Amazon Vendor Negotiation Q&A - Week 3 with Global Overview

Perfect. I will jump in. Lovely to meet you all virtually. I'm Kerry Hughes. I work with Global Overview. I'm our director for our European business. And why I'm here today, I work a lot with Amazon and have a lot of experience with Amazon negotiations. So prior to joining GO, I was actually working at Amazon for over 10 years, half of the time in the Seattle office and then the other half of the time in the London-based office. So for Any questions around Amazon Europe, pan-EU negotiations, I'm your girl. So really lovely to meet everyone.

Awesome. Scott?

Yeah, and to follow up to that, hi, good morning everyone. I'm Scott Van Nooten, also from Global Overview. I'm in our Seattle office, unlike London, so good morning to you all. Similar to Kari's background, I was at Amazon prior to Global Overview and in the vendor capacity. This is now going on my 14th year of vendor negotiations, whether at Amazon on one side of the table or representing vendors on this side of the table. So it's always a fun time of the year for vendor negotiations. They have developed over the years quite a bit, but again, happy to help answer any troubling questions that vendors may have.

It's really cool to have you both here. So the reason I'm so excited, not only because they joined us during a really tense and tight timeframe, but also because we have representation of collectively 25, 30 years of Amazon negotiation experience here. And that's not even counting me or anybody at Reason. That's just with our panelists today. And they represent both the EU and the US side at Global in terms of expertise and in terms of their backgrounds. So if you have any sort of global perspective questions here, I've been resisting the urge to lean into that pun too much since their company is Global Overview, but it is called that for a reason, and that's why they're here. So without further ado, as a reminder, we have a bunch of questions already submitted, but you can submit more at any time using the chat or the Q&A tool here in Zoom. If you use the Q&A tool, you can submit them anonymously. The only time I would suggest not submitting anonymously is if you know you're going to want to ask follow-up questions or have a more detailed conversation, then maybe let us know who you are so we can track all the messages. But otherwise, So let's dive right in. And since you are representing the EU versus the US here, I want to start with a more general question that I'm sure you get a lot from your global customers, like US versus EU negotiation. What are the major differences?

I'm guessing you're going to want me to take that one, Scott. To be honest, I would say that there's far more similarities than there are differences. Like the foundational aspects of the negotiation in terms of preparing, having the dialogue with your Amazon team, negotiating, kind of closing out kind of the final next steps is going to be the same. A lot of the program offering across the US and Europe are also quite similar. There's going to be small nuances, country-specific, based on different programs that might be unique to different countries or areas. But generally speaking, I would say there is far more similarities than there are differences. The kind of unique complexity that presents itself when you're negotiating in Europe is if you're a brand that's operating across a lot of different markets, you're selling in the UK, in Germany, in France, in Italy, in Spain, Amazon is going to often come to you and propose either a local specific negotiation negotiation, which would be negotiating just on behalf of one country's terms with Amazon, or they may come and ask you to negotiate on a pan-EU level, so across the major 5 countries or 10 countries. And so I think for a lot of brands that sell both in the US and then also in Europe, that can be kind of a unique complexity where they have to often bring in lots of different stakeholders, potentially different country leaders in each market that own those regions to come up with kind of an aligned approach and strategy with Amazon.

That makes a lot of sense. So lots of similarities, and that's a good reminder that, you know, I think people get really focused on differences, but you remind us that fundamentally the things are the same. There might be program differences, there might be some country-specific nuances. I want to follow up on that last point though, that Amazon is either going to propose a local negotiation or pan-EU. Is one better than the other? How should vendors approach that?

