Amazon Vendor Negotiation Q&A - Week 6 with Ant Finch

Looks like we've got some folks streaming in. I see some familiar faces as well as some net new ones. So welcome everyone. Joining me this week, we have Ant Finch from VendorRocket. Really excited to finally get a chance to work with Ant. He and I have followed each other on LinkedIn and interacted in a number of different ways, even explored each other's companies a couple of times, but hadn't found the right opportunity to work together until just now. And so Ant brings a wealth of Amazon experience, but rather than have me try to represent it badly, do you want to take a minute and give the quick introduction yourself?

Yeah, of course. Thanks, Andrew. Thanks for having me. Looking forward to the questions. So my career on Amazon started in 2011, but prior to that I was working in a sales role looking after retailers in Europe across traditional retail, mass retail, and wholesale distributors. And then 2011 came and I was asked to look into this, this unknown retailer called Amazon. And that became— that kind of started my journey really, and became a big part of my career. So looking after Amazon from running ads to launching products to developing products, launching content, negotiating terms all the way through to 2022. When I left that business, I'd in-house everything. So I rarely used agencies. There weren't a huge amount of agencies to work with back in 2015, '16. But a lot of what I did was in-house. So I left that business in pretty good shape and I wanted to get deeper into the Amazon ecosystem. And that's when I started running a full-service Amazon agency with a DSP seat and an ad seat. Which really let me get under the skin of the real challenges that vendors and sellers were facing on Amazon, and particularly on the vendor side. A lot of vendors during COVID Amazon was pretty straightforward, right? It was okay. You could load a product and you'd get sales because everything else was shut down. But as soon as the rest of the world opened back up, Amazon became a bit more challenging. So you really had to think about what you were doing and why you were doing it. So I did that for just under a couple of years. And then I launched Vendor Rocket, where I now specialize in Amazon strategy as well as AVN support and some other executional pieces that I support brands with in, in UK, Europe and over in the US.

Fantastic. I'm going to take you at your word and just immediately dive into difficult questions because that's what we do here. Go for it. For anybody who hasn't joined us before, please feel free to submit questions either in chat or anonymously through the Q&A tool here in Zoom or through the Bitly link that you saw on the screen a second ago. We listen to all of them. Fastest is probably that anonymous Q&A tool here. I've got several dozen questions to get us started. So if none of— nobody asks anything, we will have a lot of content for you, but please interrupt us with your own topics. We'd much rather talk directly to you. So why don't we jump straight in? And talking about a piece you just mentioned there, which was the pandemic and how that changed businesses radically, especially in e-commerce, particularly around cost to serve as things like pandemic and those things ended and tariffs started to become a bigger deal, at least for US brands. And now globally, everybody's kind of trying to think through supply chain a little bit differently. Costs have gone up, inflation has gone up. And yet in AVN, Amazon doesn't ever seem to care about any of those things for the brand. They say, cool, here's net PPM increase requests, here's where we want you to fund more. And the brand's cost to serve doesn't really come into play unless the brand advocates for it. So in your experience, what are— I'm sure you've seen a lot of brands try this or helped brands try to advocate for, you know, their own cost to serve Amazon and tell a story about how that's changing and increasing. What have you seen work well in that case about how to actually tell that story in a way Amazon listens to?

