon agency existed, you know, but Bernard here on the call was a big inspiration to me and really helpful in my journey of discovery to leave Amazon. So I'm always thankful for him. But just still saw there's still a lot of opportunity, especially in the industrial space where that was one of the more old school categories in terms of Amazon. So I left Amazon to start Wave Commerce, which is essentially bridging the gap between Amazon and, and the brand and trying to facilitate things happening. So Kind of started as a hired gun consultant and then grew a team from there. And now I kind of branded as an outsourced Amazon team. So a lot of maybe larger brands have in-house multi-person teams. We are an outsourced version of that in a nutshell. So yeah, got it. Is that a good description?

Yeah, super cool. Yes, I love it. I'm going to go video off because my connection in this hotel room is terrible, so hopefully that helps.

Great.

So everybody, this is your opportunity to ask a lot of operational questions related to fulfillment center operations, this as well. But we've got a bunch of questions already submitted. If you have additional questions, please feel free to submit them using the Q&A function. Anonymously here or the chat function, and we'll get to them as soon as we can. All right, selfishly, Jared, before we get to the submitted questions, I really want to go deeper on your point about enjoying vendor management, because I feel like maybe 1 in 4 vendor managers I talk to or former VMs enjoyed the job. If you can briefly tell me what about that job did you like and why do you think most people dislike it compared to you?

Well, I really enjoyed the part. Well, I describe of what I left Amazon to do was to amplify the part that I liked, which I felt like, you know, a chunk of the job which people think should be, should be all or most of the job. But it was really, as we know, Andrew Hamada and Bernard Liad was only maybe less than 50% of the job is interfacing with the external brands and working on their businesses. I really liked that ownership of the P&L. You know, a big part of the job is managing internally. I didn't love that part, but I really liked the, I really liked the working with the brands and going through kind of in that space. It was really more e-commerce discovery in the industrial space because we were we were going to trade shows and talking to brands that were really apprehensive about Amazon at the time. And so doing a bit of sales and, you know, bringing them around to the idea and kind of watching that flower bloom. So that was just specifically in that category was, was more the case, you know, would have been a different world in like consumer electronics or what have you. So yeah.

Got it. Yeah. So you were still in that era where Amazon was adding selection as rapidly as possible. And that was definitely a fun time to be a vendor manager because you're just talking to people growing their business.

The wild, wild west. Yep.

All right. Well, let's start with user-submitted questions. First, we got one through our anonymous question form online. Person says, we sell equally in two major categories. They have an SVS, but it's only providing support in one of the categories. However, their SDS accrual is being invoiced across both categories, even though that SDS only supports one. Is that right? And if not, how do they correct it?

No, I mean, I've never had that occur, but that should not be correct. If it's an accrual and they're only supporting you in one category and you're being billed for both, then no, I mean, that would be a conversation with, you know, I would start with the SVS and then determine. It's kind of good to have to, if you can identify an ally, there's a variety of topics where, whether it be Amazon Advertising or, you know, where you have maybe stakeholders in an area and SVS would be one where you can kind of get them on your side. So, you know, I'd recommend a conversation with them and then kind of put the ball in their court. What would you suggest? Should we approach the vendor manager? It's not going to be the vendor manager's decision to, or the SVS's decision to be able to fix that. It's going to have to go to the vendor manager, but getting them on your side as opposed to going straight to the vendor manager would be how I would go about it.

I like that. That's a subtle strategy, and as a former SVS myself, I appreciate the recognition that SVSs do have some power, even if they're not formally the decision makers. So start by talking to the SVS themselves, identify an ally, etc. Makes a lot of sense. Bernard adds that it's an administrative situation and that you need to actually request the approval via the CSM's manager to open access to the other GL. In my experience, that is usually the case, is that it's— this is an administrative problem and you need somebody to help you fix it. That said, as any category vendor manager knows, if you have a situation where you're getting an outsized amount of resources, it you're going to fight whether you're, you're supposed to or not to not share those resources. And so if I was a vendor manager and you're in the category that the SVS is supporting today, I might not readily want that SVS to go work on other things at the same time. So, again, to Jared's point, enlisting allyship is a really, really smart move. If there has been any sort of overpayment or any sort of financial transaction stuff that needs to be corrected there, Jared or Bernard, is there anything that a brand can do?

