Vendor CoOp Reports

Start. Thank you for taking the time today, everyone. I'm Andrew Hamada. I'm co founder and CEO of Reason Automation. Joe, do you want to introduce yourself?

I'm Joe Sho. I'm Chief Product Officer and co founder at Reason Automation.

Awesome. And we're here continuing our regular Office hours series. For those of us who are joining us for the first time, this is something we try to do every month where we address themes of questions that we've seen from customers and just generally out in the marketplace related to Amazon vendor and seller data. This month we're talking about vendor co op reports. This is a super important source of information for nearly every brand that sells on Amazon. But the data can be a little arcane and even intimidating to look at. And so we've put together a short presentation today to help you sort of understand exactly what types of data are available from Amazon, Amazon how to find it, and then export that data at scale, at the right level of detail, helping you understand why some other brands care. In case this isn't top of mind for you today, maybe this will inspire you to go back and start using this data. And last but not least, some of the frequently asked questions that we hear on a regular basis from our customers, our prospects and our partners. All right, so starting with types of available data, Joe, would you like to kind of walk us through the types of invoice, payments and other sorts of data that are available in vendor Central?

Yeah, so at the very high end, you know, once, once a PO is, is accepted and confirmed from your guys end generally the next step for you guys as a vendor is to set up an invoice. And so from there then Amazon provides the invoice and payment summary. This gives you a summary of all the different invoices that you've submitted to Amazon as well as their payments that they make on those invoices. So this first level is just a summary report of what that looks like. From there, then it branches out into two different details. So your payments are usually going to be less than what you invoice. Since what you invoice is then Amazon typically takes a number of different deductions and those deductions are what are known as co op agreements. There are different types of co op agreements. So you might have things like accrual agreements, which are generally a percentage off of what Amazon's buying from you. There are things called straight payment agreements. Those are generally, if you're thinking about like vine or like a content, I guess they don't charge for a Plus content anymore. I'm showing my age of Amazon. But like vine, typically when you're enrolling in vine, that's usually a straight payment. I think it's around 3,000, $3,700 or whatnot. Those would be considered straight payments and then you would have customer or promotional type of co op agreements and those are usually based off of like a discount or whatnot. So VPCs would fall into, under that category. Or if you're doing some sort of pricing promotion where you're let's say giving like $5 off of every time a customer purchases. And those are typically driven based off of customer shipments. So like an actual, actual customer order and whatnot.

Got it. So before we dive in further here, am I understanding correctly that the way that Amazon presents this information is there are different types of agreements. The types that I heard you talk about are accruals which are usually a percentage based on sales numbers. There's a straight payment which is usually a flat fee in return for some kind of service like vine enrollments. And what was the last one you mentioned? Promotions Promotion. Right. And so where it's not necessarily a percentage of every single sale that you make to Amazon or that Amazon ships to customers, but it's a promotional discount that you're funding against specific sets of shipments, whether that's by ASIN or based on whether somebody used a coupon or not.

Correct?

Yep, got it. Okay, that makes sense. Thank you.

And in general before we move, so like your invoice number would typically be your invoice minus your co op would usually equal your payments.

Got it.

Well, and then, so co ops, there are then details within the co op agreements as we kind of alluded to earlier with the different types of accrual agreements. They break out into your customer shipment details, your distributor shipment details, your distributor return details, and then your any cost variances that you might incur. So going into each one and what those those incur. So customer shipment details relates to accrual agreements and promotional agreements or sorry, not sorry. Customer shipment details relate to promotional agreements. So Those are your VPCs and your and like pricing promotions would fit under, under those details.

Can you help me understand what like when we say customer shipment details, what, what does that mean?

Yeah, so customer shipment details refer to if a custom it refers to like when a customer or when Amazon ships to a customer. So Amazon or customer orders, let's say five units of X. Amazon then ships those five units. That agreement's based off of those units that are shipped to to the Customer.

Got it. Okay, so customer shipment details are about a co op that that triggers when Amazon ships something to a customer. And that's different from distributor shipments how exactly?

Yeah, so distributors shipments are. So your accrual agreements will typically be based off of distributor shipments. So what that means is when, when Amazon's purchasing something from. From you as the vendor and they receive that inventory, those are considered distributor shipments. So If Amazon purchases $100, your accrual agreement is for 2%, then you're paying $2. The deduction there will be for $2.

Got it. Okay. And then so I see that we've got customer shipments, distributor shipments, and distributor returns. So can you tell me about the difference between distributor shipments and returns and the types of charges a brand might see?