Yeah, that's a— it's a good question because a lot of AVNs over the last probably 4 or 5 years have really focused on, well, let's drive operational improvements across the supply chain and then we can pass some of those savings on, etc., etc. And ultimately you do get to a point where you, you're unable to you're unable to make any more efficiencies. You can ship in full trailers or full pallet single ASINs, you can do all of those sorts of things, that's fine. But there's naturally a bit of a limit of what you can do. In terms of how you bring that story to Amazon, there's a couple of things I've done is Amazon are very process-based. So the vendor manager and the AVS, they will look at your terms and they will look at the net PPM, whether we agree that's the right metric or not, or whether it should be contribution margin. That's what they look at and that's what they're going to base a lot of their conversations on. So through the AVM process, I would quite often try and understand why their numbers were saying what their numbers are saying, because it's all, it's all generated. It's all that they're told what they need to go and get, and therefore there's a reason behind all of that. Quite often through the year, I would make sure that the vendor manager and the AVS understood my operational process because I'm actually a big fan of my, my business is not driven by the fact I've got great ASINs or I've got a great margin. It's driven by the fact that I can ship to Amazon in the most efficient way. And actually I'm a very reliable partner from that perspective. But I really wanted the vendor manager and the AVS and even the category leads to understand the process I have internally. So you can see actually when you talk about making it more efficient, it's not very easy to do that because you've seen it. Now that worked. A real treat because once you see it in the flesh, same as going around an Amazon FC, once you see how they pick, pack, and ship and store their products, you go, okay, now I understand it, why they do it in that way. It's worked exactly the same for me. So I'm strengthening that story of guys, that there is no more efficiency to be gained unless you can order everything in full pallets or you can go direct from factory and all of those sorts of areas. Now, of course, there might be some improvements. I remember exploring, um, uh, uh, Picks and Super Picks. I could never quite commercially make it work for me. Um, but those sorts of programs are quite interesting. Uh, Flex as well was also one that I, I ran the modeling on that a number of times because I was thinking actually that could work, uh, for the business I was in at the time. But, but commercially it never quite stacked up. But I always had a very open conversation with, with Amazon about those in terms of, look, I, I will see, I will run the numbers and I'll share the numbers with you so that you can see whether it makes sense for me. So rather than, than flat out refuse the discussion, I would quite often go, well, let me run the numbers and I will go open book with you and share with you the real impact. I think half of the time the vendor manager and the AVS just wanted to know that I wasn't pushing any of those kind of things straight away. I was actually thinking about it, how I could better engage and serve Amazon. Um, so that, that worked well for me. And, and I— lots of people say it, but the AVN is not a 3-month kind of discussion. An AVN is a, is an ongoing process. Every opportunity you get, you talk about the profitability, you talk about the efficiencies, you talk about how you're trying to make the, the business run smoother, faster, stronger— all the things that both sides want out of this. So when it does come to that crunch point of I need a reduction into, or I need an increase in terms, or I need you to do this, or I need you to put AVS costs up by X percent, you can then go, well, hold on a second, guys. You know what I'm looking at. You know how this is running. You know how efficient we are. So you know this is unreasonable and you know I can't do it. And quite often that would help in those situations.

Wow, what a strong answer. And thank you. I just to make sure that I'm capturing it well for our audience here, because you covered so very much. It really starts from Amazon being process-driven with your VM and your AVS working backwards from terms and goals and then going and trying to get what they need from whoever they can get it from. But I really love that you're emphasizing that Amazon is ultimately a little bit rational.

They—

the more that they know about you, they don't ignore it. They have to incorporate it into what they can ask for. And they can't squeeze like 10 pounds of value out of a 5-pound object. It's just not possible.

Exactly.

Exactly. And I really appreciate that you're talking about there's no more efficiencies to be gained unless they can help you change the laws of physics.

Exactly. And also one of the other things that really worked, and Amazon stopped doing this, particularly in the UK, is every time I met with the VM and I met with the AVS, I would also have an in-stock manager who was responsible for the category. And what I found was the in-stock manager is very logical. The vendor manager was illogical, quite rightly, because I think they had to be illogical because they were going for the big ask. But the in-stock manager absolutely understood, you know, full pallet picks and where to store it and how to ship it. And the fact you could only get 28 pallets on a full trailer and all of those sorts of things. And so that relationship worked quite well until Amazon went, oh, you can't speak to your in-stock manager anymore. But whether you go through the FinOps team and you push to have the in-stock manager present or at least have a conversation, you can start to have a logical operational conversation about, well, How are we supposed to do that?

That's a great callout. I have no idea how easy it is to actually get that in-stock manager into a regular meeting, but—

It's pretty hard now.

Certainly your ISM is always going to be that much more rational person who is trying to make actual numbers work, not made-up goal numbers work, because they're limited by a network and capacity and whatnot. Certainly my, my favorite people to learn from at Amazon were always ISMs. I would just roll up to their desks and just watch them do things in Excel that I had no idea how to do. Thank you. We got our first question live here from Jessica Denny. Their VM added a line item to their AVN for a freight allowance because they want to go from a WePay— they are wanting to go to a WePay from a YouPay. Any experience with Amazon being responsible for their freight rather than the supplier? Can you help Jessica think about this decision intelligently?

