Tiffany Serbus-Gustaveson  0:18  

Hello, I'm Tiffany Serbus-Gustaveson, a digital strategist at BWG Connect, and we are a network and knowledge sharing group, we stay on top of the latest trends challenges, whatever it is that might be shaping the digital landscape, we will have done at least 500 of these virtual events this year due to the increase in demand to better understand digital, and we do at least 100 in person small format dinners. So if you happen to be in a tier one city across the country, feel free to shoot us an email and we will get you on the list and send you invites if we happen to be in your city. These dinners are typically 15 to 20 people having a specific discussion around a digital topic, and it's always a fantastic time. So definitely recommend it. It's from these conversations we generate the topic ideas that we know people want to learn and talk about. And it's also where we gain our resident experts such as Media.Monks who is with us today. Anybody that we asked to teach the collective network has come highly recommended for multiple brands. So if you ever need any recommendations within the digital space, please feel free to reach out to myself Tiffany@bwgconnect.com. And I can send you a shortlist of the best of the best. Be happy to provide that to you. Also, if you happen to be hiring in the near future going into 2023 Do note that we do have a talent agency BWG Talent that we would be happy to put you in contact with as well. A few housekeeping items. We started this about three, four minutes. After the hour, we're going to wrap up at least five minutes before the end of the hour. So give you ample time to get to your next destination. And most importantly, we want this to be fun, educational, conversational. So feel free to drop in those comments, questions into the chat q&a are both enabled. If you feel more comfortable, you can always email me at Tiffany@bwgconnect.com. And we will get to them. So with that let's rock and roll and start to learn about the best approach to Amazon vendor negotiations heading into 2023. The team that Media.Monks have been awesome friends and partners in the network. So Megan, I'm going to pass it to you if you can give an intro on yourself and then we will dive into the content that would be fantastic thinking.

Megan Boyko  2:30  

Sure thing. Thanks, Tiffany. Hi, everybody. My name is Megan Boyko, and as she mentioned, I come from Media.Monks, which is a global content data and media powerhouse organization. I specifically work within the Commerce.Monks side of Media.Monks, which is really focused on the eCommerce division and building brands within an eCommerce platform. I am your client service. I'm the client services lead there at Commerce.Monks. So I specialize specifically in crafting brands, strategies that can support growth on eCommerce across content, advertising, operations, data usage and beyond. We really our team, our team is very focused on the eCommerce piece of it, we do have insights and specialize in other retailers too, including Walmart, Target Instacart. But we definitely have had a strong view within the Amazon landscape. And we we have strong partnerships within Amazon there as well. Many of our employees, with Media.Monks and Commerce.Monks actually come from Amazon and many others have had a long history working with Amazon as part of about one P vendors. So lots of specialties remain within our teams. And and I'm here today to just talk to you specifically about annual vendor negotiations.

Tiffany Serbus-Gustaveson  3:46  

Awesome. Well, let's dive right in. Yeah, some great content excited. Yeah.

Megan Boyko  3:53  

So what we're gonna do today is we're going to talk through a couple different topics first, of course, is what is a VPN and then we will kind of roll through the five steps to preparing for this annual vendor negotiations. And I want this to be conversational. So please, if you guys have questions at any time, go ahead and raise your hand Tiffany will send those over to me and we can kick it off and talk about it some more. So jumping right in, I guess the first question to answer to would be what is annual vendor negotiations. This is a process that really happens between Amazon and the one P vendors. And I want to make that distinction. For those of you who are listening, this is very specific to the one P vendors and Amazon relationship. It's the time of the year where Amazon comes together to review prior year performance and begin the trade negotiations and process for determining the terms for the future coming year. So the process is actually quite extensive. It can last for quite a while and it usually kicks off in about January. There are five steps that we like to take into actually preparing to go into those conversations with your vendor manager or your strategic count services team, but apt to get you ready to actually like, lead into those and then and have successful negotiations all the way through. So today what we're going to do is we're going to talk you through those five areas. And that's everything starting off with gathering your data to preparing your budget and scenarios, and working with the different stakeholders and your internal teams thinking about the larger market conditions that are going on aligning your business stakeholders. And then finally, just really understanding your business partner within Amazon in different tactics that you can take to best prepare yourself for theirs for those negotiations for a successful future season.

Tiffany Serbus-Gustaveson  5:34  

Oh, quick comment here. Have you heard that they're renaming these joint business plans?

Megan Boyko  5:44  

We have heard that it's, there's actually been, it kind of depends on your vendor manager. So some call it ABN. Some call it joint business plans, each category or department within Amazon, it's really a preferred term on how they like to approach that with their vendors. But they're kind of synonymous with one another. And the steps to prepare for these negotiations in this time period, really remain the same whether you call it joint business plan, or ABN. So up to you. But I think that the information still pertains for joint business plan. I personally really liked that turn, because it really leans more towards a true partnership. And that's what you want with Amazon and your brand is to have that collective partnership to prepare for success going into the next year.

Tiffany Serbus-Gustaveson  6:30  

Yeah, that sounds nice. team effort, team effort, for sure. All right.

