Podcast transcript
Introduction
Hi everyone, and welcome to another live episode of Marketplace Masters, sponsored by MerchantSpring, your go-to for marketplace analytics and reporting for Amazon vendors. In these conversations, we delve into the world of e-commerce, addressing the very specific challenges that Amazon vendors face as they seek to improve the performance of their channel.
Paul Sonneveld
I'm your host, Paul Sonneveld, and today I'm going to do my best to lift your Amazon vendor logistics game to the next level. Now, of course, I can't do this on my own. And hence, I am super excited to introduce our guest, Oliver Tomaschewski. And I hope I got that right. You might have to correct me on that. The Director of DiCommerce or D-Commerce, a successful e-commerce consultancy specializing in account management.
He helps clients optimize their account performance and processes to increase their sales and market share. With deep involvement in Germany's most relevant marketplaces, Oliver has built extensive expertise in Amazon and Otto. And before founding eCommerce, he held various positions at Europe's largest sanitary fittings manufacturer, including 11 years in key account management and seven years in online sales, where he developed a system that significantly increased sales on Amazon through content and conversion optimization. So he's been on both sides of the equation. on the vendor side and on the agency side. So with that, Oliver, thank you so much for being on the show. It's absolutely great to be here.
Oliver Tomaschewski
Thank you very much for the invitation, Paul. It's really a pleasure to be here live in the show. Thank you very much.
Paul Sonneveld
Yeah, absolutely. For just a bit of background, so I saw Oliver in action in Erfurt at the Amazon Sales Congress, I think earlier this year in March. And even though the session was in German, I was super impressed by his level of understanding and knowledge of the whole Amazon logistics game. So I went up to him straight after the talk and invited him to come and talk to us and really make this topic available to an English speaker. So that's fantastic.
Before we dive into it, just a reminder for everyone who's attending live, we are a live show, which means we've got plenty of time for questions. So feel free to pop them into the comments box in the Amazon event page, and we'll try and do our best to get to it. All right, let's start with you, Oliver. Amazon logistics is really a complex topic. How did you become an expert in this space?
Oliver Tomaschewski
Yeah, you are right. This is a really complex topic. And to be fair, it's also really hard to get some insights into this area, as it's completely impossible to just Google these topics. Also, if you would like to take a look on Twitter or on any other social networks, it's hard to get public information on this. The good thing was that in the past when I was part of the core company, I managed from 2016 to vendor accounts. So therefore, I had a very good relationship into the Amazon worldwide network.
And, yeah, from the beginning on, I had to learn it by myself doing all the things by myself. And later on, uh, as you mentioned, I also founded DiCommerce and yeah, now we are working with a lot of customers and we're just collecting all this information from Amazon. So within the Amazon meetings, you get a PDF or a PowerPoint, you can do screenshots of the slides. So I've collected through the last years a lot of information that helps us now to have a better understanding and a better overview about all the Amazon Logistics programs that are available.
Paul Sonneveld
Yeah, no, that's great. And by the way, I'm living proof of that because I try to do a bit of Googling and a bit of research. And I thought, OK, I better come up with some really good questions. And even just getting some basics answers out of Google, what's PICS versus SuperPICS, things like that, which is really just a surface, very, very hard.
So I look forward to you really painting that picture for us. But before we get into those different components right, because we're sort of going in with the assumption that if you know everything, then you should be able to improve your margins and lower your supply chain costs and all of that. But actually, is that even possible at a thousand feet level? How easy is it actually to even negotiate with Amazon on logistics and those topics?
Oliver Tomaschewski
So it is possible to pay to be fair, not for every vendor. So, if you just have a small annual sales volume, it will be not so easy to negotiate anything as a smaller vendors. They don't have a vendor manager. So, in that case, it's completely impossible to do it. But as bigger you are, as more sales you have, as easier it will be.