Yeah, I mean, first of all, work out your percentage to ship the products into the various Amazon FCs and work that as a the total cost versus the percentage of your net receipts. That will give you a value that you're currently paying to get that product from your warehouse into Amazon's warehouses. And then look at the percentage Amazon are trying to charge you. I've set up and used WePay. It works fine as long as the commercials stack up. So that's pretty much all you have to do at that point. Amazon will handle all the bookings. I mean, I have— I went, I went around the, uh, the houses with Amazon on this about, um, so if, if you collect it from me and you sign to say it's 100% correct on what you ordered, I get no more chargebacks, right? Didn't quite work out that way, but they're the sorts of conversations you need to be having because once it's picked up and it's collected and, and signed for, then, then in theory there should no— should be no discrepancies of what's actually been received at the FC. So it's worthwhile checking those bits out. But the first thing I would do is go, okay, what is my current freight cost into the FCs? What are Amazon trying to charge me? And that will then tell you straight away whether or not it's worthwhile exploring.

That makes sense. I want to go deeper on that last point about, you know, having that conversation with Amazon about who is responsible for what. Because if I'm remembering, you know, my business school days, you know, thinking about in those contracts exactly who takes ownership at what point and under what conditions is actually really contractually important. So with that in mind and knowing that Amazon isn't going to do what brands want necessarily and take over all responsibility, how can they think about that? You know, you mentioned have a conversation, but what can they expect in terms of a good outcome from Amazon taking over some chargeback stuff?

Well, it's I think it's all about the process that you have in your own warehouse, and it's how you can articulate how accurate your pick, pack, and ship process is. So as long as you've got a pretty tight rein on that and you could show Amazon actually what I pick is very accurate, and here's the proof to show, this is where getting the VM or the in-stock manager to come to your warehouse, come and look at what we have to do so that when I tell you that I've got a 99.9% pick rate accuracy, This is why, because it's measured and you can see what we do. So I think first of all, there's, there's that side of it. And then I think it is that conversation with Amazon to go, well, within the current contract, who does own the stock once it's collected from my warehouse? Because from my perspective is if, if you're picking it up, you take ownership of it as soon as it leaves my warehouse. Therefore, if you've signed for it, it's very clear that I shouldn't receive any chargebacks. Or shortages or whatever it is that may come up as a discrepancy. Now, when I've worked through this process, the pick-pack accuracy for the business I was in was actually very, very strong. So our chargeback and shortage issues was minimal. It was very low, partly because operationally it was something that was hung around my neck that I had to make sure was— it was no good having great sales if Amazon were 90 days late on a £100 grand invoice. It just wasn't helpful. So I had to make sure that operationally that bit was stable before we could grow. So, so it, it, the deeper question is how, how confident are you in your own process to be able to minimize the pain? If you're sitting there and your chargebacks are north of 5% or your shortages are north of 5%, you might want to fix that before you go into this process with Amazon, because Amazon are gonna see that and they're not gonna accept it, and therefore it's gonna become a bit of a challenge. So I think it does go back to, you know, what's your internal process? Is it in a position where you can actually articulate this to Amazon and commercially it makes sense to move to WePay? Yeah, WePay, sorry. Then it's a bit of a no-brainer.

Love it. Makes a lot of sense. Okay. We got another one. Uh, we were told by our vendor manager that our ASP is declining based on Amazon's internal reporting, but when we check against their own numbers, they see a slight increase and not a decline. Um, they said they can't share the calculation or ASIN-level detail because it's quote unquote sensitive. Uh, what does Amazon actually mean by ASP in this context? And what's the best way to replicate or validate Amazon's ASP?