Megan Boyko  6:39  

So step number one, the very first thing to do for setting up success is going to be to just really spend some time gathering that background data to understand what it is, prior investments were how those funds were used within the investments, what your return on investment looks like, and what are going to be your priorities that are most important leading into 2023. So if you can spend some of that time really collecting that background data, you're gonna want to be looking at everything from prior year terms, agreements, like your base term, your marketing allowance, your freight allowances, any other investments that you might have had, there's other pay to pay programs, too, that you may have invested in or your brand might be interested in utilizing in the future. And this pay to pay programs could be vine, subscribe, and save. Amazon offers a whole host of them. So lots of different options. But to get yourself really set up for success is to ensure that that data that you have from the prior year and your investments were there, that it's at your fingertips to be able to analyze and see if it's still supports your future priorities, or if there's other programs that are available that you might be needing to invest in to further success. Any questions here?

Tiffany Serbus-Gustaveson  7:56  

Okay, so what are the core components? Like? Where do you get that the data is that all assessable at everybody's fingertips within the portal,

Megan Boyko  8:05  

it absolutely is. So your contract will be available to you and vendor Central. And all of that will have the different core components. And again, those core components within your trade agreements would have, again, the base terms or marketing allowances, or whatever those terms might look like. You can also work with your finance team, they should have all of that readily available, too. And I highly encourage these conversations to be dynamic and inclusive of not only the finance team, but also anybody else within your internal organization that would utilize the funds and or utilize the investment that you're seeking for Amazon with Amazon for the future season. So in part of gathering the data, it's important to obviously grab it, the internal data yourself, but you can reach out to your resources within Amazon to so outside of vendor central something thing to think about would be to reach out to your vendor manager or your strategic account service contact if you utilize that program, and really ask for that background data that they have available to them. So an example of this might be if you have invested in damage allowance allowances in the prior year, you'll want to ask your vendor manager to be able to provide you that background data at an Asin and category level of what ASINs actually needed to be used or applied to damage allowances. That way you can really check and see the return on ad spend or sorry, sorry, not ad spend for return on investment. And make sure that that is still an appropriate investment for the future season. You'll often find that going into these negotiations that Amazon will ask for additional points within all of these programs. And so if they're asking for points, it's best to be armed with that data to support either or rationale for not investing into additional points, reducing your costs or even just understanding what it is that they're asking for and what might be driving those increases. Another example of this might be background data at a category level. Within your marketing allowances, how were those marketing funds used? Are they spent to drive search were they spent to drive brand awareness? Again, what is that return on value there, the return on adspend that came with it, the end your marketing manager within Amazon, your vendor manager, your strategic Account Services Manager, all of those individuals and contacts can provide you that background data. And I would argue, it's best to probably ask for this, if you have a date in mind of when you are approaching these negotiations, ask for it three to four weeks in advance. So you really give yourself enough time to review it, digest it, and know how that's going to impact your future investments.

Tiffany Serbus-Gustaveson  10:51  

We have a foundational question, which I think is a fantastic one is, if you inherited per se, a grandfathered vendor Central account, and you've never really had access to the vendor manager of that account. How do you go about finding who your vendor manager is via Amazon?

Megan Boyko  11:11  

That's a really great question. And typically, the vendor manager will have direct contact with a finance manager. If you have that contact within your organization, I would reach out internally and see what other contact points they've had, they'll have had to have had conversations at some point to be able to sign contract hogs or other trade agreements. So reach out internally and see if you can get an additional name. That being said, those contacts with Amazon do turnover fairly frequently as they they move on to different roles within the organization, you can also submit a ticket and reach out for help to see if you can get some help within vendor Central and that request a contact. Ultimately, if you're a one P vendor, though, with a large trade negotiation, your vendor manager will be reaching out directly to you at some point or another prior to these terms, because they can't just anniversary into the next year.

Tiffany Serbus-Gustaveson  12:08  

And then another question is, which this is I had worked on Amazon for 10 years. And I have this question as well. It's like, how do you find other pay to play programs that are available? It seems like Amazon is always doing beta programs and different opportunities, but it's not access for all. So any pointers there?

Megan Boyko  12:29  

Yeah, absolutely. We'll touch on this a little bit at the end, too. But I definitely think it's fair to talk about it throughout the presentation as well. There are advocates, across the board, lots of agencies, professionals that can really help give some guidance on where the Amazon landscape is going to feature what their priorities will be. They're always like keeping an eye out on the horizon to future proof your business and they're there to help you for that. So I highly encourage you to reach out to a find a trusted advisor, find a partner and sit in on those resources. Amazon does offer different networking programs to so there's a lot of resources that can be found via LinkedIn, and different Amazon programs that are launching. So you can keep your eyes out for those. They just came out of a three P program where they launched by with prime as an example. So there, there's going to be different as they launch new programs, they'll list their priorities within LinkedIn. And those are good areas to find it. But really, I highly encourage having an advocate in your corner for somebody who is always keeping a pulse on what the market is doing and where the digital priorities are leading for the future years. Excellent.

Tiffany Serbus-Gustaveson  13:43  

And for clarification, marketing and allowance. Is that base accrual, or are those two separate things.

