Unlocking Success on Amazon Vendor Central

Mastering Finance and Trading Terms Negotiation

Nov 30, 2023 1:30 PM2:30 PM EST

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Key Discussion Takeaways

Navigating Amazon Vendor Central's intricate landscape of financial management and trading term negotiations can be daunting. How do vendors maximize their profitability while effectively negotiating terms with one of the world's largest online retailers?

According to Peter Beke, a seasoned expert in vendor relations, strategic management is key. Peter emphasizes the importance of understanding Amazon's pricing dynamics, optimizing operational chargebacks, and the smart allocation of advertising budgets. He reiterates identifying the root causes of profitability issues and leveraging your product offerings as negotiation tools, underlining the significance of strategic planning in overcoming common challenges faced by vendors on Amazon.

In this virtual event, Tiffany Serbus-Gustaveson joins Peter Beke, Director of The Hawkers Club, to explore the secrets of mastering finance and trading terms on Amazon Vendor Central. They discuss the intricacies of managing shortages and disputes, the benefits of direct import programs, and strategies for reducing chargebacks and overbilling. This insightful conversation is a must-watch for vendors looking to enhance their Amazon operations and financial success.

Here’s a glimpse of what you’ll learn:

  • How to manage shortages and payment terms
  • Why sellers should manually create their own pallet program in Amazon Vendor Central
  • The importance of timing when dealing with Amazon disputes
  • Three types of trading terms vendors should have
  • Frequent errors experienced by vendors in Amazon trading terms
  • How Amazon brands can negotiate separate agreements for top damage allowance drivers
  • Why vendors should factor in a buffer when costing out freight
  • The value of price elasticity and investing in areas that drive growth
  • The difference between ABS (Amazon Vendor Services) and ABM (Amazon Business Management)
  • Tips to optimize Amazon trading terms and product development
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Event Partners

The Hawkers Club

The Hawker’s Club was founded by former Amazon employees and provides strategic insight and support to drive result driven growth on Amazon.

Connect with The Hawkers Club

Guest Speaker

Tiffany Serbus-Gustaveson LinkedIn

Senior Digital Strategist at BWG Connect

BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution. BWG has built an exclusive network of 125,000+ senior professionals and hosts over 2,000 virtual and in-person networking events on an annual basis.

Peter Beke LinkedIn

Director at The Hawkers Club

Peter Beke is the Director of The Hawkers Club, a consultancy firm specializing in assisting vendors and sellers navigate and thrive in the complex eCommerce landscape of marketplaces like Amazon, Wayfair, and Walmart. After starting his career with internships at OTP Bank and Microsoft in Hungary, Peter moved to the UK to complete his master's in strategic marketing at Cranfield University. His experience includes a significant tenure at Amazon, where he honed his skills in vendor operational excellence, seasonality tracking, and vendor experience. Recognizing a gap in the support available to vendors, Peter, along with a fellow Amazonian, co-founded The Hawkers Club in 2018. The Club focuses on providing tailored services to enhance vendor performance in areas such as customer service, operational, and marketing responsibilities.

Event Moderator

Tiffany Serbus-Gustaveson LinkedIn

Senior Digital Strategist at BWG Connect

BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution. BWG has built an exclusive network of 125,000+ senior professionals and hosts over 2,000 virtual and in-person networking events on an annual basis.

Peter Beke LinkedIn

Director at The Hawkers Club

Peter Beke is the Director of The Hawkers Club, a consultancy firm specializing in assisting vendors and sellers navigate and thrive in the complex eCommerce landscape of marketplaces like Amazon, Wayfair, and Walmart. After starting his career with internships at OTP Bank and Microsoft in Hungary, Peter moved to the UK to complete his master's in strategic marketing at Cranfield University. His experience includes a significant tenure at Amazon, where he honed his skills in vendor operational excellence, seasonality tracking, and vendor experience. Recognizing a gap in the support available to vendors, Peter, along with a fellow Amazonian, co-founded The Hawkers Club in 2018. The Club focuses on providing tailored services to enhance vendor performance in areas such as customer service, operational, and marketing responsibilities.

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Tiffany Serbus-Gustaveson

Senior Digital Strategist at BWG Connect

BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution.

Senior Digital Strategist Tiffany Serbus-Gustaveson runs the group & connects with dozens of brand executives every week, always for free.