Um, okay, so the, the, the, the average selling price. So, so what— there's a couple of things that the ASP will do. So if your cost price hasn't changed to Amazon, the ASP will be moving because it's following the market. So you might have activity outside of Amazon, um, Amazon are seeing that in some way. But if you've only got Vendor Central data to run by, so your version of the truth is only what you can see. So First of all, I would ask Amazon to share the detail because they can't challenge you on something if they're not showing that information to you. I would also run the same analysis back from Vendor Central to go, okay, well, I've run the detail from Vendor Central. These are the products, this is what's happening. There's a couple of things that might be throwing into it. It could be multi-buy discounts, which are then netted off in the background rather than in the ASP of the product, depending on if you've got those running on Amazon or Amazon price matching against competitors where there is a buy 2 for X or buy 1 get 1 free. If there's that happening, there might be an element of price matching there which is throwing the numbers because you won't see it. So I would push hard to find— well, you need to help me identify where the issue is because I can't see it. So you can't ask me to fix something if I can't see where the problem is. So I think if you could show that willingness to want to understand it and fix it, that's, that's probably the best start point. But it will typically, when I've experienced a mismatch between vendor central and what Amazon see, it's external factors that Amazon are tracking against that will be influencing it.

Yeah, I, I also struggle with this one a little bit because to my mind, like, they really can't hold you responsible to something that they're not willing to share you detail on. And even when a vendor manager says, you know, your PPM looks good, but your contribution margin looks bad because of X, Y, Z, they don't share your actual CM numbers, but you can always ask them for some visibility into like what it is that's making that worse and proving it to you. Because otherwise, to your point, how do you address a problem that you don't know about?

Yeah. And if they don't want to give you all the detail, just give me the top 10 offending products. Tell me where the biggest issue is coming from, because then at least you can, you can then identify the main bulk of the problem. It's the ASP is a bit of an issue because it generally signifies an issue on on your net PPM. So if your ASP is starting to drop, whether you've managed that through the catalog or not, and you've done it yourself because you've introduced some lower ASP products, it will, um, yeah, the net PPM will normally be impacted. And that's why they're probably pushing back on that.

Yeah, exactly. Um, the focus on ASP is a little strange because Amazon isn't really gold on ASP. Nobody at Amazon is gold on ASP, and they don't really care except in as much as it contributes to mix rate changes, to your exact point. So In this case, I'm really curious what they're actually trying to get at. Is it, to Ant's point, an actual PPM issue, or is there something else they're trying to drive? One thing that I've had success with as both a vendor manager and on the other side of that table is, to Ant's point, being explicit and just saying, hey, I want to help. I want to solve this problem for you. Vendor manager, if you could wave a magic wand and get me to do whatever it is that you're trying to get me to do, like, what is that thing? Like, and sometimes people will say, oh no, you know, really what I want you to do is sign agreement XYZ so that our profitability improves by blah, blah, blah, blah, blah in this area. And that doesn't mean you have to do it, but at least now you know what they want.

Yep. Absolutely.

Awesome. Let me see if I can get back to my question list here. Okay. I want to talk a little bit about retail media because everybody asks and it comes up in literally every one of these sessions and Everybody has a slightly different point of view. And so of course the key question is how can we get credit for retail media investment with our vendor management even though PPC dollars don't flow into PPM? And we've heard from a lot of different folks on a lot of different perspectives on that. And without worrying about duplicating, I'm curious to get your take on it.