Not necessarily. One isn't necessarily better than the other. I think it often will depend case by case. How many countries is that specific vendor selling in today? The size of their business, and if they do have internally quite aligned strategies or if they are quite different. So I don't think there is necessarily a one-size-fits-all approach. The Benefits, I would say, of a PAN-EU negotiation is that it can simplify and streamline the communication with the Amazon team. If you're operating in 5 countries today, let's assume, and you have one e-commerce representative that's in charge of kind of negotiating with Amazon in each of those 5 different countries with 5 different Amazon points of contacts, that can be quite strenuous and time-consuming. So having a Pan-EU negotiation can really simplify the process and streamline that communication. It can also help Amazon think about your business more holistically and think about kind of the size and impact that you bring to their business across that entire— across the marketplaces as opposed to just singular marketplaces. So if your business is a little smaller in one country and maybe wouldn't necessarily get the support, that might be an opportunity to try to get support across multiple different different marketplaces that you sell in. I would say the risk around Pan-EU negotiations is that brands really have to prepare in advance. So know what terms you have set up in each country, understand your metrics and your structure in each of those countries so that if you do negotiate multi-countries together, you don't end up necessarily sacrificing profitability in one market unintentionally. So I think there's a lot of benefits to negotiating Pan-EU, but you also want to do kind of your, your work ahead of time and prepare so that you walk into that conversation eyes wide open.

That makes a lot of sense. Scott, anything to add from your perspective from the US side?

I think for me, the only thing that I will add is the brand's expectation, especially if you are a brand that operates in North America as well as Europe or vice versa, you know, you might be a brand that is in Europe and you're trying to expand into the North American market. I would say respect is trusted, or I guess you build up on that trust. So you may have a really strong relationship with Amazon in one market. It doesn't necessarily automatically transfer over to the other market. You have to build that trust, and sometimes you start from, you know, the ground floor and work your way up. So Don't just expect, hey, this is how I do it in North America. So therefore, you know, the pan-EU, this is what I expect here. They are very separate. I mean, we hear that a lot, right? We hear that within advertising. We hear that within operations as well as the retail teams on Amazon. Different teams, different P&Ls. The markets work on the same principle where, again, it's different foundations, different sets of expectations. So just as Carrie said, you know, be well aware of that and be prepared for that as you start those conversations. Cool.

Yep, makes sense. So I love that you— the way you said it, that your relationship strength doesn't transfer between markets. That's really well put. Wrote that one down for our recap along with pretty much everything Carrie is saying. So thank you very much, both of you. That makes a lot of sense. We had another question come through that I don't think is gonna surprise anybody on this call because I think we've gotten some flavor on it, of it on every session. But I'm gonna keep asking it because I think it is really important. Everybody wants to know how they can shift dollars out of automated accrual-based co-op marketing into something more discreet and measurable. And although the question asker didn't say this specifically, I think they're talking about merch accruals and the general co-op accrual and being able to move that into not necessarily PPC, but even into anything where they get a sense of incrementality and the ability to say yes to things. Any guidance for brands on whether that's possible and how to do it, if so?

I'll start with this one. Yeah, I mean, again, great question. And it's the question, you know, that everyone, you know, ultimately wants to have a solid answer for. I guess you gotta— expectations, right? You know, it's always worth asking. And Carrie and I were talking about this earlier this morning. Like, there is nothing that's off the table that you can't ask Amazon. For. You may not get the answer you definitely like, but it does show whoever you're working with at Amazon, like, where your positioning is, what you're thinking is, and like what you're trying to solve as well. So sure, go forth and ask for a lower, um, in this case, uh, merchant accrual. However, you know, just Amazon reducing the percent from one number to a lower number is likely not going to happen. They'll view it as just margin erosion, right? So you have to come to the table with an offer of how you can restructure. Maybe you're all in terms. If it's, you know, there is success of reducing your base terms, or in this case, the merchant accrual, if you're willing to lean into some other programs. And every year, the Amazon negotiation team or the vendor manager has a set of programs that they view better than other programs. It's usually like a new, new, newer programs. In years past, it's been things such as the merch accrual, which people can roll their eyes on that one. But from an operational perspective, it can be pallet ordering, it can be full truckload ordering, things like this. A few years ago, Amazon was really big on adjusting their payment terms. So that was, that was their focus. So lean in on that, understand what Amazon's trying to do. Push through to you, um, and see how you can leverage that. So in many cases, reducing, um, one accrual is just going to add potentially investment into another accrual or another bucket. But just be prepared for that because in some cases that actually moves the money from non-working dollars, as we say, into like working dollars.