Schedule a free consultation call

Discussion Transcription

Tiffany Serbus-Gustaveson 0:18

Happy Thursday, everybody. I'm Tiffany Serbus-Gustaveson, a digital strategist with BWG Connect, and we are a network and knowledge-sharing group, we stay on top of the latest trends, challenges; whatever is changing in the digital landscape, we want to know and talk about it. We are on track to do 500 of these webinars this year in 2023. And we will have done 100 imperson dinners throughout the US. So if you happen to ever be in a tier-one city, you can always feel free to check out our website, bwgconnect.com. Or send us an email and sign up for one of those centers. So typically 15 and 20 people having a discussion around a certain digital topic, and it's always a fantastic time definitely encourage you to check it out. We spend the majority of our time talking to brands, so we stay on top of latest trends; we'd love to have a conversation with you. So you can feel free to send me an email at tiffany@bwgconnect.com and we can get some time on the calendar. It's from these conversations we generate the topic ideas we know people want to learn about. It's also where we gain our resident experts such as Hawkers Club, who's with us today, anybody that we asked to teach the collective community has come highly recommended for multiple brands within the network. So if you ever need any recommendations within the digital space, please don't hesitate to reach out we have a shortlist of the best of the best and we would love to provide that information to you. Also, if you have any hiring needs. Do note that we do partner with a talent agency, Hawkeye Search, formerly BWG Talent that we can put you in contact with as well. A few housekeeping items. We started about five minutes here after the hour rest assured we're going to wrap up probably about five to 10 minutes before the end of the hour. TV ample time to get to your next destination. And we want this to be fun, educational and conversational. So I'll make sure to open up the chat the Q&A, drop those questions, and comments in as we go. And we will be sure to get to them. So with that, let's roll on talk about mastering and finance and trade term negotiations on Amazon Vendor Central. The team at Hackers Club have been awesome friends and network partners. So I'm gonna kick it over to you, Peter, you can introduce yourself, and then we can dive into all of that awesome information. Thank you.

Peter Beke 2:19

Sure. Thanks for having me, Tiffany. And welcome, everyone. So I'm Peter, I'm sure everyone can tell based on the accent as, and as you guys heard, I'm not from here originally from the UK. And that's where I used to work for Amazon on the vendor central side of things. And the the topic today and why we thought it would be a really good one and more and more brands are asking for it is you know, end of here is coming. Everyone is submit their books, their P&L is how do we squeeze a bit more out of and essential and and our account, and we thought it would be an opportune time to have a conversation. And of course, give everyone a few guys the opportunity to ask any questions that you may have on the topic, not to mention that the dreaded annual vendor negotiation time is coming. So let's get prepared as much as we can.

Tiffany Serbus-Gustaveson 3:09

Awesome. So the chat is open questions, comments put in there. As we go, the Q&A is open, or you can always email me at tiffany@bwgconnect.com. And we'll be sure to get to them. So I managed the Amazon Vendor Central account for about seven years. So this was a kind of that oh, this is that time of year the negotiations are rolling in and what else can we do? So let's start from the top we have a lot of key points to get to. And first and foremost we have shortages. I remember this. This is when it is that shortage, really a shortage?

Peter Beke 3:44

Keep it Yeah, exactly. So the rule of thumb and please treat it loosely. Whatever your payment terms are plus 30 days is is where we start the conversation. So most vendors tend to have multiple different payment terms dependent on Incoterm supply chain routes. And and wherever I was an order from take the payment term that you've got on the PIO or you've got on the invoice plus 30 calendar days, and that's what Amazon tends to take to sort themselves out. If it's if the invoice is still not paid 30 days after. That's when it's 100% a shortage. We tend not to advise to deal with them before this timeline simply because it may resolve itself so you know, your team may just end up putting in loads of effort and then getting the resolution that anyways would have happened. So wait are those 30 days because what Amazon has in place and I'm sure most people heard about it is what they call a smart matching POS system which is basically kicking the problem down the road. So if that they order One PIO, one an item. And let's say they claim 10 units are missing. The next Pio comes in and they'll backfill those 10 units. So this is how you get paid. And that's why the 30 days is an important one.

Tiffany Serbus-Gustaveson 5:12

30 days is that magical number. Question here about pallet ordering. Is anyone else set up with this? And are you seeing a benefit return greater than the product? discount percentage?