Over—

well, I mean, I guess if you were getting— if you weren't getting support for a period of time, I don't know if you could necessarily claw that back. I would try to maybe use it as a negotiation chip for something else in the future, something in your back pocket. That would be pretty complicated to try to— if you're saying like if a portion of that catalog was getting the accrual for a period of time, but you weren't getting the support, being able to identify what that amount is and get that back, I don't know if that would be possible.

Yeah, I agree that Amazon's not going to write you a refund check. It's really, really, really unlikely unless you have a ton of market power and this is the hill you're willing to die on. And I don't recommend that being the hill you choose, but that you can usually get some kind of credit for it, whether it's in something less desirable like a merch accrual or something more desirable like an actual negotiation input.

I do find that when you know that something isn't possible with Amazon, but it makes business or world sense and you can connect with the vendor manager and kind of agree on that and also just raise your hand and say, I know you're not going to be able to get this money back for me, but it feels wrong. Then you can then spin that instead of trying to kick against the pricks and try to get something you know you can't get just to prove a point. Just kind of immediately trying to align again, like creating an ally and more of trying to leverage that into something else that you can get, you know, speeding that process instead of trying to bulldoze your way to something that you know is probably not possible is, you know, what I would recommend.

Yep, makes a lot of sense to me. In general, I feel like the consistent theme across these sessions has been finding the fine line between investing in a relationship with your vendor manager, which maybe isn't super, super worthwhile given the tenure that often goes into those things, versus, you know, investing in some amount of recognizing these people are humans and trying to develop allies, even if it doesn't mean trying to become friends with your VM and expecting them to, you know, do personal favors for you. There's a lot of middle ground there that I think brands really struggle with. And Amazon does as well. All right. While we're on the subject, somebody else submitted a question about incorrect products associated with their catalog. They see a lot of products that don't belong to them show up in retail analytics, and they're worried that it's impacting their reporting, their net PPM, particularly as they enter negotiation season. What do you think about that and how can they get that resolved?

Okay, so it's, yeah, items that are showing up in the catalog. I mean, you start with a case pointing it out, not that that's necessarily going to going to get anywhere. I would recommend in that, in that case, you start with pointing it out and just thinking to the next step where they would come back and give you maybe a nonsense non-answer. I would point out other, other, because likely those, those products should be in some other category. So you need to try to lead the support associate to water. And this is before I would get to an escalation step. But pointing out other, other products like I've had this happen in terms of like it was an industrial brand and they were getting iPhone accessories show up in their catalog. So being able to point out, you know, if it's just 5 ASINs and there's 200 other ASINs associated with that brand, pointing those products out and saying that, that these should likely go together, they don't go in my catalog. That can be helpful because it allows the support associates always looking for ASINs that they can kind of reverse engineer. So you should— you may think that's self-explanatory, but again, leading them to water, showing them examples so that they could do that. Obviously, if you have an AVS, CSM, you know, this is something to involve them with after, you know, you could go straight to them or after you submit a case. You know, there's going to be a lot of noise in the Vendor Central data. Dealt, dealt with something recently where in the pricing file there's products that have incorrect replenishment categories in the pricing file, but then actually in Amazon's system it's all correct. And why those two things don't jive up I couldn't tell you, but is there any negative business impact? The only negative impact is it's just a little disorganized as you're— there's no actual negative business impact. It's so, you know, I— what I urge folks to do is to— yeah, it's the question, is there a net PPM impact? Well, you can investigate that, figure out if there is. Sometimes you find things that are frustrating or not actually having a business impact, you need to just get over it. Like, and, and move on to things that actually have a business impact. Now, if it has a business impact, because if it doesn't have a business impact, it may be tough to get your AVS or your VM to do anything about it, then it just becomes more frustrating to you. So there are some things that you're just going to have to overlook.

But yeah, that makes sense. So I think I'm going to start with the end in mind there that, you know, you clarify that there shouldn't be an actual negative business impact. There might be a reporting impact, for example, if there's some weird product association and whatnot. But as long as there's no significant business impact, it's going to be tough to get Amazon to take an action, which generally is true. But that if you do think there is a business impact, start with the Vendor Central case. Help the support associate lead them to water. And then of course, if you have an AVS or CSM, loop them in next.