So, there are different options you have, for example, I think most of the people, they will know the topic about the delivery window. So, if you have more sales, you can discuss with Amazon about a larger delivery window or also minimum order quantities. So, there are different possibilities. We will also go later through it to negotiate. But the best starting point is if you have a vendor manager or best AVS, then it's easier to negotiate all these topics. At the end, it's a win-win situation for both sides.
Paul Sonneveld
Yeah, yeah, sure. So, let's paint a bit of a picture for us, you know, all the different logistic programs out there that touch on logistics for vendors. How do you look at the world?
Oliver Tomaschewski
Yes, so I tried to get an overview, to be fair, from Amazon. So, if they could maybe categorize or summarize all these programs into different categories. To be fair, within the last nine years, it was impossible to get a structured overview from Amazon. Therefore, I developed by myself an overview within four categories to have a better understanding about possible logistic options and how to improve all the logistic things. So yeah, there are a lot of different programs. In total, I would say that if we talk about the most important things that are 15 to 20 different options or possibilities you have divided into four main categories.
Paul Sonneveld
Great. I think we had a graphic that we might want to put up. This is the one graphic I was trying to take a lot of pictures of when I saw it first on stage. And I think it's a great framework for getting your head around what it looks like.
Oliver Tomaschewski
Yeah, the screen. Yeah.
Paul Sonneveld
Let me see the screen.
Oliver Tomaschewski
Just let me know.
Paul Sonneveld
Here we go.
Oliver Tomaschewski
Perfect. Yeah, so I tried to summarize all these logistic programs or opportunities into an overview. To go through each of this program, it will be too much for this small session, but I will try to point out the most relevant things. Before we go into these different programs, let me try to first summarize it into the four main categories.
So on the left side, we are talking about inbound and outbound delivery options. What does it mean? So, these six programs define how your product, so from the vendor perspective, from your logistics center, will arrive at the Amazon FC or the different Amazon FCs. And on the other hand, also how the product can be delivered to the end consumer. As for example, direct fulfillment just skips the Amazon FC and you can directly deliver it to the end consumer.
Then within the second category, we try to optimize or consolidate the deliveries. So PICS or SuperPICS, you already mentioned it, stands for Perfect Inbound Consolidation Service. So this means that within the POs, you try to summarize as most as possible within one bigger PO, which is directly delivered to one main FC. So, this is just reducing pick and pack processes within your own logistics. So, this is the second category, consolidating orders and deliver as most as possible.
Then within the third category, this is the order optimization. So, within this, we try to have good orders so that there are no problems with any orders, the right year end quotas are transferred to your system, that the availability is set up correctly, that Amazon knows if you have some issues, if you are not able to deliver products in time. But this is everything about the main order, so the PO topic.
And last but not least, this is the receipt and the dispatch of goods. So therefore, this is more technical. So LPR, EDI, CLI, these are technical topics, how you transfer data to the Amazon system, so API at the end. And PFP, SIOP, and FFP is a way how the products will be delivered to Amazon and how they ship it to the end consumer. Amazon is also trying to be more sustainable. So they want to have products that are packed in a way that they can just put the label on the product and directly ship it to the end consumer, which is more sustainable at the end.
And last but not least, this is my lovely topic. And my favorite topic is the analyze of shortages and chargebacks. And this is always surprising if we talk to new vendors. if they never have done an analyze and they see how much Amazon could maybe pay back to say it in this way, if we really go deeper in this topic. So, these are the main four categories.
Paul Sonneveld
That's excellent. And maybe we'll make this slide available to those who might include it in the email as well. It's a great little framework to print out and just remind yourself. I'd love to go a little bit deeper though. So, do you mind if we start with the inbound and outbound delivery options, or even just like inbound? I'd love to just understand more, particularly around the trade-offs, right, and where costs are involved too.
Oliver Tomaschewski
Yeah, sure. So, I would suggest that we stay on this chart. So, if there are more, if we should go deeper for sure, I have for all these different programs additional slides, but maybe we first stop on this slide to have a better overview on this. But if you like, we can just also switch to the other one.
