How to get an Amazon Vendor Manager and negotiate Terms
As a seasoned Amazon marketing agency, we often get this question, and we wish the answer were totally straightforward – but it isn’t. While it may be easy to find an Amazon Vendor (or Amazon 1p) Manager you can work with, the difficult part is often negotiating terms. That’s going to be a key focus in this article, so let’s get on with it!
What is an Amazon Vendor Manager?
Anyone selling on Amazon would want to maintain a healthy relationship with their Vendor Manager as that is the key to a successful collaboration with Amazon. Therefore, it is absolutely vital that you understand what the role and responsibilities of this individual are, along with their goals and the challenges face.
A vendor manager is someone working internally for Amazon, acting on their behalf as a marketing consultant, approved buyer and project manager. Some of their key responsibilities include coordinating, orchestrating and driving Amazon’s day-to-day goals.
Vendor managers are very busy people as they have to juggle between multiple tasks simultaneously each day – unsurprising since they are the main contact person for all vendors selling on Amazon.
At length, the day-to-day responsibilities of a vendor manager may include:
- Gains & losses
- Marketing & promotions
- Supplier negotiations, and;
- Customer satisfaction
In what cases does a Vendor Manager help?
With time moving forward, Amazon is increasingly resorting to a machine learning (ML) approach, but despite this automation, vendor managers are very much an ‘active agent’ on Amazon as they can trigger orders manually where required.
With that said, vendor managers are primarily the first point of contact for vendors when it comes to, for example, marketing campaigns and resolving technical complaints. They typically forward any issues vendors are facing to the appropriate internal department and also help the latter make strategic product decisions like placement of new articles.
In any case, it is quite helpful for sellers/vendors to have direct contact with an Amazon Vendor Manager as they can provide a lot of help and insight on inquiries related to Vendor Central, the ordering procedure and to some degree, Amazon Advertising.
How do I negotiate terms with my Amazon Vendor Manager?
While it always helps to have a Vendor Manager on your side, you should not go by every statement they make without seeking a completely unbiased and external expert opinion, as in some cases, their insight will be geared towards supporting Amazons business.
This is why it pays to research into some of the terms you should negotiate. It’s easy to find a Vendor Manager directly through Amazon but getting them to negotiate favourable terms on your behalf may prove to be challenging – if you’re in unchartered territory, that is.
Therefore, we need to understand something from the outset: Amazon Vendors negotiate Terms purely to improve their business on Amazon – so, Amazon’s position as an eCommerce giant can improve (as opposed to yours primarily).
Before moving any further, however, we need to quickly ask ourselves: Can I negotiate terms myself or do I need a Vendor Manager for this?
Well, you could always go it alone, there’s no harm in that, but you may quickly find yourself outgunned as Amazon is known for being a very tough negotiator. In any case, here’s what you want to keep in mind to get the best outcome from your Amazon vendor negotiation:
- Try to understand what’s important to Amazon and what they want in a vendor;
- You are not the first vendor they are dealing with and you certainly won’t be the last, so Amazon has a lot of leverage, which means they can very easily turn down your terms if they don’t see any value in it;
- Go into negotiations with an open mind – you may need to give up a privilege or two in order to gain another one that you want very badly (which will all make sense later on in the grand scheme of things);
- You will NOT be able to negotiate better pricing terms without a vendor manager, as vendor support will typically reject any price increase.
- Be confident and put your best foot forward – boldly share your needs but also at the same time, be realistic and think about whether it’s something you are likely to get;
- Don’t be too stringent on your terms – a compromise which benefits both parties is always better than you walking away with most of the perks… probably not happening!
Keep the above in mind, and we’ve already put our best foot forward: you are now ready to walk in there with a confident smile.
Here’s how the process works
Vendor trade term negotiations begin with an RFP or Request Preparation for Proposal, through which you are going to make your ‘best offer’. Based on Amazon’s feedback, you can always revise the offer.
Now comes the negotiation phase.
Finally, the agreement phase is where the terms are finalised as both parties sign off.
Your negotiation preparation strategy
Preparation and strategy are vital to success, and this holds truer than ever when it comes negotiating with Amazon. These helpful tips should ensure that you kick things off on a positive note:
Understand and know your terms
Amazon will ask you to agree to certain terms and condition – which revolve around everything from the way you will list products to how you will handle customer returns or any service-related issues. Therefore, you need to fully understand the terms before agreeing to any of them.
Be reasonable and flexible (to a certain degree)
Amazon is one of the largest companies in the world with equally large and deep pockets – naturally, you’re not going to be able to negotiate all terms in your favour, although you may be able to get at least half or more terms in your favour.
With that said, don’t just blindly accept the first offer they throw at you. Amazon is very clever and they may only be testing the waters to see how far you will go. At the same time, however, you’d want to come up with a compromise where you have Amazon’s best interests at heart.
By showing a certain degree of reasonability and flexibility, you have a much better chance of getting the terms you want.
Amazon will likely use every tactic in the book to cut down their costs and one of the ways they like to do this is by asking you to accept longer payment terms. Unfortunately, and to their disadvantage often, this can prove to be a sticking point in vendor negotiations – vendors are always interested in receiving payments as soon as possible.
One way you can get around this is by offering Amazon a discount if they agree to shorter payment terms. For instance, you may offer a 5% discount if they pay you within 30 days.
A marketing allowance covers the costs associated with advertising and promoting your listings on Amazon so Amazon will make an offer and hope that you agree to it. The total allowance you get depends on what kind of products you’re selling.
Again, if you offer Amazon a discount, they may offer pay lower marketing allowances in exchange, saving themselves money while also giving you the flexibility to effectively run your online business.
Freight allowance covers the cost of shipping to Amazon’s warehouses into Fulfilment centre. Again, the allowance payable depends on the kind of products you are selling. Be prepared to negotiate this point too!
This allowance covers any costs associated with damaged produced that your customers return. As with the other allowances, the amount you get depends on your product category.
This allowance is unique from the others in the sense that it is not a fee payable to Amazon but rather, a way for them to cover their losses should one of your customers returns a damaged product. Therefore, agree only to an amount you feel is justifiable or you are comfortable with. All the while, that amount should also adequately compensate you for the cost of the damaged returned goods.
There are of course other allowances and chargeback fees which you can learn more about here
This is where you must agree to a customer return policy, which will govern how you deal with any returns due to dissatisfied customers.
If you offer Amazon a discount, they may offer you a more lenient return policy. For instance, you may offer them a 20% discount in exchange for accepting returns within 30 days of a sale. Discounts galore! But all to your advantage in the long run.
We’ve only really skimmed the surface here when it comes to negotiating vendor terms. If you want to go in 100% prepared right from the start, Chris and his team are ready to lend you their expertise.