Yeah, well, I've found— I mean, there could very well be a business impact. I don't know in this case, but I've seen where products show up in the catalog, but a PO for that ASIN is never cut, right? It's just this erroneous thing. And then 3 months later it disappears. So we could spin our wheels, spin our wheels, spend hours, submit cases, escalate here, escalate there. And this thing just resolves itself over time. And so I just urge, you know, to determine, is this just something that's annoying you? Which I'm not— there's something to that. Like, you don't want things that annoy you, but how much—

Yeah, in this case, if I had to guess, it's less about items showing up in like the PO ordering side and more about items showing up with actual sales that are not associated with the catalog. And this question was submitted anonymously, so I don't have full context, but I've seen this a couple times with our clients where they're actually seeing other brands' data or other brands' products in their sales incorrectly. And it won't necessarily even be another vendor. It might even be Amazon products. Some of my favorite examples of this are Ring cameras and doorbells showing up randomly in people's sales data or Echo devices with like their actual unit sales volume and whatnot somehow getting attributed to this vendor and it completely throwing off all their metrics because say, for example, they're a, you know, $10 million a year supplements company and they get a CE product associated with them, every single one of their metrics gets completely thrown off, at least in, in Vendor Central.

Yeah, I've—

and in those cases, I don't, I don't know if there was a big issue with Ring products because I've seen that as well across vendors that I've worked with. And so I guess in that particular case, we were able to just point it out and support got it fixed. You know, with, with Ring products and Amazon owned, I was just a bit— I don't think I submitted the case myself, but just a bit more firm and like, this is Amazon confidential information. Don't you think you, you, you don't— because it's actual real sales data that's coming through to my account. So don't, don't— wouldn't you want to resolve this and that? Kind of rang the bell a little bit. But yeah, Bernard, you have a thought?

Yeah, just to follow up your point, Jared, too. So from the question about if it's more of a reporting from a sourcing view versus a manufacturer view, I think that might be more so the question. I think as a brand owner and not a distributor, your manufacturer view in the reporting should actually equal sourcing view if you are the only source of one piece supply. If that's not the case, if you have a brand that's widely distributed, from an ASIN-to-ASIN standpoint, if you are the brand owner, your manufacturing view should always be greater than your sourcing view if you're looking at a matter of GMS. If you see discrepancies, if you see something that's maybe an ASIN that you haven't offered to that's only in the manufacturing view but not in the sourcing view, you essentially have a brand mapping problem. There is a mechanism to get that fixed, but within the last year, getting brand mapping and something else called brand stamping requires leadership approval. So if you do see discrepancies in your reporting, yes, you can absolutely raise the case, something that your, your CSM will likely have to lead. Your vendor manager is not going to know what to do with it. But there is a mechanism to get it fixed. But, you know, as for the folks on the call, if you do have this issue, you should be asking about auditing and correcting brand stamping and brand mapping.

It's a great call-out about manufacturing versus sourcing view, Bernard. And for anybody who isn't familiar with all the nuances of how those two views work and how you can affect what flows into the views, including the details Bernard just shared, I'm dropping a link here in chat so that you can read more about it later. Thank you both. That was a very comprehensive answer, and I learned something. We got our first live question here. I'm gonna have you answer live, Jared. This is from Lorenzo. During AVN, Amazon asked for huge cuts in COTS prices. Familiar story. They haven't agreed yet, but suddenly a couple of top seller ASINs were wiped out, and Amazon is asking for straight payments to cover week 3 due to vendor issues and packaging size. Lorenzo, do you mind clarifying what the question is? You gave us a lot of context there. Um, it would be great to understand what you mean by, uh, ASINs getting wiped out. And of course, Jared, if you have anything to, to add while we're waiting for Lorenzo, please feel 3.

He just—

oh, okay, sorry, he clarified. The ASINs are no longer live, so it sounds like they suppressed top seller ASINs, and Amazon is asking for street payments to cover something.