Peter Beke 5:31

Hmm, yeah, good question. Here's, here's what I'd say. The more Amazon can order from you, in terms of case backs, Master pack higher quantity, whether it's a pallet, or even a full container for really good products, let's say direct imports, the lower the risk you have for shortages. And that's on the plus side, then there's operational efficiency and cost savings, there has to be on your upside as well. What I would warn everyone is the way Amazon tends to sell it. And that used to be at my job partially is here's a new vendor code, we'll call it a palette ordering vendor code. The problem with that is that's in every single instance, the same as a normal domestic vendor code, there's no difference. The only in the vendor code under nature, how it works, the only difference is in the backend, the product gets set up as the MOQ is going to be whatever however many units you fit on a pallet. And the important point here is, Amazon will ask for usually three to 5% of your domestic price, in order to enroll an ace and into a pellet ordering program program, you can do that without giving the three, three to 5% off, because you actually can set the inner Packmaster pack combination in vendor Central, do the same, how many units you put on a pallet, therefore, you can basically manually create your own pallet program without giving three to 5% of your revenue to it. So that's always my advice to do it. If if it's gross, what to pay attention to, is that the product so let's say we instead of each is now Amazon will start ordering 10 units because that's what fits on a pallet. Those 10 units will need to sell in three to four calendar weeks. If from a p 70. And sell through perspective, it's a realistic number that you're solid through 234 weeks, go for it. If it's not going to sell in 234 weeks, I would caution to wait a bit until the sales are ramped up. Because if Amazon needs to sit on it, let's say for 1012 weeks, they're just not going to order. And then you do more harm to yourself than good. So this is how I'd set it up. And key point is please just don't pay the three to 5%. No point.

Tiffany Serbus-Gustaveson 8:19

And they haven't caught on to that that you can manually create your own pallet and bypass that three to 5%.

Peter Beke 8:25

Yeah. So because if you think about it, like, let's say you sell something bulky, like sofas or beds, right? Those products anyways are big, and they would come in ages. Let's say however, on the other side, you sell, I don't know baby wipes, or pet wipes maybe. And it's only worth selling. If you're selling master packs, and Videla master pack. You've got let's say 1025 or 50 or however many each is that the customer will get. And that you can set up in vendor Central. So basically, it will mimic how the pallet ordering program will work anyways, because you can set up the quantities yourself. Because Amazon wouldn't know how many units you would put in a master carton, how many units you'd fit on a pallet.

Tiffany Serbus-Gustaveson 9:13

Got it? Super interesting. Great question. Keep them coming. Let's go on to timing. So we already talked about the shortages and you know that average 30-day window what about disputes and trading terms? Because we know with Amazon timing is everything.

Peter Beke 9:30

Yeah. So um, in terms of let's, let's, let's talk about this way. Um, let's say if you were to submit any dispute or claim today or the next couple of weeks on vendor central light, likely the amount and the recovery is going to hit this USB are no shortages. It's really a wild card to be honest and I wouldn't want to publicly commit to a resolution timeline because sometimes they get resolved within two, three weeks. However, the longest we have running is 13. Month is and still counting. So it unfortunately as it is, it is real. So shortages, they tend to be a longer resolution type of thing. And what's interesting to know about trading terms in the van be correlated to timing is you got to know that if your VM reaches out to do a VM, they have an individual targets that they have to achieve across their vendors. And unless your brand is within the top five, top seven of the VMs brands, it doesn't matter for the VM, whether the trading terms increase come from your brand or someone else. So trying to politely and gently kick it down the road a bit, sometimes can make it go away. If there's a genuine profitability problem in the account, it's not going to help and and when we can go around it, unfortunately. But this is how timing, you know, if you can just delay it a bit. It will pick it up in January. And sometimes it does go away. Else trading terms basically anywhere between well, from now, until the end of next March. Depends on what category

Tiffany Serbus-Gustaveson 11:36

The end of March 2024. Recovery beyond chargebacks and shortages, the co op over billing.