Megan Boyko  13:51  

So marketing allowance can look a little bit different brand to brand, there's several different ways to spend marketing allowance. And it can come through basic rule, it can also come through other avenues for marketing allowances. And I can send out afterwards if you guys want to reach out to me via LinkedIn, I can send out some different aspects on what different avenues of marketing allowance look like. But they are they can be just simply straight pay agreements for things like an electronic gift guide or other search functions. It's the thing to keep in mind when negotiating with Amazon is that there isn't necessarily a black and white rule that says marketing allowance equals one. So think about what actually works well for your brand, what objectives you're trying to achieve for that and have that conversation with your vendor manager. There's also some good resources online to be able to, to look up what all of those Amazon programs mean, and how Amazon typically utilizes it and I would encourage you to look at

Tiffany Serbus-Gustaveson  14:58  

those And we're gonna have some awesome questions. This is very engaged in in love it. Um, I've been here to automated blurbs don't have a vendor manager. But you want that back end data. Any pointers on if you have nowhere to go, you have no human beings who talked to is there a point in the portal or someone to reach out to to get that data so you have something in hand for these negotiations.

Megan Boyko  15:28  

So typically, the data that you would need is available within vendor central underneath of your operations portals. So you can go into the sales portal at retail analytics to grab your information and you can go into the operations reporting systems, they do have really good helpful q&a Is within that you can even just type it into the box on vendor Central, what you're looking for. And typically, the q&a is will help direct you to how to download those informations. If you do not have a human contacts, creating a ticket for Contact Us is a really helpful way to get that information, it takes a little bit of time, it can take a couple of weeks to actually gather that. So be proactive in your approach. If you're needing some time, think about do the background dating into the time that it takes until you're in negotiations, just knowing that you're planning for a couple of weeks of a turnaround that contact us and their systems typically will also provide you what it is you're looking for.

Tiffany Serbus-Gustaveson  16:27  

And going back to the marketing allowance, sure, is there any visibility for a vendor to see how it's been utilized over the past

Megan Boyko  16:36  

that is something that is in your rights that the vendor manager or the marketing manager should be providing to you. So again, if you can't get a ticket, through contact us, check and see however many different, you know links, check with your finance team, check with your other internal peers for any other vendor contact or Amazon contact and they can put you in touch with a vendor manager to provide that information. The other option, when it comes to downloading all of your investments is you can go again into vendor Central, and download all of your contracts. Now, this is a little bit time consuming. This is why I usually advocate having a strategic account services rep or your vendor manager doing it. But you can download all of the contracts. And they will be listed on there with what the investments are. And then you can roll up the total to figure out how much you've spent for the total year for it. And I highly encourage doing a once a month, once a week to once a month download of those contracts anyways, and keeping a running total on your end. Just to make it a little bit easier. When it comes time for these negotiations, the data would be a little bit more at your fingertips, if you're managing it throughout the year. That being said, if you haven't done that, a Amazon contact can provide you the information. So step two, once you have your data, what other kinds of things are you going to what would be the next step into planning for this. And it's really plan out your budget and start thinking about all of the different means that would go into the into your budget. And that goes beyond really just like what your brand priorities are, however important be thinking about your brand's needs, their priorities, their objectives, and what you'd like to achieve for that year, but also take into consideration the overall market conditions like what is the general market experiencing? What is the competition on Amazon experiencing? What are the what are Amazon's needs? And if you start thinking about this from a macro picture and holistic, you'll be able to come to a budget ahead of time that is more suited for the environment that you're negotiating in and less so just specific to your brand. So I highly suggest that these are good times to just sit there and put some pen to paper on what is it that we are looking for? And what is it that we are trying to achieve? And is it safe

Tiffany Serbus-Gustaveson  19:03  

to say that they don't care about new product launches, new product development, anything product centric?

Megan Boyko  19:12  

Oh, Amazon absolutely cares about that. I think you have to consider what is your brand's need and those priorities and what's going to make that successful for sure. So let me give you an example of what I'm talking about here. When I say consider all of the brand needs, the market needs Amazon's needs. And we're in an environment at the moment where shipping has been pressured the last two years since COVID. We are in an environment where inflation is on the rise and fuel costs are on the rise. So how does that play into your budget and your product delivery priorities for Amazon, they may come and ask for higher freight allowances in order to offset shipping costs. Is this something in planning your budget that you are willing to invest in to achieve those other priorities? Or is this an area that is going to be be pressed for you have to. So if those product launches are to your point of product launches, that product launches are going to be challenged, or a key priority here, then investing extra into freight allowance might be an avenue to take. But again, it's really important to think full picture, what is the brand? What is the market? What are Amazon's needs. Furthermore, what I will also say about this is think about when you're approaching these negotiations, take this as a holistic brand approach to so it's super important to include all of your categories in all of your investments. So if you're approaching 80, and agreements, and you have strategic Account Services for a portion of your business, make sure that those investments stretch to cover all categories. What this does is it just provides more visibility for the brand more support for the brand. And it keeps it keeps your brand from looking fragmented in terms of support and appearance within Amazon. And anytime you can always include all categories in these negotiations at a time.

Tiffany Serbus-Gustaveson  21:03  

And what stakeholders should you be considering?