Yeah, it's, this comes up nearly every year. Every brand wants to do this because PPC is seen as a growth lever and it's conditional, yeah, conditional, whereas just pumping investment into your base terms is unconditional. You're giving margin for the sake of giving margin with no guarantee you're gonna get anything back. So it's always a common challenge. When this comes up and brands are probably already doing this, but my initial standpoint is Amazon, I know, I know for you guys it's a separate P&L and you don't recognize what's happening over there, but I do. So, so, so my reality is it's one pot of money. So whether I'm paying it to your ads team or I'm paying it to you, it's one pot of money for my P&L. That's the first thing. So, so I understand your reality, but this is my reality. So we need to just make sure we've got those ground rules in place. You'll then come up against the normal, yeah, you know, what you do with the ads team is what you do with the ads team. What's worked really well for me in the past and continues to work really well is where you butt up against the ads team wanting you to spend more because they're incentivized to get you to spend more. So the more efficient your ads, the more you're spending, that's brilliant. Whereas the retail team are all about how much margin and, and, and terms and net PPM you can deliver. The, um, what works really well is when you get them both in the room and you go, guys, I'm ready to, to work with you, I'm ready to invest, but we want to grow. We can't put it into base terms because I can't have unconditional investments. I need it to be conditional, and advertising and deal support for me, I get something in return for that. It, it, I can, I can see it coming through. The better the ROAS, the more I invest, etc., etc. So it, it's getting them in a room and getting them align is actually quite a powerful thing. And the VM will push back to go, no, I don't want that to happen. You know that they're not part of this conversation. But if retail media is part of your strategy to grow on Amazon, which is going to help Amazon as well on the retail side in terms of that growth and net PPM, there needs to be a common understanding of what that investment looks like and what it will deliver. The fact that you're caught in the crosshairs of internal policies around where the P&L sits is kind of, well, that's That's like me going, well, I unfortunately, I don't own that part of the P&L for margin management, so I'm not gonna talk to you about that, or growth or whatever it is. It's just putting a barrier up that's unnecessary. And it's tactical, right? Because they know that the retail team will do that and the advertising team will do this. So I would bring those two forces together and articulate the case that actually to improve the net PPI, Ppm to improve the growth and make it profitable and sustainable for both sides, we need to increase investment in retail media, or we want to take funds from the net Ppm or from the, from the terms. We want to put it over here, but this is how we're going to do it. I hear a lot from, from vendor managers, and, and Andrew, you, you may have used this term yourself, but quite often I hear we need a path to green, which is about getting the net Ppm net PPM in a positive position year on year. Ultimately, the vendor manager wants to know, have you got control over the profitability of your account and do you have a plan of how you're going to do it? If you can find a way to articulate that and show the vendor manager and give them confidence in you as a vendor that you will be successful, that's, that's pretty much the key to unlocking the AVN and closing it down.

Great callout. Some stuff that we've heard before, of course, but I really love your point about that. Reminding your vendor manager that investing ads is ultimately a growth strategy in that you need to have that, that the long-term path to green for a vendor manager on their PPM metric is you being eager to invest in Amazon as a channel and bullish on it. And they certainly don't have a path to green if, for example, you decide Amazon isn't worth it and you need to take those dollars and invest them in another channel altogether. That said, we just triggered a bunch of really good follow-up questions. The first one, what hook can you use to get retail and ads teams in the same room because they're refusing to do this?

Okay, so, so first of all, pause the investment if you've agreed additional investment on advertising. So let's say say you've put another $50K on the table for next year, just say to your ads team, I'm now not going to unlock that spend because it's not contractual. You don't have to spend it. I'm now not going to spend it until we get alignment on the terms. So then you're forcing your ads, uh, exec or whoever to then go, okay, well, this is a problem because I need this value. Therefore, I now need to reach out to my vendor partner. Um, and you can keep going, well, I, I can't unlock this. And you can have that discussion with the vendor manager and the ADS, say, well, I can't unlock this now until we've got alignment on what we're doing on ads. So I'm now stuck. So you can force a kind of bit of a point where you're going, well, my hands are tied now until we can reach some kind of agreement because you're trying, Amazon, you're trying to negotiate with me on both sides.

Mm-hmm.

Yeah, I'm not allowed to. So I now can't proceed until we can talk to both of you at the same time together to get some agreement on how we move this forward. One of the things that, and I think a lot of brands forget that advertising is a great tool, I believe, and I've used in the past for managing the vendor manager's KPI. So net PPM, for example, if I needed to improve the net PPM very quickly, my advertising would not be focused on ROAS or ACOS, it would be focused on on net PPM or high net PPM products and I, with a high conversion rate because I'm, if my, let's say my paid sales is 30% of my overall business, I know that 30% of my business can now be delivered on a net PPM that's maybe 2 or 3% higher than the target to influence it straight away. So if you're sitting there and you're about to go into your AVN and your net PPM is not looking great year on year, Advertising and PPC is, is a great tool for you to articulate, particularly if you can go, no, look, I want to take 50 grand from there. I want to put it over here. I'm going to put it there. But this is how I'm going to use it. These are the products. This is what it looks like. Because all that's doing is back to that. This is my path to green. This is how I help solve your problem. But you've got to solve my problem first of all before I can help you. And I know it sounds kind of simple, but it's a— you've got to understand what their issue is, articulate what your problem is, and then show them how by solving your problem, you solve theirs. That's ultimately, unless you just give them another 1% or 2%, which no one wants to do.