Peter Beke 11:54

So actually, there's, there's more and more on this topic. So it's really interesting when we when we talk about sort of charges on vendor Central, we tend to bucket them into three categories, if you like, what is your operational chargebacks, right the Be on time shipment, labeling, incorrect UPC all that. And, and that's to be fair, in most cases, genuinely operational excellence. So it's less about accounting and financial maneuvering, it's more about operational excellence, how to reduce those sustainably. shortages, we have talked about the pilot ordering program is a good one. You know, Packmaster back set up if the product allows is a good one. And of course, the ultimate sort of goal if you can do direct import for containers. Again, that reduces the likelihood of a shortage occurring now, when we go beyond those two, the third category is is a very important one. And I think it's a less than one to at least I see less awareness about a topic, which is all types of over billing and that cord over billing is the most important one. So when we talk about Co Op or trading terms or allowances, they all mean the same thing. So most vendors should have three of these by definition, marketing, or basecoat, freight and damages. And heading into a trading term season. It's good to know that freight and damage return allowance, those are both opt in opt out. Usually, there's a very good way Amazon tends to phrase them as if they weren't but they are opt in opt out. You don't have to have them. I tend to advise everyone to keep the returns and damage allowance because once it's not there, Pandora's box is open. And Amazon is gonna start returning literally everything. And unless you've got a world class warehouse and a lot of money to burn, that's not something you want to get yourself into freight allowance. That's a very interesting topic. Because there are loads of brands out there to actually get in real life better rates for their own product range than what Amazon's offering them as a freight allowance. So I only encourage everyone to do the numbers. Talk to your ops team and quantify how much it would cost for you to ship from your vows to Amazon's warehouse and at least have the number in your back pocket. Maybe you don't need to use it. Maybe it doesn't come up. Have it in your back pocket. because if the we have to increase or try to increase your freight allowance, in that case, you can always say, Well, if they've done a market research got a proposal in from UPS, FedEx, whoever, this is the number, if you can match it, we keep it with you, if not, to take it away and and bring it in house. And, and it is possible to get out of freight allowance, especially if it saves you money. And the more specialized the product is, the higher the likelihood that the vendor themselves who will be able to do it for for a lower amount. And also. Now, when we talk about trading terms, and you mentioned overbuilding Tiffany, that's an interesting one. So there is a systematic trend that we've noticed, which is Amazon not always charging the vendors for the right units or the right amount of units on trading terms. So if I order 100 units from you, you ship 100 units, and I pay for 100 units as a Muslim, then sometimes they charge trading terms 402 105 units. And, and so far, we've seen it in every single vendor central accounts we've touched. And Corp over billing is, is a bigger and bigger problem, in my opinion. The when I look at the amount that's out there, for most vendors, it's anywhere between half a percent of annual revenue to four and a half percent of annual revenue, which greatly depends on the complexity of the account, and the size of the portfolio that they are selling on when essential but that's usually the range. And, and and it is rather a serious one. Um, sometimes, you know, we see that Amazon is charging freight allowance on direct fulfillment. Even though that that service, that transaction never happens because from your warehouse, the product just goes to the customer straight away. So there's no reason why to charge a freight allowance. Sometimes they claim a shortage, only pay you less by the shortage amount by day trading terms as if the as if d shipment arrived in in full and the luckiest of the bunch. So everyone hang on to your seat births. Because this isn't wildest I've seen seven times in my life. So it's not frequent. I've seen vendors getting charged for trading terms on POS, they never actually received was an interesting one to audit. That's yeah. That's that's an interesting one. To say the least. Wow. And shall be going through a question or or perhaps.

Tiffany Serbus-Gustaveson 18:23

What you had said, and we have some here in the chat. So please, keep them coming. Um, the return allowance? So if you decide like, Oh, yes, I do not want to take on Pandora's box of returns. I work in furniture Been there done that? Do they take the average percent based on your own return rate as a brand? Or are they taken as a category average?

Peter Beke 18:48

The good, good news about damages on freight allowance is they are both based on your actual numbers. So it's always your actual portfolio correct. And therefore the important point is, as soon as the actual real-life performance improves. I've seen loads of cases when Amazon lowered the damage allowance and the freight allowance as a result of the improved return rate improved damage rates and and lower freight rates. So it's always based on your trailing 12 month is actuals. And what's really important to think about here, as we head into AVN is that naturally there's always going to be some products in your portfolio that will drive those numbers. And think about what you can do with those products. So I've seen their VMs allow the brands to negotiate the sort of top outliers, let's say top five top 10 products that contribute most to the damage allowance. In a separate agreement, and they get charged a different percentage. So let's say for some reason, if I were to sell furniture, and I don't know, let's say, cutlery, I wouldn't want them to occur the same damage and return rates because furniture tends to be a bigger allowance. Gato tends to be a smaller one, because it's simpler product. And so please, everyone bring it up. It is possible to create even sometimes separate vendor code, sometimes just separate agreements for different groups of products. And this is how you can avoid the top damage allowance drivers not to refer, like like not to penalize the rest of your portfolio. That's what I'm trying to say.