Megan Boyko  21:07  

That's a great question. And we actually will start to get to that a little bit here next to and when you're considering your stakeholders, first, start with your internal stakeholders. So when preparing the budget, and working with your finance team, bring all internal stakeholders that are going to have and utilizing those budgets. So if you're on the sales team, and you are speaking to marketing alliances, or other marketing spend, bring in the experts within your marketing team, if you're looking at other shipping initiatives, bringing in your demand planning experts and how their priorities are going to influence into this. So first look internal, then, within a stakeholder thing, we'll speak to this shortly. But it's going to be really important to map out Amazon stakeholders and what's important to Amazon and how those external stakeholders do align with your internal and how you can best pair up with one another for negotiation purposes. All right, guys, once you have your data, and you have your people, let's go ahead and start preparing for all of the different scenarios. And what I mean by that is like really think from start to finish, what is acceptable? What is ideal for the brand, what is best in class and achieving all of your priorities look like? What would make it the most profitable in margin healthy within the scenarios? What is going to be the best delivery for new product launches and be the best presentation from a marketing standpoint, what is going to best support your back end operations. So think about all these different scenarios. And then from there, again, when you're thinking about the market, and you're thinking about your business partner, what where can you make some concessions if you need to? Where are you willing to give to get a little bit more? What are also your limitations? What are those non negotiables that say, Nope, I just can't go any further. This is not an area I'm investing in, it's not going to achieve my actual goals and objectives. If you can lay all of this out ahead of time, it really helps for a much more smooth negotiation back and forth in these discussions. Because it'll keep you from getting in a sticky situation that's uncomfortable, because you'll already have it laid out with what do you want to go? What do you want to achieve? Where do you want to see your brand go? What does this business agreement look like this year? What is it need to achieve for the next five years? So all scenarios all mapped out will just put you in a more comfortable place as you lead into your next step of negotiations?

Tiffany Serbus-Gustaveson  23:39  

Would you go as far as preparing an exit strategy and or model change? Like we're looking at a three P model with Amazon as opposed to one p if we don't get XYZ?

Megan Boyko  23:53  

Absolutely. I mean, I think that that's really important to prepare, if you have to have been hard, no conversation, and prepare that exit strategy. Ideally, you can also think about other strategies that's going to take to avoid getting to that point, because ultimately, the last thing you want to do is exit your business or move to a completely different platform. But it is important to know that that's there. What I would avoid doing is using any kind of like threatening language that says if you don't, then I'm going to exit because typically, that's not going to be the kind of partnership that Amazon is looking for. They're here to partner, they want to build businesses and they want to have that win win scenario. So again, it comes back to like consider what your business partner is also looking for and what those other environmental challenges are, and find healthy ways to create make all boats rise. But yes, absolutely. If the negotiations hit a point where everybody is at their limits and you've hit your non negotiables it is fair to prepare an

Tiffany Serbus-Gustaveson  24:55  

exit strategy. It's probably doesn't get to that point but Yeah. All right. So this was harder.

Megan Boyko  25:03  

Absolutely. So you have your strategies prepared, and you've spoken with your internal stakeholders, and you've gathered all of the data that you have, and you've prepared your budget, something that's really important to think about. And this was brought up earlier. So thank you for that question already. But it's really aligning your business stakeholders. And when I say aligning, I don't mean just internally, but your internal alignment of leadership to Amazon's leadership. So if you have a senior vendor manager on the Amazon side, who is managing the negotiations, make sure that person is appropriately aligned to your leadership, whether that is a senior account manager or a senior sales director, what does that look like? The reason that this is important is because each, each person within this stakeholder matrix is going to have their own set of priorities, they're going to have their own set of needs that must be achieved to and there. And so by being able to prepare them, you're going to be able to have a much more honest and fruitful conversation right up front than you would if you if you were aligned to incorrect person. An example of this might be if you're having conversations and needs as a brand about enrolling in strategic accounts or preferences, you're not wanting to talk to the in stock manager, that's not the correct alignment, ensure that all parties that you need to be discussing with are present at Amazon and all parties internally are present for these conversations as well.

Tiffany Serbus-Gustaveson  26:29  

Is there a magical number, like don't go over this many people, I wouldn't say

Megan Boyko  26:35  

that there's necessarily a magical number, I think it's very fair to say that one to one is a more ideal situation. And that to me, what you'll find too is Amazon is going to limit the numbers naturally themselves, they won't invite a massive group into these negotiations, they'll keep it much more intimate. So try and match more of their style, but ensure that you have your correct approvals and leadership there, that also expedite the process a little bit too, so it doesn't need to constantly go back and forth with that, let me pull this correct team in or fact check with them, you'll have done all of your preparing ahead of time, you'll have the team and the approvers there. And you'll have requested for Amazon to do the same to expedite this process. Vendor negotiations can take fairly lengthy amount of time, which can be business disruptive, if it goes on too long. So anything that you can do to help aid in the process to expedite this is only to your benefit.