I would— I mean, we're seeing— I mean, I would say last year and then even more so this year, suppressions due to negotiation. And even like, it seems like that— I don't know, Andrew or Bernard, I don't think that really exists when I was at Amazon, where that's actually, if you have someone else look at the ASIN, it's coded with that, like due to negotiation. And that was something that was interesting to me. I had someone else at Amazon look at an ASIN you know, the vendor manager is not necessarily going to admit that, but I found that interesting as that is a move I'm seeing more often.

Yeah, I can chime in on that too, Jared. So I think Lorenzo's question, you know, sometimes it's coincidence that an ASIN goes away outside of the circumstances of Amazon negotiating cost or cost reductions or not. I think the first step you want to do is really understand the suppression first. You need to probably do the diligence to figure out, is it one, is it crapped out, or is it a regional suppression, or is there a suppression related from a direct fulfillment versus in-network standpoint. I think you probably want to understand that before you fully commit to the ask if it's a cost reduction and they genuinely remove the feature offer. I think a good telltale sign if you want to check if something is regionally suppressed or crapped out, log out of your customer account, amazon.com, and log in as a business. If you have a business account, Business Prime, if you log in through Amazon Business, you actually don't see regional suppressions. You don't see direct fulfillment or in-network suppressions. If you log in with a business account and you see that there's no feature offer, then that kind of gives you an idea that the product is crapped out. If it is crapped out, you know, that's a separate discussion from, you know, it helps justify the cost reduction, but there's obviously other ways to check if, you know, why there's no feature offer. Is it compliance? Did you update content recently? Did you include a word? Did you include like mold in a bullet point or, you know, something like that? So there's a few checks and balances you want to check, but at least do the diligence and ask, you know, your vendor manager if you have access to him or her, why they see the feature offers disappeared. I think Clarence followed up about, you know, Vendor Central says no active offer. So the package info, so there's other catalog attributes on the back end that used to be kind of like nice-to-haves that are now required to have a feature offer. Sometimes you don't have a main image, it goes away. Sometimes if you're like in the automotive category, there's a weird attribute called like model year that's required. So there's some weird ancillary stuff that previously were optional attributes, and then if the attribute goes away for whatever reason, then the feature offer or the buyability goes away altogether. So I would kind of start there to see if you can figure out the root cause before fully committing and associating the feature offer going away due to cost.

Yep, really good callouts, folks. Just to summarize, you know, start by verifying whether it's a coincidence or not, because sometimes it is. In this case, it definitely sounds like there's a legitimate reason or could be a legitimate reason for pulling this item down if there's a catalog issue or a packaging issue. To Bernard's point, there's been a huge change in how Amazon approaches optional attributes. And making them more required. And so we've seen a lot of people get big chunks of their catalog pulled down all at once or just rejected in part of like an item update process or new item setup process where they weren't seeing that friction previously. So definitely investigate that first. Awesome. All right, let's keep going. This one I've been waiting for you, Jared, to ask specifically because of your former time as an area manager. I've I'm hoping you have some fun answers for us. Amazon wants us to lower our VLT as a brand, but we think we've done all the things that we can, whether it's locating regionally, you know, trying to outbound as quickly as possible. What are some other things that we can try in order to make Amazon happy?

I mean, yeah, that's, that's an interesting one. Because I don't, I don't know that like even in my time of vendor manager, it's not really a metric we focused on as much because you— there's not a whole lot of ways you can move the needle there. Ultimately, in terms of vendor lead time, ensuring that— and the biggest indicators are shortages and chargebacks in terms of the receive process. So if you've optimized everything, in terms of their outbound, which it says that they have and transit time, then all you can really do is, is have you done everything in terms of the receive process at Amazon? So I don't know, without like more context on this person of what, what they have done, they've, they've said they've done everything they can on the outbound side.

You know, what are some examples that come to mind that you would want to check?