Tiffany Serbus-Gustaveson 20:50

Yeah, absolutely. There's always a few bad apples in the batch that are we interested? I'm assuming that's not a thing that they're broadcasting to the brands as an option that you probably have to ask for a date for a little bit.

Peter Beke 21:04

Yeah, it's, it's one of those things that are like, the freight is a bit difficult to calculate. Because we don't know and I don't know personally, either what Amazon's freight rates are that they negotiated. So that's, you know, anyone's guess, the damages. However, that's something everyone can at least have an educated guess for, because in Ara, Premier and Ara, you will see the customer returns. So at least you'll know on a unit level, what is your percentage. And basically, if just based on the unit level, you're overpaying versus what your agreement is, chances are, the ask is going to come whether it's this year, or next year, it's going to come unless you do something about it. If it's lower, chances are the ask is not going to come. And and that's when you have an opportunity to say that, hey, you know, just based on the units, this is what I calculated, let's have a point below what I'm paying. So next year, I don't want to be paid at half a point unnecessarily. And, and that you can build up factually, because they share the data with everyone. So I again, encourage everyone to to be prepared and take those figures to the negotiating table when it happens.

Tiffany Serbus-Gustaveson 22:24

And the unit economics really do matter when you're looking at on a unit. That's powerful. A couple more questions here about the freight allowance. If you take that on, if you do your due diligence, and you're saying yes, that's something that makes sense that we're going to take on our own freight. What should teams be aware of is there more bandwidth than required within the teams to have to take on more process or more risk or liability because you're not having an Amazon do that process flow.

Peter Beke 22:53

Um, what I'd say here is, number one, don't assume that you're shipped to the same fulfillment centers as what appear on your POS today. The reason behind it is that Amazon does their own freight, they tend to ship to across dock and afterwards to the final and fulfillment center or the final destination if you like. If it's the vendor doing it, they'll skip the crosstalk and just have you shipped to the final fulfillment center. So I always recommend to have a 10 15% buffer in it when you cost it out. To account for the fact that you may not be shipping to the same cross docks, if the destination warehouses a bit further away. Regarding operational flow, there's not an awful lot of difference if I'm honest, because the appeals themselves by your warehouse team need processing the same way. Right. So the number of units was an order the frequency, that's not going to change. You may need to like put them on to like a couple of different trucks but like it's that's not a not a big difference in my opinion. And what I would say is that sometimes the difference can be like, like a really, really huge. I've worked with it and the branding question is part of your network differently. personal medical equipment is what they sell. They got created that they will be able to ship the products to Amazon for give or take 2% of net receipts, their freight terms were above six. And you know we were just looking at a number How could there be that we are not even double but triple paying that that is reality. And that was reality. So there was a huge, huge huge saving for them. And they had a massive power at the negotiating table. Exactly. Because we did that background work. They tended it. And and they calculated their own percentage and on Amazon, all they had to do was reduce it because that was they would have lost the contract

Tiffany Serbus-Gustaveson 25:18

And the data to prove it. That's awesome. That's a great takeaway. Question here. What programs would you recommend to vendors, abs saps programs, a plus March accrual, etc, that actually drive growth and results versus just feeling like you're paying and money is being taken out of your pocket? Or?