Really love it. Go ahead, Kelsey.

The only addition I would say to that is if you're not successful, have a contingency plan and start already preparing for the next year and how potentially you can improve your own margin working with Amazon to then kind of offset the costs that you may want to reinvest for the next year's negotiation in some of those key programs. So different tactics that brands try is over the course of the next year, like slowly increasing costs where they can get new cost pricing increases approved, being really mindful about the cost structure for any new product launches that you might be launching over the upcoming year to help them be margin accretive, or cutting out operational inefficiencies and costs that are currently being a burden to your Amazon business. So I would say if you, if you can't win in the AVN, don't take that as it's a lost cause. Think a bit more creatively about how do you plan for that next year and build in margin in your business so that you can still afford some of those other programs that you may want to buy or lean into.

Super creative ideas. The key things that I'm hearing across both Scott and Carrie's answers, number one is a dollar is a dollar to Amazon in some senses. Like you, you can't reduce the amount of dollars Amazon gets in total. Like that's going to be an almost impossible conversation to have unless you have some kind of extremely rare scarce leverage that nobody on this call is going to be able to predict. But, um, at the same time, some years a dollar is not a dollar. Some years a dollar in, uh, payment terms is worth more to Amazon and your vendor manager than a dollar in that merch accrual. And your job in negotiating is to figure out not only where are those dollars worth different things on the Amazon side, but also to Carrie's point, on your own business, so that you can understand where you're willing to make trade-offs and where Amazon is willing to make trade-offs in order to move money around in a way that makes everybody happier, even if the total investment picture doesn't necessarily change significantly. Super cool. Okay. I have several more questions for you, but somebody mentioned profitability and I want to dig into that a little bit because I think with Amazon experts here, we have a chance to talk about it in a little more nuance. So, excuse me. First, since it is negotiation season and everybody got done signing CSAs last year, lots and lots of cost support agreements, is it possible to get a cost price increase through without a CSA?

It can be done. I guess it also depends on— I mean, it's very important on what you share with Amazon, right? This is a negotiation and you do not show all your cards. At the very beginning of a negotiation. And in most cases, you don't even share all your cards at the end of the negotiation. Save those for the bank for, for following years. So if you do need a cost increase, Amazon treats cost increases differently. So a cost increase due to a tariff is treated completely separate than a cost increase that's needed due to raw materials or other input costs. So before you make the ask, fully understand like why am I asking for this cost increase. The worst thing you can do is just saying this cost increase is just management is asking for a 5% cost increase. You really need to understand why the cost increase is there so you can bucketize it. Moving away from the tariff situation, it's actually much easier to push through a cost increase if it is fully justified through either raw materials or transportation. Or labor, and you've not asked for a cost increase in several years. That's usually where we can get away with having to go through a guaranteed agreement just because it's more justified. Now, if the last cost increase was a year ago, it's really hard to get away from having to commit to any type of margin approval. And then what I was speaking to earlier, the tariff cost increases they're, they're needed. Like, we're not going to beat the bush, beat around the bush for this one. However, it does require up to 3 levels of approval at Amazon. So if your cost increase is due because of a tariff, just know that there's going to be a delay and it's going to be a process, in some cases a month, maybe 2 months, to finally get the cost increase pushed through successfully, on top of also having a margin guarantee on top of it. And with the caveat of if tariffs happen to be adjusted in the future, that Amazon will be coming back to you and seeking a cost reduction. So just be prepared for that. And in some cases you have to balance it out of like, all right, what's the true reason behind a cost increase? And think about that more because again, it's different paths on what— on how the internal team at Amazon will approach it.

Super clear. Carrie, anything to add there?

No, I second what Scott said.