Well, if they, you know, sometimes they said we've done everything and then I find out that they're shipping out of one location. So obviously, like, your vendor lead time shipping out of one location is going to be not as optimal as shipping out of multi-location. So it may not be feasible for them to add additional locations, or it might be feasible. You know, that's something that is more a part of a long-term strategy and doesn't happen overnight. But, you know, when they say again, when they say they've done everything, well, what does that mean? I would want to parse that out a bit. And that, that would be a big one. You've got a lot of companies shipping out of one location. When it's possible that they have multi-location and they've just chosen to ship Amazon out of one location and they're not being flexible in that, I would want to explore that, you know, and then if they physically only have one warehouse, one location, maybe smaller business looking in, you know, have they looked into the options of 3PLs? What's the feasibility there? You know, but I haven't seen vendor management push really hard on that topic. So, you know, you wouldn't necessarily— it may not be worth that brand's time to move mountains to become a multi-location operation just because vendor management's saying we need to improve VLT. I would expect that the VLT must be quite bad if a vendor manager is bringing it up because they don't typically bring that up. So, you know, again, I just kind of need more details in terms of that. You know, I'll give a separate example. A brand doesn't know what they don't know. They say, you know, yeah, our vendor manager is saying our co-op is under category standard and we can't continue doing business at this co-op. And we think our co-op is fine. And then when I— but I don't know what that co-op is. So I ask, well, what is— what is your co-op? And they say, oh, it's 2%. Well, yeah, 2%, you're going to get, you know, you're going to get yelled at every year, you know, and some of them may, you know, let you somehow you negotiate your way out of it. But yes, 2% is way under any— it doesn't matter what category. I don't need to know what category you're in. We understand it, you know, and there was a time in the past where Amazon was signing brands at any, you know, any co-op amount all over the place. They've standardized since then. But again, it's kind of like, what is your perception of, of, you know, what is the norm or what is the definition of I've done everything.

Yep. So yeah, that makes sense. So, you know, the, you know, shipping out of multiple locations versus one is one thing they can check on the outbound side, but that it's kind of vague otherwise. You mentioned, you know, once you've done everything you can on the outbound side and knowing that we can't verify that, that you can turn to optimizing the receiving process at Amazon. What are some of the top things that come to mind for you that a brand could do there?

I mean, making sure that you have a clean catalog, you know, that's the first thing in terms of pack quantity sizes. Looking at programs like, you know, license plate receiving and standard where also where cartons that single-acing cartons that can be, you know, you're removing possibility for failure in the receive process when you do that. Not to say that Amazon can't handle anything you throw at them, but these are all potential points of failure. So if you start removing those and making that receive process more efficient, and a lot of times, you know, the question is like, well, have, have we done everything that we can? Well, no, it's not necessarily a reasonable target to say that, that we'd like to achieve zero shortages. But shortages is an indicator that perhaps there's some— of course they don't give you any root cause, like the shortage occurred because of this, but shortages would be one and then chargebacks would be another. Chargeback is much more helpful in terms of if you're getting like ASN-related chargebacks, then you know what you need to work on. If You know, if it's an ASN mismatch, is this a, is this a digital problem or a physical problem? And then you can set out to fix that. But, but yeah, just, just doing, taking those steps to make the receipt processes as seamless as possible. And those ones, I would say, you know, moving to the license plate program or you know, having, not having multi-SKU cartons is a great, you know, thing to go. That's not necessarily going to present itself in chargebacks because you don't have to do that.

Right. That's more about your own product decisions and optimizing to your point for Amazon receiving and trying to help them not make errors even though they are technically capable of doing a bunch of things. The simpler your eaches, inners, cartons, boxes, etc., universe is, the less likely it is that Amazon is going to accidentally do some kind of weird 10x receiving or outbound issue that has a big financial impact on your company. That makes a lot of sense. One more submitted question: How do auto-renewals of accruals work? And I'm going to copy this question in the chat because I've never heard of this before, so I'm not sure how to even restate it for you. So let me open up my chat window here and drop this in. How do auto renewals of accruals work? How to best track all of auto renewal and cancel by dates? Can we get out of auto renewals? And before anybody answers, the reason this was confusing to me is that in my experience, both as a vendor manager, as a consultant, and even now in the periodic times I get to see this for brands, I've never seen an agreement auto accept the renewal. I've seen an agreement auto generate the renewal and have it available for signature in Vendor Central, but I've never seen it automatically agreed to. Gerald Bernard, is that something that you've actually seen?