Peter Beke 25:38

I always like to say at this point that if Amazon is asking for any amount from a vendor, there's always a reason why they are asking. So figure out what the root causes like why is it that they are asking? Because likely you can resolve it without giving the money. But let's go on to these programs. As I say, yes. They are great. If the financial problem you have in your vendor Central account that you can't resolve today without one exceeds the cost of ABS, SS. So let's say Amazon tends to propose 1% 2% 3% of net receipts, and a financial amount that you can't resolve. Let's say you have a miss receiving problem. You have such a huge shortages problem and you're not getting anywhere with it. In those cases, and ABS ICS can genuinely help. And to me, that's always a very simple calculation, what is the financial problem that I have with Amazon catalog and things like that? Please don't get an ABS for it's not worth it. So if you have a massive financial problem, and get an ABS for a year, they resolve it afterwards, you can recalculate next year and see if it's still worth it. Else I've not really seen outside of this, I've not really seen ABS bring a genuine value to the table that would justify the few 100,000 Sometimes a million dollar a year ask and going on April's what I'd say is, April's itself is a must have. So if you don't please just invest into that. And what's worth knowing? Is the premium A plus which I assume the question refers to on Vendor Central tends to cost a few $100,000 on Seller Central, it's free of charge. Please do it via Seller Central, you don't need to sell a single unit on Seller Central, I'm not advocating for that. Keep your distribution where it is. The point is just get it on Seller Central arm I think in like a couple of weeks you can enroll into it and have the premium A plus hosted on Seller Central and you can still do your trading from Vendor Central and save yourself a couple $100,000 which is not too bad. What other initiatives drive growth. This is a very good time to mention all certificates and climate pledge friendly stuff that Amazon is doing more and more of the reason for me bringing those up, because those are a one off investment, a small amount. And they started to function like the prime badge did, let's say 710 years ago, which is it's a filter in the search. So if you don't have it, your portfolio is excluded by definition. And you don't want to lose that traffic. So compact by design is the packaging sort of family of certifications that you can go for and, and there you can get a couple if it's minority-owned business or small business, veteran-owned business or at least partially owned. Again, you can get these certificates from Amazon that will just drive natural traffic to your data pages. You do it once some of the best investment anyone can make. On top of that, I think what's growing quite a bit is posts. So if someone's not doing it, please start. You don't need to pay for it only the sort of time investment of your team that that's gonna stop doing it. Because that's another traffic driver that Amazon's giving more and more real estate in the search windows and data pages. And if you're not there, again, you're missing out. So those are really driving growth. The way and I noticed

Tiffany Serbus-Gustaveson 30:19

Is that something your team can do.

Peter Beke 30:22

Yep. So the background story is Amazon just got jealous off Instagram. Yeah, exactly. And they said, Well, I want that. So they created it. It's a really good one, if you're not doing it start worth every every penny of time invested into it. And it's really not a lot of work. For a matter of fact, you can just, you know, mirror your Instagram posts, like you don't need to put in an awful lot of effort to actually get to make a difference. And in terms of what drives growth, versus just consuming cash, what we see and you can sort of tie it into an AVM when it happens is price elasticity has become significantly more dominant over the past year, versus what it had been. And so if you can invest in to the next Prime Day, if you can invest into the next Black Friday, Cyber Monday, may be able to get Christmas this year, but probably not. And split funds away for that. The VMs actually have a target how much deal of revenue or promo revenue data source for all of these major shopping holidays. And if you can participate, that's a really good area there you can invest your budget into and and that genuinely drives growth. The reason I'm emphasizing the price elasticity that much is because obviously we all know the sort of macroeconomic situation that it's not anymore, the pandemic highs of sales, and the customers based on what we see are becoming more and more price elastic. So you can lower the price, even by 10 15%, it's going to make a visual dent on your sales. So that's where I would go first and foremost, in relation to AVL. If you want to take it outside of AVM, and you can get away with not spending incremental money on avian and if you're not doing demand side platform advertising, please start it complements really well the Pay Per Click Site. And that's another really, really good investment that I can only encourage everyone to make. Aside from that I would stay away from the GMM or general modular agreement as much as possible. And I think I'll I think I'll stop there on ABN because that's, that's where I would take my money and I hope it answers the question, Stacy.

Tiffany Serbus-Gustaveson 33:21

And for ABS, what does ABS versus ABM? Is it Amazon vendor services, Amazon vendor management.

Peter Beke 33:31

So the at ABS and SCS, basically our assembly just call them differently. And then AVN is the sort of trading terms negotiation, how they rebranded it today. And the ABS SCS is actually sort of a program that you get access to a dedicated person. However, they tend to rotate quite, quite frequently.

Tiffany Serbus-Gustaveson 34:01

And the abs, in theory, you could use them for 12 months to understand if you have a serious financial issue that you cannot rectify on your own, but don't think they're going to solve your A plus content or make your marketing go to the next level. That's not what they're about. So you could invest in them if you needed to. And that's okay. You could do a 12 month duration contract and Amazon's okay with that.

Peter Beke 34:26

Yep, yeah, exactly. Exactly. I I do agree it's largely not worth it unless there's a really really that that big, financially quantifiable problem that you can't resolve in any other way. They use the same ticket system days the same everything as what we can use, we have under central.