Yep. So a distributor shipment is when Amazon's receiving a return, is when they're returning stuff. So it's basically backing out the deduction that was taken from that return. So if you're an accountant, this is kind of a debit and credit type of scenario. But that and then going to cost variance too. Cost variance is also a subset of that. And cost variance is when they detect a difference between the purchase order versus the invoice from a cost perspective.

Got it. And so when they. And that table is logging the magnitude of the cost variances and the occurrences, or is it also does Amazon penalize or charge the vendor based on those.

Cost variances as well in these specific cases? Actually, I might have to follow up with the group on that one. I actually, I actually don't know that off the top of my head.

Got it. Cool. So taken all together, we've got just stating it again for everybody so I can wrap my own head around it. You have four types of invoices that we pull the details for here in vendor central. One is customer shipment details, which again is when Amazon ships in order to a customer that triggers some kind of co op event. The next is when distributor shipment details, which trigger when the vendor ships something to Amazon. Distributor return details, which trigger when Amazon returns something to the vendor and needs to undo one of the co op triggerings from the shipment. And last is cost variances.

Correct.

Got it. And I believe we have one more layer.

Yep. And then under customer shipments, these then relate specifically to VPCs. And so Amazon does provide at these levels, coupon clip fees and redemption fees. These two reports look very, very similar to each other. I'm not entirely sure why Amazon breaks it up into two reports, but they do because they probably could easily put it into one report. Clip fees though are exactly what they sound like. It's when a customer clicks on a VPC, that action of a click with VPCs generally generates a fee that's associated with it. That's standard with all VPC contracts and whatnot. And then the redemption is the actual like promotional costs associated with it.

Got it. So if I'm understanding correctly, the clip fee is say there's a coupon for a dollar on, on an item and there's that little checkbox on the detail page that says click here. If I click that, that triggers the clip fee and then if I actually complete that purchase, that dollar value of the coupon would hit in coupon redemption fees.

That is correct.

Yep, got it. That makes a lot of sense. So there's quite a bit of nuance here in terms of the different types of data, but that they ultimately are all rolling up into this same sort of general pantheon of invoice and payment information that brands sort of need to collectively analyze together.

Right, got it.

Okay, so I know we just went through a whole bunch of the detail, but I would love it if just to make sure that we're bridging what we're talking here to what folks are actually seeing in Vendor Central. Can we walk through how to actually find and export those details?

Yeah, definitely. So the first thing is these are all under the payments tab in Vendor Central when we first talk about the, at the invoicing level, invoices and payments. So it's kind of the highest level, plus the 1B level, it's under the remittance. And when you export to spreadsheet, it gives you a spreadsheet of all your, all your invoices and all your payments. It's kind of a messy looking spreadsheet in the sense that it's kind of split in half. And so you kind of have to bring out your, copy out your invoices and then copy out your payments from here. But this is the quickest way to get both in one snapshot.

Got it. So even though this section of Vendor Central says it's remittance payments, using that export function actually gets you both invoices and payments, Right? Oh, gotta love it. There's always something new with Amazon ui.

Well, and then so the next level for co ops, this is under payments and co ops deductions. And so there's kind of two layers here, which is if you're just looking for your overall co ops, you can select all your invoice IDs to on the left Hand side here. And then I don't see that there's a. Should be a button that tells you to export and that can give, that will give you like an export summary version of all your co ops. If you click the download reports, then this opens up what they call the backup reports. So the backup reports here, where you see that downloaded report, this is where your customer shipment details, your distributor shipment details, the returns and cost variances and coupon clips and vir all live under these downloaded reports things quite a few of these live all in the same spreadsheet. So they're like. They will come as multiple tabs in the same spreadsheet.

Got it. Okay. So they gotta love Amazon. They're giving you a whole bunch of information, but they're siloing it in different places, if I'm understanding correctly. And so if you want to get the full universe of understanding what you've got, you start here at your remittance payments and export to a spreadsheet your total list of invoices and payments. But it's not going to include all the minutia that we saw earlier. Then when you get here, in addition to that exporting for all your invoice IDs, you can get that level of detail if you actually want, down to the individual fees like the coupon clips, the customer shipments and all that good stuff. You need to use that download button which gets you to co op backup reports. And then you download a bunch of individual Excels. Super cool. Thanks Amazon. Alrighty. Well, despite that pain, obviously this is super important data and we can, I can think of a bunch of different ways that brands might use it, but what are some of the top ways that for. Let me back up. I think we've got a list here. The top ways that I can think of that folks use this for are to do promotion analysis. You mentioned that the customer shipment details contains a bunch of information about price promotions, et cetera. What can you tell me about the way that brands can use this information to do deeper promo analysis?