I will mention this as well because again, also overall profitability, right? And every brand looks at their— has a different P&L and how they view Amazon, right? I think some brands probably include everything, including the kitchen sink in their Amazon P&L, including advertising, even national media. A more strategic brand will probably separate it out as much as possible. But in overall profitability, and I'm speaking more like probably below the line on probably everyone's situation, is yes, there's like the accruals and there's, you know, the order to cash process that Amazon is deducting and obviously the payment of the monies that obviously the brands get. Take an eternal look at your overall operations. Of servicing Amazon. So don't overlook the ops team, you know, the pickers that are actually fulfilling the orders. Is there anything that you can do to help streamline that process, to pull costs out of that process? And then my favorite— it's not necessarily a trick, coming— my first job was an accountant— is talk to your accounts receivable team. And just mention the word Amazon and the word shortage, and they may have a lot to say. So in some cases, if you can solve for that, if you can solve for the accounts receivable deductions and shortage issues, you'll probably be saving a lot of man-hour in the front office of, again, moving manpower away from the Amazon— on the Amazon books, meaning in some cases I've seen cases where they had 3 accountants working on the Amazon business. After some adjustments to payment terms and the way that we look at deductions, it's a part-time person now, right? So again, don't just view profitability as above the line. Definitely, I think some of the easiest adjustments that you can make are definitely below the line.

Such a good callout. And now I need to give a recap because we— there was so much good stuff there. We started about talking about getting a cost price increase through without a CSA and lots Lots of good content there. It can be done, but remember that it's a negotiation. Don't play all your cards. Um, and a key comment from Scott was that Amazon treats cost price increases differently depending on the reason. It helps you to be explicit about the reason, um, and change your expectations for Amazon's responses accordingly. If it's a tariff-based increase, they're going to go through escalations and they're going to ask for it back later. It's easier to get through if it's justified by sort of laws of physics, input cost changes, and you don't ask for cost increases all the time. Could go deep on that just by itself. But then separately, you know, you're thinking about some really good guidance on how to improve profitability with Amazon outside of the traditional cost lever. And then the also the terms levers is looking outside of the Amazon lever universe and looking at where your own costs go. You mentioned things like margin recovery and, you know, order cash recovery process, shortage claims, price claims, etc. And not only the value that you can recover from those things, but the amount of time and energy and salary expense, etc., that you are saving by reducing the incidence of those things in the future. So good. All right. We got a live question, our first one. Let's jump in. Somebody's first time going through AVN. Once terms are agreed to, how are they documented? Is there a formal piece of paper that gets signed?

Would you like me to take that one, Scott?

Go for it.

Tag team it. So again, there could be slight variations depending on what exactly you agreed throughout the negotiation process, but most of the instances, if you're making a change to an actual structural agreement, so you are changing a value in a co-op term or buying into a marketing package or allowance or signing up for an operational program. You will often see that these come through as agreements that you can review prior to signature. They live within your kind of agreements tab in Vendor Central. If you're agreeing to something outside of an actual co-op agreement, then I would absolutely ask for documentation from your Amazon team members to have it confirmed on email exactly what was agreed, what is kind of the timescale that you're hoping to achieve those programs or initiatives that you had negotiated, just so that you have a written copy. I think a lot of us know team members at Amazon can change over quite quickly, and as people are moving on to different roles, different experiences, and so the likelihood that you're going to go into the negotiation next year with that same Amazon contact that you have right now that you're negotiating with is often quite low. So I would say make sure that you can print off or have copies of the agreements that are signed and get any other kind of commitments written down on email so that you have that for your records and you can kind of share in that transition if you do have team members change over, over the course the year.

Love it. Yep. The— some stuff will be formally documented in agreements in Amazon systems for you to sign. Those are pretty straightforward. Your legal team will get into them. And the nice part is that once they're signed, they're really well mechanized in Amazon systems. So all the data flows through automatically into your NetPPM and all that kind of good stuff. That's a big part of how that gets actually calculated dynamically. But that anything incremental or special outside of the usual agreement framework, does not have a formal documentation process usually, and you need to ask for it. We got a lot more questions come in, but I want to double-click on— I got to stop saying that. I want to go deeper on the relationship piece because this is something that comes up over and over again. And I have strong opinions. Everybody's got strong opinions. And I would love to hear from you two because I've heard slightly different takes on this just in language. You know, Scott, you use the terms like, you know, thinking about that relationship year over year and how are you maintaining a relationship? Presumably with Amazon rather than, you know, individual vendor managers. But Carrie, you also just mentioned that realistically Amazon churns people so fast. And if there's any job at Amazon where I think dreams go to die, it might be vendor management. It's a job that nobody wants. It's the job they take because they want to be cat leaders and so, and have P&L ownership. And so they're there very briefly. How can brands balance those facts? I need to build a long-term relationship with Amazon. But there's a rotating cast of characters.