Tiffany Serbus-Gustaveson 34:46

Spending hundreds of 1000s of dollars on that through Vendor Central if you do have hybrid, set it up on seller and then over to vendor Central. Great save money that way from overarching plan. That's correct. All right, we are getting some questions. And thank you all. Let's roll through these. So I love this one. Is there a way around Amazon 14 commitment to high advertising investments?

Peter Beke 35:15

Very good question. I like that. The best advice so up, I want to clarify advertising. Then, when I say advertising, I talk about PPC DSP. And the best thing to do is never to reveal your advertising budget to your VM. Because I've been their personal experience, every single VM is trained that if they hear, Oh, this is going to be my ad budget for the year, what I'm hearing is, that's the money you don't want to give me just yet. So I'm going to work towards getting it from you. Don't take it the wrong way. That's that's the way it works. Hide it, hide it. All the sort of marketing programs that the VMs can offer like banner on the category page, stuff like that. It's really one of those things that you will never know how much they contribute to incremental sales, because they'll never give you a reporting on it. I tend not to believe in it. That's my subjective opinion. So I, I tend not to recommend putting money towards it. Other people may see it differently.

Tiffany Serbus-Gustaveson 36:42

And that ties in here. Have you ever received post-campaign reporting when participants participate in vendor management-initiated holiday programs? And banners?

Peter Beke 36:54

Yeah, the answer wasn't the previous question.

Tiffany Serbus-Gustaveson 36:57

That does not happen.

Peter Beke 36:59

I've not seen it once

Tiffany Serbus-Gustaveson 37:00

In the places, it just you're not getting it.

Peter Beke 37:04

So it's, it's one of those things that I'd, again, unless you're a top three, top four, I've been branded a category, chances are, you're not gonna get it. And you're just better off investing that cash because, like, what I'm thinking about is, if let's say, I'm an owner of a business, or I work for the management, I need to either way justify what I'm spending the money on. And VDS banners, you can't go back and show that this is how much revenue we generated, whether it was incremental or not. We can't say anything, it may have generated a lot of revenue. I'm not saying it didn't. I'm saying we don't know. And when I think about it, would I approve as an owner, the next time it comes up? Or would I want to ask my top management for any amount next time? No, because I can't really prove it. Whereas if you put it more towards promotions, as I said, Prime Day Black Friday, all those debts, traceable. And you can actually, you know, reverse engineer, this is how much we invested. That's how much I got for it. And was it worth it? That's a much better conversation to have done. Look, here's our banner, but we don't know if it's doing anything.

Tiffany Serbus-Gustaveson 38:29

Very good. Love it. We have about six minutes left. So questions, comments, get it in there. Do coupons go towards the VMs promo spend goal?

Peter Beke 38:43

It depends on the category. Depends the last. Yeah, is the last I know. Sometimes they do mostly they don't.

Tiffany Serbus-Gustaveson 38:51

if your furniture hardlines you know?

Peter Beke 38:57

I don't think they do. They're not in hardlines. If it's one of the younger categories, they may so grocery, for example. But not hardlines. Definitely not.

Tiffany Serbus-Gustaveson 39:10

What is the best way to not renew a GMM but ensured that Easons don't crap out? 

Peter Beke 39:17

Are we good? So, the GMM originates from a genuine performance problem the way Amazon sees it. And when they bring up GMM, the like what I always hear is that Amazon has a profitability problem with my product. And it's important to know here that the VM has the objective to resolve the profitability problem. How it gets resolved. They've got multiple different avenues GMM is the easiest one for the VM. Now, we need to figure it out if it's a price matching problem, and that's what's driving the lower retail price drives the margin squeezes it undone. Amazon can sell the product better. Is it because the returns on damages are so high? Is it because Amazon sitting on the inventory on day just occurring storage charge? Let's say for a whole year? And is that what? What's crippling the margin for Amazon? So step number one, figure out what's driving the need for the GLM. And what's the underlying root cause that the VM is asking for it? And then you can take it from there, right? You know what to fix? And the answer to this specific question is the same as well, which is, once you know the real reason, then you can work towards fixing it. And that's how you eliminate the need for GMM. If you're already in one, then that's how you get out of it. So recently managed to get a shoe brand out of a GLM. And their whole problem was price matching on multiple different competitors sites. And as soon as we consolidated and made the retail prices less volatile, they stopped paying for the GMM every single month. And then afterwards, almost on set. Alright, we don't need the GMM anymore. So it is possible to get out of it, you just need to address the root cause is the main message.