Yeah, first one is TheyPay & WePay. Quite easy. In the most cases, I would say 90% of the cases, it's they pay. So, from the Amazon perspective, this means the vendor pays the logistic partner, the distributor, how the products come to the Amazon FC. This is the standard process. As I mentioned, 80, 90% of the vendors will have this one.
But there is also the way around that Amazon pays for it. For sure, at the end, you have a term or agreement within Vendor Central. But there are some benefits and some advantages within this program. For example, if Amazon will pick up your products from your FC, the delivery window topics will be easier. Getting delivery slots will be also easier because for sure Amazon will try to deliver with their own trucks the products to their FC. So this is the first part, how the products come to the Amazon FC.
FC direct is a quite new program, which I also presented first time on the Amazon sales congress this year. This is a program which is especially for bigger vendors. So, in the normal procedure is if Amazon orders products from you, you can validate these orders, you pack in a truck and the truck is driving to maybe any subsidiary of the logistic partner, they repack everything, then it goes to the next one. And then at the end, it arrives at the Amazon site.
FC direct means that it's directly delivered from your warehouse directly to Amazon without stopping the truck on the way in between. This saves a lot of time. And basically, if you have a small delivery window, this will help a lot to just deliver in time and being very flexible.
Paul Sonneveld
So you're not at the mercy of a logistics consolidation service to put everything together and then trying to hit your inbound slot.
Oliver Tomaschewski
Yeah, exactly. And then we have Amazon Trade. Amazon Trade is like an external logistic partner. So you decide, for example, in Germany it's DHL, DAXA, or Kuhn & Nagel, or any other one. Just some examples. Not focusing on any one of these ones. So Amazon Trade is like DHL or anyone else. You just book them. You directly know in advance. How much does it cost, but it's especially interesting for also bigger deliveries or full truckloads.
So for half truckloads, this is not interesting. So just full truckloads. And in that case, you can, by the way, always decide for each PO, if you would like to use your logistic partner, or if you would like to use Amazon Freight. But at the end, it's like an external logistic partner you book in advance.
Paul Sonneveld
And do you get preferences in terms of inbound slots with Amazon's fulfillment center if you use their freight service?
Oliver Tomaschewski
Yeah. So, at the end, I would say that Amazon will especially say to you that you will have better delivery slot, but as mentioned before. So always, if Amazon will pick up products from you, like on WePay or on Amazon Freight, my experience is that the delivery slot, the delivery windows, and also the problems with the deliveries, like shortage claims, et cetera, will be better if you use these programs.
Paul Sonneveld
Understood. Understood.
Oliver Tomaschewski
And can just use some complexity.
Paul Sonneveld
Yeah. Are there, you mentioned already for Amazon Freight in terms of, you know, a bit of a rule of thumb of when it makes sense and doesn't make sense. When it comes to the two other boxes there, the TheyPay, WePay and FC Direct, are there some rules of thumb that where it kind of makes sense or wouldn't make sense? Are there some obvious considerations?
Oliver Tomaschewski
Yeah. So as bigger you are, as easier it will be for you to get FC direct. So, FC direct is not a program you just log into vendor center and you click, okay, I want to use it. So at the end, it's part of the negotiation topic that we just discussed before. So you have to get in contact with your vendor manager or your AVS and discuss with them if it makes sense to do it.
So if you are a small vendor, for sure, there is completely no sense because why should you take a 10% of a truck, which is directly going to Amazon, this will be just very expensive. So there is no sense. But if you have full truckloads, or just filling up full trucks, this will be easier for you to use this program. Yes.
Paul Sonneveld
Yeah, makes sense. Yeah. Okay, let's move on to the outbound side of things.
Oliver Tomaschewski
Yeah, perfect. Then we have the Vendor Flex. Vendor Flex means it's like, I would say, a micro FC, which is not a real FC within the Amazon network, but this is an FC which is directly based within your logistics center. So Amazon comes to you, they have people coming to you, all the machines they need. So everything what is necessary in a real FC will be within your FC and Amazon employees will pack the products directly within your building and ship it from your building to the end consumer.