Yeah, the theme that keeps coming back is the—

I don't—

positivity is not the right word, but maybe proactivity and just willingness to lean in and showing that like this isn't about defensiveness. It's about I want to move forward. Here are the things blocking me from moving forward. In this case, you're, you're, you're continuing to emphasize that reality just isn't what Amazon wants it to be. If they refuse to get into the same room, retail and ads, then you can always push exactly what Ant said that You, you need those things to happen at the same time. They're the same conversation for you. It's the same bucket of money. Pausing investments can be a very, very effective lever as well. And then the last thing I'll say here is that if you haven't already been hearing about CP and contribution margin, that can oftentimes be an entree to getting those folks into the room together. Because the second that the vendor management team starts to talk about CP, they are doing it because they want to start incorporating like their variable costs and start beating you up for that. Well, you You know what else contributes to CP? PPC spend. So they open that door for you. You should run straight through it and start claiming that.

Yeah, it's a great job. Yep.

All right. Another quick follow-up there. Do you think ad spend would ever start getting pulled into AVN? This one's more speculative, but I'm really curious your question.

Do I think— I mean, it hasn't done formally for many, many years. Is. So I think, you know, if it sits in different cost centers within the Amazon ecosystem, I think it will be, it'll be quite challenging. I think it's always interesting when, I mean, I've seen, I've seen some of the, the QBR reports, for instance, now that comes up where it shows your ad spend as a percentage of your overall net receipts each quarter. So which is, is not— they weren't doing that 10 years ago, that, that it was non-contractual. You agreed a nominal kind of percentage and off you went and did whatever you wanted to do. Whereas now I'm seeing the AVS and the VM pull it up a bit more during QBRs. So they are leaning more towards it. And quite often I've used this in the conversation to go, well, if you don't care about my PPC spend, why do you talk to me about it in the QBR? You want— so, so, you know, I think it's, it's with all of these sorts of things, then an AVN, a good AVN is a year-long process. It's understanding where you've helped Amazon, where they've helped you, the value that's been delivered, the value that hasn't been delivered, where has it worked, where has it not worked, and you're constantly going for it. One of my big challenges was I wasn't particularly profitable on a range of product. So every time I had an opportunity to meet with a VM, I would just tell them, these products are not profitable. I know you want to grow them, and I know you see them as a key brand within the category, but they're not profitable for me. So I need a CPI. I need that. That is a real problem for me that's not going to go away. So quite often, the implementation of a cost price increase was not a— it was not a, I'm gonna fire that across to you now and serve you 60 days notice. It was 6 months plus in the making because I knew where the issues were. And you, after 12 months, you know that Amazon are going to come to you and ask you for something and, well, you need something in return. So it's that longer-term play for vendors that I think they need to be leaning on to make that AVM really work for them. Yeah.

The only other thing I'd add here is that I don't know if this is— to what degree this is still true, but in my day, back in the day of vendor management, Um, Amazon really dogmatically viewed your trade budget and your media budget as separate buckets because their executives come from CPG where they know that that's the case in your own financials. Um, and they lean on that extremely hard. That is ultimately the primary reason why these things are separate negotiations with separate teams. They want to be tapping those separate budgets. They don't want you to be thinking about them collectively. They want DSP to be going for that big brand national media spend. Stuff, not your trade budget. So until that starts to change, I think at the brand side, Amazon is not incentivized to change it on their side either. So yeah.

Yeah.

Thinking about cost price increases, because you just mentioned one, we have another question here. Amazon is trying to push us to accept a large amount of bulk buys at a very large discount of 15 to 20% in exchange for accepting their tariff quantified cost price increases. They're threatening to suppress listings if they don't. What are your thoughts on this?