Tiffany Serbus-Gustaveson 41:39

That's really good takeaway. And that's good to know that if you do address it, Amazon will remove it. Yeah. Very cool. And the last few minutes here, we want to talk about the trading terms and what people should be asking for. And if they're not happy, what can they do?

Peter Beke 41:59

 So we already talked about the return damage allowance, allowance, and how to deal with those. Tip number one, if you have to concede on anything, don't do it on the marketing or bass coop. The reason for that is because I've never in my life seen the bass go up, go down, the data stays flat or goes up, freight and damages, they go up and down, stay stay flat. Like as we discussed, it's based on actuals. The base Corp is a bit of a made up number. So it's like you know, whatever the VM wants it to be. And there's no like justification behind it. So that's number one. And so, if it was down to me what to ask for, that's asked number one, if the bass scope verb to increase, just eliminate that. Ask him number two, try to figure out how you can create a win win. What I mean by that is are your products ready for a direct import program that both you save on the cost side? And Amazon does as well. So that's a really good ask because both sides genuinely increased profitability without either side compromising. The next Ask is I'm sure new product development and and introducing new products to the portfolio is constantly on everyone's agenda. And so when we design new products, think about how it's going to modify my entire portfolios, damage allowance and freight allowance. Now that we know that it's based on actuals is it going to increase it or decrease it? And the way we can formulate it into an ask is bloody Airbnb are planning on introducing this new portfolio X can we have a separate damages agreement for that? Because it's just so different from our from the rest of the portfolio? Right? And this is how you don't need to early on penalizing you sort of family of products that you're just introducing a different ask can be and don't underestimate this one. What are the products that Amazon hasn't got right now that your other customers do have? That's a big big leverage that you can use in order to get an Ask resolve or or get one of your asks answered. Saying that look, I'd love to give you those products on site on Amazon as well. What I need ABCD to be done first.

Tiffany Serbus-Gustaveson 44:50

That's a great one.

Peter Beke 44:52

And when it comes to asks probably the last tip I'd give is just go around your team. And, and and ask them, you know, what is it that you'd love to get resolved? And, and maybe one of those is going to turn out like, you know, go to high shortages? Have we got, let's say, the receiving problem at the FCS then the VM kind of does what right? So qualify financially, what's most important for your brand internally, and start there.

Tiffany Serbus-Gustaveson 45:38

I think using your products as leverage as it is a direct import opportunity that can be a win, win and celebrate versus like, Oh, you're trying to squeeze more money out of me with you the cost of transportation. But then also the new product launches, because there was times where we actually didn't move forward with a new product launch because of that situation you just said. So the fact that you can ask them to segment that out, and then it becomes its own pool with its own return percentage, damage allowance, and then reassess in 12 months. That's very cool. Awesome. But a minute, two minutes here, any final questions, comments, put them into the chat, but let's talk about spare budget could happen might be happening. If you have a spare budget this year, how do you make the most of it?

Peter Beke 46:32

I'd go back for a second to the price promotions, our interest fair budget is big enough price elasticity, I know I sound disappointed, like a broken record that works incredibly well, this year. Number two, if you're not doing any advertising on the demand side platform, start at least dip your toe into the water. And it tends to work an absolute treat and as I said, it complements the Pay Per Click Site really, really well. Other than that, one can learn an awful lot from the customer reviews. And we were talking about how to reduce damages and return allowance for your top sellers get a resource that goes through your reviews and maybe data analysis will reveal how to improve the product or the next iteration or the next version of the product, which basically are investing into reducing your future trading terms is the way I think about this. And and that's a really good long-term investment. I know it's not sort of short term, immediate sales growth stuff. But that's really good long-term investment into the profitability of the account.

Tiffany Serbus-Gustaveson 48:00

And now that they're aggregating the reviews and using AI, it's pretty easy to see now what is being said about your products; being able to leverage that tool is pretty cool. Awesome. Well, Peter, thank you so much. Like always, always fantastic Intel wonderful takeaways; we definitely encourage follow-up conversations with the hackers club. They are best in class when it comes to Vendor Central. They know everything about that world. Definitely encourage you to reach out and talk to them would love to have a conversation with you. That's how we get the topics for our future events. So with that, it's a wrap. Happy Thursday, y'all, and have a lovely upcoming weekend. Thanks, Peter.

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