Tiffany Serbus-Gustaveson  27:31  

If it goes on too long, is there a threat that they will turn off the business suppress the business,

Megan Boyko  27:40  

I haven't seen that happen. Um, but there definitely is, there can be financial implications down the road in terms of other charges, especially as it relates to operational aspects of the business. And it's best to just get in front of it. The other piece of that too, is you don't want it to go on too long. Because as you're speaking to things like marketing, spend and how you're going to plan for promotions, that's best to know upfront so you can plan it for the entire year. And make sure that your product launch or product support is appropriately planned to hit all of those major moments. So you know, an example of this is Amazon this year, released a new prime early access sell to second Prime Day. And it's the first time that they've done that. By being able to have your marketing budget planned at the beginning of the year, you can account for some of those kinds of things and know how to be nimble with your budget through the year versus getting like caught up in it at the very last minute, which could put a brand into a position of you be either underfunding over funding or just a sticky situation.

Tiffany Serbus-Gustaveson  28:49  

Very interesting. All right. Oops,

Megan Boyko  28:53  

I think I went one too far. So next within this is as you're approaching these conversations, and you have your correct stakeholder aligned, make sure that you spend a little bit of time really understanding your business partner, we spoke to this a little bit like what are going to be their priorities. But the other piece that I'll add to that is like knowing what your business partner is going to use in terms of their data to support their negotiations. Typically, within Amazon, they're going to be pulling from the same metrics and scorecards that are available to you on vendor Central, and those cover all operational performance metrics. They cover all retail performance metrics. So typically in these negotiations, your vendor manager is going to be represented or her is going to be referencing things like key cogs, net key PM, your loss by box rates, your rep out of stock rates, Amazon is measured against these rates, and therefore they're also measuring their vendors against these rates. And this will inform how they are proposing their terms. So if you can do a little research ahead of time and the gathering data phase of already proactively gathering these measures, you'll be able to understand what it is Is that your your business partner is looking for, and what's, what their objectives are really going to be. And within that, you might be able to proactively predict what some of our counter negotiations are going to look like. And hopefully, instead of getting into locked horns with it, you find these Win Win opportunities, a little bit of a give get right like, I see that increasing loss by box or reducing loss by box is important to you as a vendor manager, here's how this might play into a scenario for me as a brand. And then with those win wins, be able to move forward with successful negotiations and a better partnership that elevates both of you through the next season.

Tiffany Serbus-Gustaveson  30:42  

So some may look at it as unreasonable demands from Amazon at time. And can you provide any rationale on that?

Megan Boyko  30:52  

Well, typically Amazon is going to be one might call aggressive within their demands. But ultimately, they're really not unreasonable is they're usually rooted within data in here. And they're usually very transparent with how it is or what it is that their goals are, and why this data is supporting it. So when I say goals, if you look within the vendor central scorecards you can actually see. And even this little image right here on the screen gives you a nice little visual, you can see a horizontal red bar, roll through where it actually says poor on those graphs, they Amazon will tell you ahead of time with a goal is and ultimately they're looking to remain very operationally sound, retail, healthy, as all are all of us. And so they're going to push their vendors to make sure that they're meeting their scorecard metrics. So rather than thinking of it as unreasonable, it's how can I help Amazon meet their goals as well as achieving mine at the same time, and really understanding where these where you sit within these KPIs will help you have a leg up within negotiating?

Tiffany Serbus-Gustaveson  31:58  

KPIs or key, KPIs are definitely key.

Megan Boyko  32:02  

That kind of rounds it all out guys, right, we're talking about you gather your data, you prepare your scenarios, you make sure your stakeholders are all aligned to really understand your business partner your market needs, your environment needs. With all of that pre planning, it should set you up for success as you move into the next phase of negotiating with Amazon. And ultimately, really, that's an individual mentioned at the beginning, a joint business plan or joint partnership is a great way to think about it. Don't think of this is just one of those like have to get through kind of exercises, use the AVN time period to really establish where you want your joint business plan and brand partnership to go through the next year through the next five years and use this prep period to start planning for success within that. As mentioned before, as all these pieces come together, I highly suggest having an expert within your corner, there are people out there who can give you all kinds of insights on what that landscape might look like in the future, what Amazon's next steps of priorities are, or just total eCommerce in general, where are the trends headed? What pitfalls might there be? What are some of the watch outs with that, and they can help guide you and help pair your priorities with Amazon's priorities to be able to move forward and forward with a successful business plan? Is the

Tiffany Serbus-Gustaveson  33:28  

forecasting typically all historical, when they're looking at the New Year? And like what the numbers are giving you? Or are they actually taking the factors into effect of your new product launches and things you have in the pipeline that they don't have data on?

Megan Boyko  33:44  

That's a fair question. So typically, what they're going to be looking at is their own. And by they I mean Amazon's internal goals and objectives as well, they will utilize their data for the historicals and pair it up to where they need to go to meet their needs. So again, as I mentioned, with like, the freight allowances is a great example, historical data may have represented what freight costs, shipping inflation were at that time, and then they're going to see where they need to go. And they will use the data and the future trends and pair those two together to get to what their goals are. So it's it's important to use the data, it's also important to be able to have kind of an eye on the horizon for yourself and what that might mean for you to it is this

Tiffany Serbus-Gustaveson  34:30  

the point of the process where you actually have the platform to talk about your challenges as a business, whether it be material costs, supply chain issues. Absolutely. This goes on for brands these days.