Yeah, so it does give a deeper dive in terms of or at the very least Getting all your VPCs or price promotions in kind of one place. Oftentimes you have to track this manually and so this gives the ability to actually pull these at scale in terms of what promotions occurred, how much, how much actually was purchased in those promotions, and also what the cost of what the cost was to the brand. Most like Amazon does offer dashboards for like VPCs, but you have to go into like each VPC to kind of view performance. And so if you're able to grab all this information and put it, put it in a specific place, it does allow you to be able to analyze at a more aggregate level than at a kind of a one off and. Or slash, create tracking mechanisms for your promotional activity.

Got it. Okay. Yeah, that makes a lot of sense. So it's just a faster way to manage it at scale than by using the UI that forces you to look at one coupon at a time. Makes a lot of sense. I know that. A big one. And I know that you mentioned this is accounting and reconciliation. For those who don't know, Joe is formerly a tax accountant, so we can blame him for all of our tax problems in life. But it also means that he's very familiar with the concepts of debits, credits, et cetera, and how things like invoices and payments are going to be important to that team. Joe, can you tell us a little more?

Yeah. So oftentimes your accounting team will want details around, like, why Amazon's taking a specific deduction or whatnot, having it. Typically they would, they are actually probably oftentimes the ones going into, into these reports, downloading these specific reports to do those specific reconciliations. So it's, it's really, it's really the devils in the details for the accountants and your finance people.

Got it. And that makes sense. I know that a big reason why they do this, in addition to, you know, keeping the books clean, is to actually perform reconciliations and make sure that the deductions that Amazon is taking are actually appropriate and meet the terms and conditions that you agreed to. So particularly when we were back in our, when Joe and I were still at Amazon and in the vendor management role and on the other side of the table, a lot of the time we would. A lot of questions that we would get from vendors were about reconciling invoice charges and payments and making sure that those numbers lined up. So if your teams are not already doing this, strongly recommend getting into this data to look for more opportunities.

And Amazon does make mistakes. And so this is. The details is where you would be able to identify whether a mistake was made and whatnot. So that's not unheard of. They could be misapplying certain agreements and so actually also reviewing to make sure that the agreements are matching the ones that you actually agree to. So, for example, if something's not canceled properly, and then you would see, you would, you should see the deductions show up here.

That makes sense. Another really Common one that we would see is price promotions or even accrual agreements that are based on a specific ASIN set or based on a specific vendor or manufacturer code. And, or I guess it would be vendor code and ultimately finding that the numbers don't match because there are ASINs misassociated with that code. And so promotions or discounts are applying to the wrong product set and a vendor might be getting billed incorrectly.

Yeah. And something to note also is, you know, the details in all the, in all the reports are at the ASIN level. And that's actually one of the big, big things is you can, you can actually drill down to the ASIN level. Yep, exactly.

All right. And last, but certainly not least for anybody on this call is the using this data in order to prep for negotiations every quarter. Joe, how have you seen folks do this?

I mean, sometimes it's bringing up to your vendor manager things that have gone awry. So that's definitely one aspect to it. It could also be to quantify, you know, the actual co op versus just relying on the percentages that Amazon gives you per se as well. It's also an important use for also like promotional planning and reconciling, you know, what you budgeted versus what actually was spent from a marketing perspective as well. So using it for your marketing planning, I think, and slash, negotiations, prep, you know, like, hey, we spent 100,000 last year. You guys built us for 150. You know, like, what can you do with that 50 that you overspent on? Or X, Y or Z.

Got it. Yeah, that. If I'm recalling correctly, it's been a little while since I've had to deal with an actual co op agreement or marketing development funds. But I can, I can certainly recall instances where vendors felt like Amazon had not deployed the full value of accrued co op based on an agreement. And certainly that's something that would come up in a negotiation period. Awesome. I think that that's the main topics that we wanted to cover, but there are a couple of pretty specific and esoteric questions that we've heard from multiple customers. And so we wanted to make sure that we address these as well. One in particular that we hear a lot from folks is that they can't get the data that they get from the invoice summary out of intercentral to the aggregate invoice details. Joe, what do you know about why that might be happening?

Yeah, so some. So the details are only applied to very specific agreements, number one. So that's usually the biggest delta, which is straight payment agreements do not have details. And so as such then the, your aggregate of your details are usually going to be a little bit lower than your summary. If you have straight payments or some sort of straight payment agreements in there, that's probably the biggest one that we've seen. You know, the other one that we, we see is it seems to be more prevalent in the EU marketplaces. We're not entirely sure why it is the case. I have a hypothesis that it might be something to do with like maybe currency exchange, but, but we do see it more often with, with EU than with the US side of the. The side of the house.