Well, I mean, if the agreements are staying the same, you don't have to go in and accept every single year. So if the accruals have stayed the same year over year, then, you know, and in some cases brands that does happen for years at a time. Only when something has changed do you have to sign, like, so it just has a new agreement in the agreements portion. I don't know.

Yeah, I'll chime in on that too, Jared. So if I think if the question is related to the estimated auto-renewal date when you go into Vendor Central, look at your agreements, the standard agreements, if you have regular co-op, a freight allowance, a damage allowance, that renewal date should reflect what it was when it was put into play from the last ABN, right? So most accruals end on the end of March. So you should be seeing kind of those, you know, if your agreement dates are set conventionally, it would be the same. There are some other contrecogs types of accruals that if you log into Vendor Central every day, the estimated renewal date keeps moving out by a day. Or it's like tomorrow and it's always going to be tomorrow. So I think, I guess it depends on the circumstances. If the question is related to the standard accruals, damage, co-op rate, the estimated renewal date should reflect, you know, that activity around AVN. It's probably going to be, again, if you look at the current activity date, it should have gone active April 1st of last year and it'll end end of March. Again, these other other circumstances where if you're on an annual thing and not during, ABN, if it's like a calendar, you see some agreements that end on December 31st. That's a different circumstance, but I wouldn't pay a lot of attention to whatever the estimated auto-renewal date. There are vendors that were cut off last year and continue to get cut off that they still show that a renewal date of their contract COGS, but they're not getting any POs too. So I guess, you know, I wouldn't put too much weight on what the estimated auto-renewal date is in Vendor Central. The second part of the question is to get out of the, you know, to get out of the auto-renewal. Yes, legalese, if you look at the actual verbiage in the agreement, it says you notify Amazon whatever, 60 or 90 days if you don't want to continue this agreement. You can vocalize that so it's on paper. But then obviously that becomes an ABN discussion of whether or not it's going to renew. This is probably more applicable if you have a freight allowance and you want to get out of it and you want to go prepaid. It also goes into play the other way if you currently have a freight allowance and you want to get out of it and, or, yep, the other way around. So I guess it just depends on the circumstances. But the short answer is if the question is related to the renewal dates in Vendor Central. I don't really pay a lot of attention to those. If you want clarification, obviously ask your VM to specify when the current agreement goes into effect and if he or she does expect it to auto-renew without any type of negotiation at the next APM cycle.

Yeah, I don't know if there's any—

I learned something today.

I don't know if there's much positive impact of getting out of auto-renewal because that's Either Amazon, if they don't have an agreement, they're going to put those provisional agreements in, which are likely higher than your existing agreements, or they're going to shut off POs. I mean, these are not outcomes that are likely positive. Of course, we would need to know more context of this particular situation, but I can't see a case where that would play into the brand's favor.

So Yeah, that's a great callout that if the goal here is to get out of auto-renewals because you want to use it as a negotiation lever or you want to pay less or you think that it creates some kind of leverage for you in the AVN, that might be a mistake. That's not necessarily how it works because to Jared's point, they'll just put in provisional terms or they'll stop ordering from you. And if those aren't outcomes that you're prepared to face, then don't do that. And I don't know why you would, and we don't necessarily know that there's a positive impact to actually going through with that process. Ultimately, it makes more sense to me to think about your terms across all of your agreements, including ones that auto-renew, thinking about what your total position as a business is, net of all of those agreements. And of course, if you're trying to actually reduce Amazon's margins year over year, you're in for an uphill battle no matter what you're trying to do. Potentially an impossible battle. But if you're specifically trying to get out of a specific program, to Bernard's point, then certainly you can talk to your vendor manager about changing from we pay to they pay or vice versa, and that impacting like a freight allowance. All right. In our last couple of minutes here, a question that I've been asking everybody, you've probably heard me ask it in previous sessions, Jared and Bernard, but one to open up for you here. What are some tactics that Amazon is using these days to pressure vendors that vendors should be really aware of?