Megan Boyko  34:44  

Absolutely. I think it's a great time to be able to have those questions because the other thing to remember too, is while the negotiations might seem hard, Amazon offers a whole host of programs and opportunities that can actually often alleviate some of those challenges. is an example of this might be direct ship, if your company is challenged with certain shipping opportunities, Amazon may have a program that is that you're not currently utilizing that is better suited for you to be able to get the product to the customer on time and fall and still meet some of Amazon's shipping standards. It's a great time to have those honest conversations and really just lay out like what the what your brand priorities are, again, continue to ask Amazon what their priorities are too and have those like really dynamic conversations, it's, it's the best thing that you can do is approach it with a true partnership lens versus just a i. These are my terms, and I'm not budging from them. So that's why I come back to imagine all scenarios, view them as a partner, and your business will definitely flourish.

Tiffany Serbus-Gustaveson  35:52  

And how many rounds do you typically see it takes to get to something that is good for both,

Megan Boyko  35:59  

that very much can vary, it really depends on how much one upfront effort and work was put into preparing for this. It can go, it can go quite lengthy. And it also can go quite smooth. If you're having these conversations not only at AVN time, but really throughout the year, it's important to utilize things like your monthly business reviews, quarterly business reviews, weekly touch bases, with your account teams or your strategic Account Services, if you have that kind of thing, utilize these conversations build a relationship with with Amazon throughout the year. And it will actually make the negotiating time period much quicker, much smoother and much more transparent. Because those conversations and that relationship has already been established. If it's something you haven't already done, build that into your process for the coming year. If you don't already have monthly business reviews, request those as part of your terms, remember, everything is negotiable. You can put in stipulations about that as it's built into the base terms that you're that you're recommending, and just continue to keep those conversations flowing. Frequent and honest. Excellent.

Tiffany Serbus-Gustaveson  37:18  

But we have quite a few questions with how great they the CEO loves activity. So we're just gonna rapid fire if you're cool with that, yeah,

Megan Boyko  37:28  

bring it on. All right, like it.

Tiffany Serbus-Gustaveson  37:32  

Oh, this COVID. So how do you approach when they say your competition is investing at a much higher level.

Megan Boyko  37:39  

So this is an area when I say have an expert in your corner that can very much help guide some of this. While an expert might not be able to tell you exactly what the competition's investments are, they can. There are data sources out there that whether it's data or personal expert or an agency or somebody in your corner, they can guide you into a little bit more of a a viewpoint of what the competition is doing and what they're where they invested in, in the previous year in different areas and avenues that they might be playing in, they might not necessarily be able to tell you the exact terms and that's fine. But they can give you an idea of like what was successful for them. And within that information, you can build that into your plan. And you can use it as a negotiation tool for yourself to

Tiffany Serbus-Gustaveson  38:30  

to tie in into how would Media.Monks help with vendor negotiations? What are the benefits of working with an agency versus negotiating in house?

Megan Boyko  38:39  

Yeah, that's a great question. So Media.Monks has experts within all different areas of the business within content, advertising, demand forecasting, we're constantly keeping our eye on the horizon for the different programs that Amazon is launching an offering. We are a trusted partner within Amazon. So so they come to us with their their programs. Their priorities are for the years, and we can share that information with our clients. And then we can tap like, again are huge experts are huge resource network of experts that are within Media.Monks, we do partner with over 150 brands, and we're doing over a billion dollars in revenue on the platform. So we have a wide variety of experience across all categories and businesses big and small. And which gives us a large, large network of people to be able to tap into to gain insights and share that.

Tiffany Serbus-Gustaveson  39:42  

But going back to cost increases. Yeah, definitely our reality. Our aliens have played place to resolve those or is that not the time in place?

Megan Boyko  39:53  

It's a definitely the time in place to make sure the cost increases are discussed. I'm a huge proponent of being transparent with cost increases, it's very much a reality of the environment that the economic environment that we're living in right now, with all the factors that play into developing a cost for a product, and it will have an impact on on your terms down the road, especially if you have a long lifecycle product where a cost increase is going to be, is going to be something that is more impactful to an ace, and that's lived for a really long time, at those conversations, be upfront about it, let them know how it is impacting everything else. And again, it just comes back to that transparency and building a true business partnership with your vendor manager and the rest of the Amazon support team versus just trying to solidify only terms and move forward for the year.

Tiffany Serbus-Gustaveson  40:51  

Oh, great question about a plus content. So with premium A plus content on Seller Central right now at no cost? Would you suggest asking for this to be included on your vendor Central account?

Megan Boyko  41:04  

Yeah, if it's important to you absolutely can ask for it to be included in there. Now, most things with Amazon are considered pay to play most things. But again, it comes back to that previous comment about understanding what is important to Amazon and find ways to have that give get or that win win scenario. So if a premium A plus is important to see if there's areas where Amazon can extend that at no cost, but they will come back and ask you for something that the brand might need from you and or the Amazon might need from you as the brand in return for that

Tiffany Serbus-Gustaveson  41:38  

investment. Have you ever seen clients parlay the Amazon shortages in their ABN discussions? So if the short paid you on whatever product that gave you no good reason why or solution to fix it? Is this the space to talk about that?

