As Q1 of 2020 concludes, the time to tackle your Amazon Vendor Negotiations (AVN) is narrowing. This is your opportunity to renegotiate your terms with Amazon and hit every topic from marketing funds to damage allowances and freight accruals. This negotiation period is your fight for leverage and growth to your bottom-line business. The window is closing, so keep reading to make sure you take full advantage.
As Amazon continues to expand it’s lines of business and services, Amazon Vendor Negotiation terms have had to grow it’s parameters in alignment. It’s important to remember that Vendors play a critical role in Amazon’s success story, and therefore have more influence and relevant input than they might think. This critical period is an opportunity for Amazon and Vendors to align on their business goals and strengthen their partnership. Let’s explore what changes are on the horizon for AVNs in 2020 and how vendors can use this information to their advantage.
Why Amazon’s popularity will impact AVNs in 2020
It’s a great time to be an Amazon Vendor, as its sales figures and customer base continue to grow. The retailer realized net sales of $70 billion by Q3 of 2019 and is set to reap 1 in every 10 dollars spent on digital ads in the US, meaning Amazon is taking a particularly strong approach to AVNs for 2020. Amazon’s confidence in their negotiations comes from demand and drive for customers and brands to use their marketplace. Vendors play a vital role in helping Amazon to meet the needs of its huge customer base.
Another big change for Amazon this year is its operating cash flow, which has increased from $21 billion to $36 billion from 2018 to now. Furthermore, net sales have increased in Q2 by 20% to $63.4 billion compared to $52.9 billion in the same period last year.
In 2020, the threshold of Sellers surpassing
$1 million in sales reached 15,000. Although Vendors and Sellers play different
roles in the marketplace, such figures signify what opportunities are possible
with Amazon and its unparalleled growth in the ecommerce sector.
As with any negotiation, it’s crucial to have access to the financial layout; Vendors must take in this information into account during AVNs to guarantee a successful go-forward strategy. Upstart Works can take care of collating the information you need to prove yourself in any marketplace.
Amazon shopping events in 2020
In 2019 Amazon’s Prime Day surpassed Black Friday and Cyber Monday combined with 175 million items sold in 24 hours, setting a new record for the retailer. With 2020’s Prime Day on July 06 fast approaching, vendors must be ready to make the most of the event. Amazon will look to vendors to help fuel the event and ensure plenty of attractive deals to drive traffic to the site and induce revenue growth. .
As Amazon offers its customers more options, faster shipping, and a better customer experience, the company will aim to absorb these expenses through their AVN contracts. For example, in 2020 Amazon will aim to recoup costs such as one-day shipping, through AVNs. It’s vital for Vendors to be informed of this objective as they enter negotiations, so they can reaffirm their role in Amazon’s biggest day of ecommerce purchasing.
Tackle AVNs head-on in 2020
AVNs are a critical business tool that ensures both parties know what to expect in the year ahead to meet sales goals. Going into negotiations with a strong understanding of your strengths as a Vendor and solid sales data will transform the way you look at AVNs.
At Upstart Works, our years of experience working with Amazon on behalf of leading brands, and our insights resulting from experience, will ensure you are getting the best results possible for your business. We are familiar with how Amazon works, where the opportunity exists for Vendors and Amazon to win, and most importantly, how to advocate for your success.
The window for AVNs is closing, so if you haven’t already, contact us today, and let us take care of your AVNs in 2020! #HustleUp