I mean, I think they're getting more, much more aggressive last year versus previous years and this year of just actually turning off POs. And in the past, if your negotiation was being handled by an offshore resource, they didn't have the teeth or the ability to do that. So I often in, say, 3 or 4 years ago and further back said, you know, if the AVN comes from an offshore resource, you can safely ignore it because you're not going— if your only concern is the business getting shut off, that's not going to happen. That's no longer true. And so You know, it, it does. I don't know if this is directly answering your question, Andrew, but I think the biggest one is that they're just, they're coming with more teeth in terms of shutting off selection, either the full catalog or portions of the catalog, or this we talked about earlier in the call, the suppression due to negotiation on particular SKUs. Um, that's something that I feel like has been new in the last couple of couple of years. So yeah, just, just have to be— and in terms of how to prepare for that, what I'm urging everyone to do is just to have more of a multi-year plan in terms of your negotiation and where you're going margin-wise, not just this year, but, you know, really a 5-year plan of how that's going to be developed in terms of when price increases are going to occur. Of course, things come up in real time, tariffs, this and that, and you have to change that. But having some semblance of a plan of how you're going to be able to throw Amazon a bone here and there, but you've somehow, you've baked that into your margin over time in terms of, you know, price increase, that things like that are being considered. That you need to be able to give Amazon things along the way where, you know, now in the past you wouldn't, you could stand firm and be okay. And now it's seeming like, you know, you really need to be able to give them something or there's going to be negative ramifications.

Yeah, so absolutely right, Jared. Just kind of ride the coattails of that too. This will go back to my previous comment about trapped out versus regional suppressions versus DS suppressions versus in-network suppressions. You may have a vendor manager that's either a cash flow, a CM, or a net PPM SME, subject matter expert, or it could be a GL-specific threshold that has a hard floor with net PPM or contribution margin. So to give you an example, you know, we're in, you know, I support folks in the grocery category, in the furniture category, automotive category. Some of those categories, and even at a subcategory level, they'll say, hey, anything that's big and bulky, that's over 100 pounds, has— this is arbitrary, I'm just putting this out there, random number— you can't have a net PPM below 42. So you might have guidance from supply chain or from central finance that says, hey, just, you know, stop, stop POs for these ASINs until they figure this out. And then what figuring out means, I know Andrew, you love the, you know, GMMs and CSAs. We're seeing a lot more pressures, pressure this year, last year too, for some GLs that there's more of an ask to cover the gap of funding of kind of that PPM or CM. So we see more asks for GMMs, we see more asks for CSAs, we see less asks for MCP. During AVN, but outside of AVN, we still see a lot of asks for MCP, uh, for the match cost, for the, uh, the matching compensation program there. So, you know, that's kind of more so what we're seeing. There's obviously, uh, Amazon is less shy to ask for funding, whatever the scenario and however it looks like. So we're gonna expect more of that, um, again, outside of the GMM, CSAs, we are seeing more ask of, ask of, hey, here's a list of products that are probably 80% of your business. We need X% of a cost reduction on these, even temporarily. So expect more of those this year.

Got it. That's an interesting one. I've heard the term before, but this is only like the second or third time I've heard somebody express the PPM floor concept, which I think is a really interesting lens or different lens on like what people usually view as a PPM benchmark. It's a slightly different flavor because it's not a true benchmark. It's more specific and it's more of a minimum concept, but it's still something that I think is tangible and is going to be deployed a little bit differently in negotiations than these other tactics that you've expressed have been, Bernard. And it all feels like they're getting ready to start. The rumors that I keep hearing are that Amazon is going to start actually communicating more about CP inputs. And potentially start sharing additional PPM metrics that start to help them claim value for variable costs, etc.

Yeah, I think to your point, Andrew, so the net PPM force technically has always existed. That's always been the baseline of what a GMM ask is, but it is a different way of them asking and kind of framing how they're going to get that funding incrementality.

Yep, exactly. Awesome. All right. We are over time, but I really, really appreciate you both sticking around. Jared, for anybody who didn't hear us in the beginning, Jared is fighting a stomach bug and he joined us anyway. So really appreciate you, sir. If you have any questions or would like to follow up with Jared, I dropped his LinkedIn in the chat. You can also check them out at wavcommerce.io. And then Bernard will be here with us next week. So thank you very much, everyone. I'll follow up with questions and recordings as soon as I can when I'm not at a trade show. Um, but otherwise, have a great week, and I'm looking forward to seeing you all next week. Take care, everyone.