Megan Boyko  41:58  

It's absolutely the space to bring it up. For sure. Again, I come back to I highly encourage you to use this time to also establish a new working cadence and establish monthly business reviews, quarterly business reviews, these kinds of conversations should actually be happening every single month, so that it's not caught up in more contentious conversation during adn agreements. So if you can get in front of it, that's to the better if you've had no success and being able to contact Amazon, prior to that, due to maybe a variety of reasons, then absolutely bring it up because we didn't anything that is going to impact payments, does directly feed into these terms agreements. So have the conversation. But when you have the conversation, establish a better working partnership and cadence going forward to so that these are resolved prior to these agreements.

Tiffany Serbus-Gustaveson  42:53  

And when looking at the negotiations, pros or cons and having it annually versus every other year,

Megan Boyko  42:59  

you know, I've seen brands do it both ways. And I've seen it be very successful both ways. So it really is coming back to again, evaluating your business priorities, the environment that you're in Amazon's business priorities. And if stability is what as a brand that you're looking for over the course of the next couple of years, it is absolutely worth approaching it from a two to five year plan. Within negotiations, Amazon typically will continue to push that this is done annually, because there's a reason to be able to go back from a return on investment standpoint. And look at it just year over year that I have seen brands. And we have supported brands and being successful and developing multi year agreement contracts.

Tiffany Serbus-Gustaveson  43:45  

Excellent. Going back to the freight questions, because yeah, that was always very expensive bucket when looking at Amazon p&l Would you recommend one time payments to cover actuals from last year instead of agreeing to an increase program costs for freight and damages?

Megan Boyko  44:04  

So I think what that really comes from is it's going to be informed by the data. Find out from the data what the actual driver was for those costs. I was at one single pallet that was driving up costs, was it a reoccurring problem and then see how that fits within your budget. What makes the most sense my only hesitation that I have about doing flat one time things is if it was a singular problem driving it that can be solved with a permanent solution for more sustainable growth with an operations than a one time budget doesn't necessarily make sense that INSEAD on the inverse of this. Maybe you your investment within something like strategic Account Services, which typically is a percentage of sales to pay. That might make more sense to do a flat fee to help cover other minor categories while supporting one large category to again it Having your whole business looped in to, to these agreements is going to be an important lens to take through all of this. So looking at every single category, looking at the data, the trends and what that meant and help let the data inform what what makes most sense for your business moving

Tiffany Serbus-Gustaveson  45:16  

forward. And that definitely ties into this question, which I think another answer, but I'm gonna let you answer it any possibility or strategy for lowering collapse or frayed alliances? Or do they always go up?

Megan Boyko  45:30  

No, they don't always go up. In fact, they can be the inverse, they can go down, they will continue to ask for more, or there would be no real incentive on Amazon's side to reduce it without having some data that informs what that looks like. So again, use the data, your allowances may go down, your co ops may reduce in cost saving there, where which instead of just having an overall cost savings might put you in a position to reinvest those dollars that were spent there into other marketing dollars to help drive search or Bing drive brand awareness. And further your sales. I like to think of things is what at the end of the day is going to increase my product sales, where's the revenue coming from? So if there is a cost reduction on freight allowance, and you can reinvest that into another area, that ignites the business, that's a

Tiffany Serbus-Gustaveson  46:24  

great win win. Or make it operational change? Absolutely. Images go down freight allowance that Yeah, absolutely. And also recognize that if you're reinvesting in other areas of Amazon,

Megan Boyko  46:36  

absolutely, they recognize it, they absolutely recognize it. And, and again, it comes back to Amazon, really, they want to be a good partner they want to see brand succeed from an operational standpoint, from a retail revenue standpoint, it's it's so work with them and develop that true partnership, it doesn't always make sense to just increase costs, you might want to take a hard look at or find a trusted partner to take a hard look at your internal operations to really find where some sort of sustainable changes can be made. That can lead to some substantial growth.

Tiffany Serbus-Gustaveson  47:11  

And going back to the returns data, so that information is in the new analytics sales tab for asking, but it does not stipulate what's a damage return versus buyer remorse, correct. Um,

Megan Boyko  47:27  

so that's a little bit of a tricky one, because the returns are consumer driven, they have to select a reason for return. And when they select a reason for return, it might not always be an honest reason for for return. You know, that's, that's the trick with a limited amount of selections. An example of this within let's call it the apparel category, a consumer may choose to return an item because it is not what they were looking for. But they may choose damaged or too small as a category that's going to be reflected in the data. What I would encourage you to do in that area, if you're seeing a large trend of this that doesn't make sense is utilize your vendor manager or your strategic Account Services team to see if they can do a little bit of deeper dive digging into this are your returns on par with what other competition is seeing within the category. And let them give you some additional insights on what those returns look like. But ultimately, returns in damages should be viewed separately.