First of all, I take offense to no one wants to be a vendor manager. It was my favorite role at Amazon. I loved— honestly, I loved the 5 years I was there. Um, I actually met Carrie.

I, I second that, Scott. I loved being a vendor manager.

So, well, clearly we're already getting some conflict, everybody. Like, my scar tissue is not everybody else's scar issue, I guess.

I guess I'll answer it this way, right? So vendor managers are human too, right? So just if you can create a relationship with one person and they move on or when they move on, you know, we do create, you know, a debrief for the next person that's going to take our, our seats. There may not be somebody in position right away, but there is a document that needs to be created. And in that document, you're pretty clear of, hey, my advice is to work with this brand, stay away from this brand just because of that relationship part of it. The metrics aside, yes, metrics will definitely help drive the business forward, but there is a personal element to it. So I would highly encourage brands to always build on relationships on all aspects of Amazon, right? So whether it is the vendor manager, the in-stock manager, if you have an SVS, S, an SVS may become a, a vendor manager someday. I've seen it happen many times, and they come back as senior vendor managers and managers as well, um, as well as the advertising team, right? So again, even though these teams at Amazon don't necessarily work with each other very often, um, as long as you know each of them, you can use them to your benefit. So, um, whether that's cordial conversation, meeting them at expos, even coffee if you're in the same city that they are in, right? They're all over the country these days. I highly recommend building up on that personal relationship.

Yeah, I was going to say the only add to that, just to echo what Scott's saying, is that if you think about the typical vendor manager at Amazon, they're responsible for a lot of different vendors. Across their portfolio and they're all crunched for time. They have to prioritize. They're going to prioritize their time on the accounts that they appreciate working with, that they see as collaborative partners, that when there are special programs that they need to test or initiatives that they really want to support, they want to work with partners that are going to also help support them. And their kind of goals as well. And so just to re-echo that, having a strong relationship with your Amazon contact where possible, it can be really, really beneficial in unlocking some of those kind of incremental aspects of help that otherwise can be difficult given their time constraint.

Such a good succinct answer. You know, at the end of the day, VMs are humans, your SVS, your AVS are humans, your ad account executive is a human as well. And humans move around, they have personal feelings. They care about, you know, how their day goes, etc. And, you know, when we are thinking about who we can call in order to get things done, if I know that calling Brand X means I'm going to pay a tax of, you know, interacting with somebody who is going to question everything that I say and send me 14 follow-up emails that are all kind of aggressive, then maybe I'm not going to make that phone call. Maybe I'm going to call Brand Y, who is always happy to take my call, knows my kids' names, you know, has something in common with me, but more importantly, listens to my ideas, evaluates them. Even when he tells me no, he tells me no politely. His boss, she's really kind about it as well, etc., etc., etc. So these things matter. And at the same time, never forget that everybody does move around. And so treating that investment as like the primary mechanism or lever for you is never going to be a good idea. and that ultimately what I hear is a lot of long game stuff. You know, the consider that, you know, the, the, the, the flip side of short VM tenure means that that person is moving around a lot throughout the company. They're taking that relationship and their history of you with them and potentially unlocking things all over the place. This is exactly what I did. Uh, my first role at Amazon was as an SVS. And to your point, they don't stay that way. They ideally get promoted and they move around a lot. And my first brand was 3M. I learned to love them deeply. Uh, and I, you know, kept them in mind across every other role that I took at Amazon, whether that was additionally in retail or even in devices when I finally moved over to Echo and Alexa. So super smart strategy. Okay, let's keep going. Tons of questions flowing in now. Let's start with this one. Um, a follow-up question: How should we expect an agreement to invest a certain amount in merchandising packages to be documented? Is that an agreement in Vendor Central, or would it be documented elsewhere?