Um, how— first of all, I think it's understa— initially with bulk buys, I just say no because it's stock that Amazon need anyway, and, and all they're doing is they're going to buy 6 months worth of stock at a reduced cost, and then you're not going to see the benefit of that cost price increase until, until they start to reorder again, which may be well into next year. So, so I think, you know, be, be be, be careful because the short-term impact will be quite painful, um, for you. Uh, the— what I would do is I would work out the value of the discount, uh, that Amazon are asking for. So whatever that is, do you say 10 or 20% off the bulk, bulk by value? So you might go it's $100,000 or whatever it is. So then you know that what the cost to be able to try and move the CPI forward is $100,000 in their eyes. I would then work out what the weighted impact of the CPI is from your perspective based on what Amazon are saying they will accept. And then just work out what the difference is and whether it's palatable. I mean, initially I would say absolutely no chance because you're not gonna see the impact for months and months and months. I would probably rather be in a position where I'm fighting Amazon for the CPI now. Normally with a CPI, I'm not sure about in the US, but in, in the EU, they normally ask for 60 to 90 days notice of a cost price increase, and then they expect you to protect the margin for, for that period of, of time once they've implemented it. Um, I, I don't think they should, uh, I've never done that. I don't think you should do that. I think there are ways in which you can cover that in, in, in terms of how you protect the net PPM. So I think with Be mindful of the cost, but run the numbers. Everything with Amazon, just check out the commercials and understand how they stack up for them, what it means to Amazon and what it means to you. The more you can pull that back into a value, then you know what the negotiation stakes are. You know what the ballpark is that you need to be working in.

Yep, exactly. The last piece I'll add there is that if they're threatening to suppress your listings if you do what they want. I mean, ultimately that's, that's the pain game about who can, who, who does that hurt more? And I think that's ultimately, again, part of that equation of looking at that cost. If Amazon suppressed some of those products and you didn't get orders for that for a long time, would that negatively impact you? Is that actually a threat to your business? And if not, then maybe it's actually a lever in your, in your favor, because just as often we recommend that brands consider not confirming or not shipping or even potentially delisting for products where Amazon is not I'm not willing to work with absolutely price increase. And you may find very quickly that Amazon really does want that selection.

Yeah, so suppressions are an interesting one. It's quite a common, common threat from Amazon in terms of suppression. One I've seen recently is our suppressions are managed by the central team. We can't control that locally. That's okay. I'll speak to the central team then. You know, you've basically just told me my negotiation isn't with 'You.' Exactly, exactly.

And if you're not the one that has that control, then why are we talking?

Yeah, exactly, exactly. So I think it's just, just listen to the language that's being used, and then you can use that back and to try and kind of, um, smoke out the, the empty threats.

Yep. Okay, we've got, um, about 7 minutes left and still more questions coming in, so I'm going to push us through as many as we can.

Uh, all right.

Great. Let's see, we've got VM says to prioritize high ASP products, but also expects them to support the full catalog to grow traffic. They have 3,000 SKUs in the catalog and a capped ad budget. So this is pretty contradictory to them. How does Amazon expect vendors to balance ASP efficiency versus traffic coverage? And when is it acceptable to let your low ASP items lose traffic?

Um, well, that's a, that's a, a deep question. So I think the, um, uh, so the lowest low ASP, so they want to push high ASP products. So it's understanding why they want you to do that first of all. Is that because the net, your catalog is historically low ASP? If it's low ASP and your net PPM isn't where it is, that's going to equal low contribution margin. So it's back to that CM discussion again to go, okay, right, there's a, there's a, there's a logic as to why they're asking you to do that. So I think you can answer that holistically within your catalog, but being able to drive every product within your catalog, 3,000 ASINs, no chance, because 80% of your sales are going to come from, well, let's say maybe 300 ASINs, probably maybe 500 maximum. So I think the challenge back to Amazon, what Amazon is— I haven't got the budget to spend it on everything, and actually 80% of my sales come from these products, so I need to be able to spend it on of those, let's say, 300 products, 150 of them have an ASP that's 20% higher than what we've currently got. Therefore, I'm going to focus on these products because that's going to give you the biggest impact on your ASP in the fastest amount of time. So you've, you've listened to what Amazon has said, and rather than trying to action everything they want you to do, you've gone, well, let me just work that back to what's going to give you the logical and quickest impact without me having to, to break my neck trying to do everything on, on every product, because you'll never be able to do it. So I think it's, it's, it's really, it's understanding what they need and finding the best way in which you can do it to help deliver their KPI whilst making sure that you deliver your KPIs, which are going to be net receipt growth and, and your net margin, etc. Yep.