Tiffany Serbus-Gustaveson  48:31  

Based on your depending on your category. And with the same go for benchmarking for freight and marketing funds and damages. It's really based on a category level. Yes, question here about increased funding. So Amazon is claiming or asking for increased funding and claiming that the N ppm is below category average? What do you think is the best way to challenge this? If the average selling price is below the MSRP? How do you approach this conversation? Yeah, again, I

Megan Boyko  49:03  

would I would ask for asin level data. So what they're going to do is they're going to show you what the net ppm is against the entire category, I would ask for the ACE and level data to see if you can pinpoint what specifically is driving that lower PPM and any other category insights. If you're challenged at getting additional insights. Within that, then I would say reach out to an expert and see if they can give you some other insights on what the competition is doing. There's a lot of different platforms out there. They do offer services for this

Tiffany Serbus-Gustaveson  49:33  

shortages. So shortages continue to be an issue with Amazon ever be willing to agree to a percent and shortages in exchange for them to not charge us for them. So

Megan Boyko  49:48  

this is negotiable. Yes. Again, if you're going to ask Amazon to agree to waive something, they're likely going to ask you to do some kind of a give get on their end, and those could look like a trial. They'll run with testing a new operational delivery system, or extending a certain amount of lead time for your product to be delivered within a different window. There's, there's lots of different avenues that you can take with it. Without knowing exactly what the data looks like our it's a little hard to say right off the bat, but something that our team would do is they would go into the micro data within vendor Central and see where those shortages are within each ASN and try and fine tune and pinpoint what might actually be driving those shortages. Is it a problem with the ASN that's coming through? Is it on time delivery within the shortage did to just not arrive altogether. So rather than just automatically agreeing to waive it without any concessions, and Amazon's not likely to do that. But if you can show that you are working towards a more sustainable solution for your operations, give it a six month time period, or a year time period, then you might be able to get those waves as you're working towards this this solution.

Tiffany Serbus-Gustaveson  51:11  

Do you have a typical ratio for ad spend versus sales?

Megan Boyko  51:15  

But that's gonna very much depend on your category and your products and what it looks like but

Tiffany Serbus-Gustaveson  51:21  

never give that information to the vendor? No. never hurts to ask

Megan Boyko  51:26  

now. Definitely is one of those. Yeah, again, there, there are our ad experts that can help drive and guide that based on market performance, competition performance and some of the other data that they will use. Amazon will not provide that data for you. But they it's important to know what your objectives are leading into it, but it will vary.

Tiffany Serbus-Gustaveson  51:51  

Do you have an opinion on the S vs. Service? And any benchmarks on percentage charge?

Megan Boyko  51:57  

Sure. So I do have an opinion on that. I probably could have a whole discussion on this one. I very much webinar. Yeah, we'll have another webinar. Absolutely. So SBS strategic vendor Services, also known as sa s, strategic Account Services has gone through a few different iterations in different names and support. Ultimately, they are meant to advocate for your brand internally at Amazon and be a support system. It is a great, great point of contact, there are challenges with the program, as many vendors will have concerns about the turnover that can happen there as which is typical with an Amazon is employees like move and elevate and move on. And ultimately, I think that this is a fantastic resource to have, if you set up those business expectations ahead of time. Again, I come back to have weekly touch bases have monthly meetings have quarterly business reviews, make sure you really like utilize this partnership is truly a partnership. And not just a service that you pay for and then expect return have very clear, very clear expectations of what your brand is looking for in that investment and then holding Amazon accountable to making sure that they achieve those KPIs to the strategic Account Services team or the SPS team. They're very talented individuals, they can offer a lot of insights, they can provide you these data points that you're looking for. The one other thing that I would highly recommend to brands is to again, come back to ensure that when you invest in these services that you are investing for all categories of your business. So avoid fragmentation and support invest into all categories. Strategic Account Services can work across multiple different categories, or at least provide connection points for your brand for that and they can really help elevate those like smaller categories in comparison to the big ones too. And then the other thing to note here within negotiations is Amazon will typically ask for a percentage of sales, it is for some brands more favorable to do a flat fee, and then let that support all categories. Those are options and just know that those options are there. You just need to be able to know what math works best for you and your finance team.

Tiffany Serbus-Gustaveson  54:21  

That's great Intel. Final question here. Anything you should withhold when you're negotiating with

Megan Boyko  54:28  

Amazon? I think when you're considering your scenarios, consider your starting point. You know, don't don't go all in it. Classic negotiation one on one, you don't go all in with everything right? Right away. Make sure that you're presenting your most desired solution and then just know what your what are the things that you can hold back. What are the things that you can negotiate on down the road, but make sure again, it goes back to the planning your scenarios. put that piece of it in there and know what you want to like, hold as a conditional as a carrot later and what they really need, but if you work through the plan your scenario section, you'll be just fine in that area.

Tiffany Serbus-Gustaveson  55:13  

Awesome. Megan and fantastic until and guidance greatly appreciated. Thank you all for joining today. And your participation was fantastic, wonderful comments and questions. We do encourage follow up conversations with the Media.Monks team, a huge thanks to Media.Monks for being long term partners of the network. We appreciate everything you do. And with that, I think it's a wrap. So thank you all for joining. Hope to see you on another event. Take care, stay safe, happy holidays, and good luck with those negotiations. Go get Enjoy. Thank you, everybody.