I've seen this a couple ways, right? So I would say the most common way— it would be helpful if the merchandising agreement was a separate agreement. However, I've noticed in most cases it's embedded in the text of that basic rule. So let's pretend your basic rule is 10%. Within the fine print, it will say of this 10%, 2% is allocated toward merchandising accrual. So that's the 2% that you're working with to fund merchandising initiatives. And then within Vendor Central, within the merchandising portal, you'll see on a, I believe, a biweekly or at least a monthly basis of what your pool of money is to work with. So that's how it flows in there. I've not necessarily always seen a separate merchandising agreement.

Got it. I just want to be sure that I'm understanding this person's question correctly. I think you're describing like the merch accrual, right, where there's a line item in your accrual that says a certain amount of it can be deployed for merchandising packages, yada yada, and that you essentially have a bank account of stuff that can be deployed for sponsorships. This person, I think, might be asking about something slightly different, where, um, as part of the negotiation, um, they have agreed to invest a certain amount of additional dollars perhaps in straight pay funding throughout the year, as long as that amount totals X. Does your answer change at all?

It does. Well, I guess it does change. Usually the documentation for that is unfortunately email. I think in the past we've done this and then the straight payments just come through on either whatever cadence you agreed to, whether it's monthly or quarterly or even a yearly straight pay.

Yep. That's the answer I was getting to as well. Unfortunately, a lot of those kinds of agreements end up still being in email. A lot of he said, she said. For what it's worth, I will say that Amazon does treat email like legally binding documents. So that— don't take email as a sign that it's not serious or true or that you can't hold them accountable to it. As an ex-Amazonian, it was pretty terrifying how deeply they could and would audit your email for things if they needed to. And there's legally binding documents. There's a reason why that kind of stuff gets shown in discovery in trials.

On top of that, I would just say, say I would save every email for AVN. To that point of Andrew said, they do— we have seen audit, you know, audits of email even when something wasn't finalized in a negotiation. Maybe it was an offer, right? It was a, it was a back and forth. The, um, you know, a year later, an audit of an email may interpret the email differently and say like you agreed to this and make the deduction when in fact it something that you threw on the table. It wasn't agreed to. So highly encourage you to save all negotiation emails.

Yes, the general rule of thumb with negotiations, not just with Amazon, applies here. You know, everything that is not written down does not exist. Perfect. All right, let's jump back to Daniel in the chat. Any downsides to pallet ordering that they should consider? They're in the apparel category, if that matters.

Oh, good question. Again, like, operations is close to my heart just because there's so much, there's so much inefficiencies in operations today, as I'm sure everyone is aware. The pallet program, you know, we've seen tremendous success on the pallet program. Everyone loves the pallet program. I mean, Amazon can receive a pallet with one click versus having to count all the master cases or the cases that are on a pallet. But the pallet program doesn't really make sense for every ASIN. The ASIN does need to have, you know, have a pretty good good weekly or monthly volume. In some cases, again, usually a rough, rough rule of thumb is a pallet every 2 weeks. So again, if you're not moving through at least a pallet quantity of sales per every 2 weeks, the pallet program probably doesn't make sense for that particular ASIN. But again, if it's a high-moving item, even if it's a fashion item, we've even had success with seasonal items, Palette program is a great, great option. I have a couple of clients that they are— again, their catalog is small and it doesn't change very often, but they are only, only palettes.

Wow, that is hardcore. That might be a first that I've heard of. Full palette. Okay, that makes a lot of sense. You say it doesn't make sense for every ASIN. It should have good weekly, monthly volume, you know, one palette every 2 weeks. Are there any other factors to consider, or is that really the only one? It's really—

I mean, yeah, it's as straightforward as that. Now, again, you need to dive deeper into the specifics of the program. Amazon is expecting some sort of kickback for this, right? And they'll, they'll come back and say like, hey, they're taking the risk of ordering, you know, additional weeks of supply or additional days of COVID there. So they want a kickback. It's usually in the case of a cost decrease on specifically only the pallet order. So you can have an order that's on the pallet vendor code and a non-pallet vendor code. You need to have different pricing for that. Going back to my accounting days, you need to make sure that your accounting system can account for that. So it's one ASIN, two costs. So if you're, um, if your accounting software doesn't account for that, that might be something you need to solve first. Um, but other than that, if the economics work, um, in some cases, again, a lot of our brands will say, I don't have to put any additional labor behind a pallet, like it's already created, it's, it's set up that way from the manufacturer. All I need to do is put one, actually two labels on two different sides of the pallet, and you're off to the races.