Uh, the only thing I have to add here is that Amazon goes through seasons of caring about, uh, selection and traffic and low ASP item coverage and everyday essentials versus profitability versus sales growth versus etc., etc. And so even though you've probably heard all of those priorities from Amazon, they're not always equal and not always in every negotiation period. So if this year Amazon is telling you to prioritize high ASP SKUs, uh, Maybe ask them to, and to Ant's point, remind them that the laws of physics exist. You know, you have a limited budget. You've heard in the past that they want you to prioritize this other tranche of content and products. So ask them to confirm it. Has that priority changed? If so, lean into the exact strategy that Ant just described. Show them which high ASP items you can focus on to drive the improvement that they're looking for.

And also around that, what does good look like? So when they go, we need a higher ASP, well, what is that? You know what, for you to go, that's been really successful. What has to happen? A 5% increase? Increase, 10% increase? Quite often within this space there's a lot of soft language. We need to grow, we need to improve this, we need to take that. But let's put some black and white answers on it, because you can sit in front of them and go, well, I've increased it by 5%, that's a win. Well, no, we wanted 10. But if you didn't get that clarity, it's, it's important to keep asking that why and what does good look like.

Yeah, absolutely. Semi-related, um, another question here: what is a defense possible ad coverage model for big catalogs, like hero-only versus tiered coverage, that Amazon would accept without pushback? And I think we just heard that there probably isn't a strategy that Amazon accepts without pushback, but curious how people can do better versus worse with this.

Um, I think it's— I, I'm, I'm a big fan of, of making sure your ad strategy supports your retail strategy. They're not unlinked, they don't work independently. So quite often I'll see people talk about, I've got a ROAS of 9, but my net receipts are down 40%. You go, well, okay, well, you haven't won. You're very efficient, but you're probably bidding on your own brand search terms too much, and actually you've still failed to hit your budget numbers. So I I think, I think the— with the advertising strategy, it, it's about aligning that with your retail goals. So your retail goals would be, I want to deliver X percent of, of net receipts, a net PPM of 35.2%, whatever it is you might have a target there, conversion rate of 9% or 10% or 15%. What— just have real clarity over what good looks like and also what products you're going to align that against. If you think about the very first conversation you will have had with Amazon, it'll be, I want your full catalog at your most competitive price. That's how Amazon starts every vendor conversation. And what you've almost got to do is, no, I'm going to give you the right products for me that make me the right amount of money, that's got demand, that actually are going to have a great conversion rate. So you take what Amazon are asking, you give them what is going to give you the right result as well as help hit their KPIs. So I think it's It's when you think about your advertising, less is definitely more in terms of coverage, and you want to be thinking about that, that kind of full funnel approach on how you're bringing people into the category and how you're converting them at a higher rate that makes sure you hit your retail goals.

I love it. Super clear. Amazon's always gonna ask for everything, whether it's right for your business or not. And unfortunately, like sometimes very short-term focused because your, your VM, your category leaders, et cetera, they're gold on quarterly and annual goals for OP1, OP2, et cetera, et cetera. And 18 months from now, 3/4 of those people are going to be in different seats at Amazon. So long-term impact here is not super, super important to them except in as much as their stockholders. So you really do need to be advocating for your own business. Not assume that what Amazon asks for is like some really extraordinarily well-thought-out, custom-tailored guidance for your business. It's not. It's them asking for everything and expecting you to push back. All right, we are at time. So I want to be respectful of your time. And thank you very much for spending this 45 minutes with us this week. Anybody wants to follow up with Ant, he is on LinkedIn very, very actively as well as his company Vendor Rocket. If you stay tuned here for 2 seconds, I usually have this link ready to go, but today I didn't. So here is Ant on LinkedIn. He's pretty active there. He also has a personal training business, isn't it not?

It is, yes. Yeah, helping the Amazon community get fitter.

Lord knows I can use that. So we might have a separate conversation following up after this. But for everybody else, thank you very much. You'll see some written recaps loaded into our website soon. This is our last session for 2025, but we will be back in January with Bruno Ferreira from Blue Dot and then a full slate in January every week. So see you soon. And if we don't see you before the end of the year, happy holidays. Thanks very much, everybody, for your time today.

Thanks, everyone. Thanks, Andrew. Bye.