Got it. Okay. So there's two things just to recap there. One is that not every invoice has accompanying details. And so if you're trying to pull all your invoice details, it's going to be missing straight payments, which you said don't have those details normally. So that's always going to drive the details total to be lower than your summary total. And then second is that we see that variance increase or seems to be more prevalent in the EU because of potentially currency exchange.

Yep. And then I think the third reason is also there's just an error in which case that is probably the right candidate for so.

Got it. So customers, or I'm sorry, vendors should probably be looking at this data on a regular basis to make sure that they're identifying potential errors.

Yep.

Cool. Another question that we hear a lot is does it matter whether I use manufacturing or sourcing view when I'm working with this data? And I think that for a lot of vendors, the manufacturing versus sourcing view is a constant source of frustration. And you know, when they're dealing with sales diagnostic reports, the fact that these views rarely align, that the same data isn't available in both views, etc. Makes this a top of mind issue for a lot of folks as they are coming to look at these financial reports. How are they impacted if at all?

Yeah. So taking a quick step back, manufacturing versus sourcing views and all the sales diagnostic views that you see. I see and brand analytics, those I would define as like those are business business reports in comparison to these payments which are actual financial financial reports. And so that that is one of the big reasons for that specific delta. When we think about the two between manufacturing and sourcing, manufacturing gives you data at a level of in terms of what's happening at an aggregate, regardless of where Amazon is sourcing the product from, typically you have to be the brand owner in order to have the manufacturing view. And so typically it also allows you a view if you have multiple distributors selling it to Amazon to have an understanding of like how much aggregate like your, your, your distributors are selling into Amazon sourcing view. On the other hand, it relates to your specific vendor code and where Amazon's sourcing the item from. So sourcing view, while it won't tie directly because it is still a business report versus a financial report, will tie more specifically to or will be closer to what you see under, under the payment payments tab in your financial financial data.

Got it. Okay, that makes sense. And so but then for specifically when you look at the payments and whatnot does it ultimately it doesn't really matter as long as you have an understanding of how it works on the sales diagnostic side.

Correct?

Yep, got it. Thank you. That's super clarifying. And last, I think this is our last question, but how do people get help with this information? We just exposed the complexity, the potential for errors and also the importance importance of this data for vendors on a regular basis in pretty critical ways like promotional analysis, accounting and negotiations prep. How can vendors get help and maybe wrap their minds around this a little more cleanly?

Yeah, so I think when you're talking about this much data and this main disproportionate places and in terms of how much data there is, I mean one thing if your accounting team isn't already doing so is to be able to track it and keep it in some place. A database is probably the best solution in that regards. These are reports that we do offer with reason automation but a database solution is probably going to be one of the best types of things in order to, in order to manage kind of this level level of data.

That makes a lot of sense because a database will allow you to associate more easily and on programmatically all the various data sources sources that we looked at earlier. Jumping back in time here to this chart, even though each of these things lives in a different, slightly different place and you need to go clicking around in Vendor Central's ui, getting all this data into a database allows you to write one query to generate a completely comprehensive report on all of your invoice and payment information, all the way down to the details to use however you need to.

Yep. And if they're doing it ad hoc ly then it probably means that you're not typically reviewing it on a more regular cadence. So if you have a more automated solution through like and having it into a database could also allow better reporting and better visibility on what's happening with your invoices, payments and co op.

That's a great point that at the end of the day there's no silver bullet solution that makes this data suddenly magically easy to work with and interpret, but that the friction of downloading and accessing all of the data ultimately makes it harder to get the practice in that you want and make good decisions about how to look at the data in the future.

Yep. And I think the Amazon kind of banks a little bit on that. It's not unheard of that you've seen disputes like a year, year and a half old before, before they get resolved. And I think oftentimes it's because there's so much data that's available that oftentimes it's very, very difficult to kind of parse out. So, you know, having it again, having it organized in a way and having it in aggregate can be extremely helpful. Got it.

Cool. Well, I think that's everything that we wanted to cover today. I see that we're at time. Thank you very much, Joe. I appreciate you coming on board and helping our audience understand some of these concepts a little more closely. Thank you to everyone who attended. We're going to we recorded this meeting. We'll send out a recording of it shortly after we get off the line today. It'll be hosted on Zoom in the Cloud, so feel free to download and share. If you have any questions that we can help with, don't hesitate to email us. I'm andrew@reasonautomation.com Joe is joeasonautomation.com Just let us know how we can help.

Thanks everyone.