That's pretty incredible, having gone through outbound at a brand, inbound at Amazon. Yeah, that, that almost— why would you not do that if you can?

And then, Daniel, the, the last thing, again, what I said earlier, talk to your accounts receivable team. Are there shortages on this, you know, potential ASIN that you will put through on the pallet program, shortages on pallets are very rare. I'll just put it that way, right? Because again, you're either checking in all or none, right? It's none of this, uh, oh, we received half of what we think we ordered. No. Um, so in that case, pallets, they literally get checked in, they just move through the Amazon supply chain incredibly fast, which again is why I would encourage you to look at the pilot program.

Good stuff. Thank you, Scott. Thanks for asking, Daniel. All right. One more that came through in the chat. Victoria signed a CSA during 2025 negotiations, but now they want to step out of it since the margin impact for their business turned out to be huge. For 2026, they are offering Amazon EU products discounts instead of a cost support agreement, but they pushed back. How can they never ever get back into a CSA?

Oh, that's a tough one. I mean, any agreement will have to be agreed. And so in terms of if you've already managed to move to a lower cost structure in your EU countries as opposed to that, I think you're already off to kind of a foundational good start. And if the Amazon team does bring it up in the future in terms of wanting to get you back on that program, I think often Offering up alternatives is always a good route or a good option.

Yeah, absolutely. Uh, Victoria, it might help to clarify, um, the terms of your current CSA because in my universe every CSA should have a limited term. And then to Carrie's point, um, once that term is over, just don't agree to another one. Start pushing for something else instead. But I want to be sure that we've understood correctly and you don't have, for example, something unusual like a multi-year CSA agreement or anything like this. Feel free to clarify that in Q&A if you want. But my add-on to what Carrie said is that if you have a CSA, there's not a lot you can do about anything you've already signed. But when you're thinking about renewing or replacing or deprecating a CSA, do everything humanly possible to do that. A cost support agreement is basically the holy grail for every vendor manager in Amazon because it wipes away any number of operational errors because they know that at the end of the year you have to write them a check. Responsible vendor managers are still going to do their best to minimize that because you can't write infinite checks, but the pressure for them to manage you is very different. And their expectations for perfect performance are very different around because they know that they can tap that door at the end of the year. And so my general guidance from Reason Automation is that if you have to sign a CSA, make it as limited and as discreet as humanly possible. You know, don't sign a CSA that says my entire category's net PPM is going to be X. Like, that is the kiss of death for your business. And it takes a very responsible VM for it to not blow up your business when you've signed something like that. Instead, make it as limited to specific selection as possible. Ideally specific ASINs, not even by category, subcategory, or anything else where the flex— there's flexibility because Amazon systems can add and remove ASINs from that at any time. And ideally do it based on discrete terms. Ideally per unit funding if possible, but if not, being as specific as possible about what types of margin erosion that you are responsible for trueing up. And then last is the shortest possible timeframe for both the length of the agreement and the true-up period. If Amazon is, for example, asking you to sign it for a year and they're only going to true up once a year, that is a huge potential pain point for you as that one true-up period is going to account for any possible profit leaks throughout the year. Whereas if you are doing smaller true-up periods, you can actually limit that pain. Scott, anything to add there? I saw you open your mouth.

Oh, I know, right? I mean, I've been on so many of these things and like, lesson learned. So good, good advice, Andrew. Do your research. Bring in a financial analyst if you have one on your team, right? Making sure that they understand all the potential risks there. You can cap a CSA so you can say up into a certain dollar amount. So I think I think that, you know, this example that would probably wouldn't have been useful because you're pretty much helping bridge that cost increase, but there's other outside environmental things that you have less control over, like obviously Amazon's pricing, price matching obviously impacts their margin. So therefore that burden goes on to you through the CSA. So just making sure again, the market price is moving in the direction it needs to be. And if Amazon is price matching something in error, address that as quickly as possible because that now becomes your issue.

Exactly. And that's a critical example of the, the potential pain of a CSA is suddenly Amazon's crazy price matching algorithms, the accuracy matters a little less to them because they know they're going to get the money one way or the other. And therefore it becomes your job to make sure that they're being accurate. Awesome. One more around costs. If you need to submit cost increases, should you complete AVIAN first, then follow with the cost increases, or do them together?

I think this really depends on the time of year. If you have a vendor manager contact that you're already in communication with regularly and it's earlier in the year, the moment you need a cost increase, I would start that conversation, or the moment you know you're going to need a cost increase, I would start the conversation. The more forward notice that you can give the Amazon team, the better. If you know that you're putting through cost price increases across all of your retailers at a future date, give them a heads up. If it's really close around the AVN timescale, for better or worse, it's going to get lumped into that conversation because any big shifts in the cost cost structure, profitability, your Amazon team member is going to have to account for that when they're thinking about that total profitability mix. And so it's, it's a bit inevitable. Have the conversation as part of the AVN if, if timely, if that's timely when your cost price increase needs to go through. But if you can have that conversation much earlier and avoid having that as part of the AVN, I would recommend doing it earlier the better.

Got it. Okay, makes sense. So depends on the time of year. Um, try to start the conversation as soon as you know that that cost increase is coming. Frame it as going for everybody, not just Amazon. Um, but that all else being equal, try to keep them separate from the avian time frame. Cool, very straightforward. Um, I think we've got time for one more question. Um, and this one I know always comes up. Last time we talked about benchmarks for Net PPM, but I'm curious with operations on the call and especially like pan-EU perspective on the call, are there other benchmark KPIs that Amazon holds vendors accountable to relative to their peers?

I'm trying to think back. Oh, VLT. Remember that, Kerry? That was a big one for many years, right? Of like, you need to reduce vendor lead time. And it turns out Well, all the added days seem to be on Amazon's side, but no, I mean, for their acceptance rate is, is it— some of these more softer skills, right, that, you know, are easy. Amazon usually pushes more towards, you know, improvement there when they maybe feel that they have squeezed every last penny out of you as possible. In some cases, view that as a win on your side because again, they aren't asking for for higher accruals or things like that. Now they're asking for other aspects of the overall business.

Yep, love it. Super clear that there are lots of other metrics that Amazon's gonna hold you accountable for, and that really Amazon will create a benchmark for anything where they feel like they need to try to drive a conversation, even if that benchmark has never existed before or been used in any other conversation. Amazon vendor managers have access to a tool that I believe is still Turismo, but it could have evolved at this point. I haven't been there in a minute. And that tool makes it very easy, trivially easy for them to understand any KPI at any level of granularity, whether it's one of your products, your entire account, your entire category, et cetera. So just be aware that they can do that. And then to Scott's point, if they are doing that outside of the financial space, that's actually probably a good sign that they have done their math and realized you can't squeeze any more blood out of a stone. All right. Thanks. Thank you very much, everybody, for attending today. Scott and Kari, if folks have more questions for you or want a little more help with AVN from Global Overview, how should they engage?

You can either reach out directly to either Kari or I, and I think our emails are on this invite, or globaloverview.com. I mean, that's our website. Obviously an easy way to get in touch with us on there.

Perfect. Thank you so much, Kari, Scott. Kari, at the end of your day, Scott, at the very beginning of yours, I just dropped Global Overviews link in the chat here. And as always, we will be sending a follow-up with the recap of all the questions and their contact information. If you have any more, please don't hesitate to let us know. Otherwise, have a great holiday weekend and good luck with Black Friday and Cyber Monday, everyone.

Thanks, Andrew Hamada.

Take care. See you next week.