So this can also save a lot of time, but basically it saves also a lot of space on the Amazon side because they don't need to store your products. The process looks like that if a customer, so if you, Paul, would order a product, and this product is based with a vendor flex program. The vendor will get the order. Then they just move it within the building from the right side to the left side to Amazon.
Amazon will pack it and then it will be shipped. So Amazon, they don't need to store the product. They are stored in the main warehouse of the vendor. And this is the quite interesting thing. So basically, for the long term, for the long tail portfolio for this, it's quite interesting to use the Vendor Flex program.
Paul Sonneveld
So does Amazon take consignment or is it on consignment? So, when the products move from one side of the warehouse to the Amazon side, does Amazon take title of the goods or actually do you still own the goods? Are they still in your title?
Oliver Tomaschewski
Yes, you still own the product and in the moment when they get the product, they buy it from you.
Paul Sonneveld
Yeah. Okay. And I'm assuming that they're on their own warehouse management system. The whole operational setup mirrors that of Amazon.
Oliver Tomaschewski
Yeah, exactly.
Paul Sonneveld
Yes. Okay.
Oliver Tomaschewski
Yeah. Then we have to Direct Fulfillment. Direct Fulfillment is nearly the same like Vendor Flex, but the difference is, so there is no one from Amazon within your FC. You just share with Amazon the data. So for example, you have 10 pieces within your warehouse and if someone will purchase it, You will pack it from your warehouse, your own people do it, and then you directly ship it to Amazon. So it's nearly the same. The only difference is that your people are doing it and not the Amazon guys are doing within your FC.
And last but not least, the Direct Import. This is a little bit different to the other ones. Direct Import means that Amazon offers to you within this program the opportunity that they will pick up your products in Asia. So, this is just limited to Asia. They will pick it up and they will do from that point all the things.
So shipping it the duty topics So everything what is necessary to take your products into the FC network of Amazon, but just limited to the Asian part. So last but not least all these six programs helps you to doing the inbound and the outbound process better and to define how the products will arrive at the end consumer.
Paul Sonneveld
And can I ask, the Direct Fulfillment option, I mean, obviously it's in Amazon's interest, you know, to have someone else pick the orders and hold the capital and the working, but it's still Amazon's reputation on the line when it comes to shipment performance and delivering for the consumer. So, does that mean that they're very cautious about giving vendors this option, or do you see those restrictions being loosened?
Oliver Tomaschewski
No, so they are very, they are very KPI driven. So, at the end, you can only use this program if you deliver in time. And if you don't deliver in time, Amazon is very strict at this point. So, they will increase the delivery time, which is visible on the product detail page. And at the end, if there is written deliverable within two or three weeks, no one will purchase the product. So, the, you should have an own interest as a vendor to deliver in time. And they are really very, very strong. They share everything with you.
Paul Sonneveld
Yeah, no, that makes sense. I mean, that's in line with the broader kind of philosophy around even on the 3P side, right? The merchant fulfilled.
Oliver Tomaschewski
Exactly.
Paul Sonneveld
Okay, in the interest of time, let's talk consolidating programs.
Oliver Tomaschewski
Yes, sure.
Paul Sonneveld
Including my favorite question, PICS versus SuperPICS.
Oliver Tomaschewski
Exactly. So to directly start with this question, PICS is perfect inbound consolidation service. This means, so let us, maybe let us start one process before. The normal process is if Amazon orders from a vendor, then they order, for example, in Germany to 50, 60 different FCs. So, you have, in the worst situation, you have 50 pallets of products which are delivered into all FCs.
PICS means they consolidated on one or two main FCs. In Germany, it's mostly next to me. So I live next to Dortmund. There is DTM1, DTM2. The European vendors will know it. So this is the European main delivery FC where the products are delivered. So PICS just consolidates all to one or two FCs. Basically not everything, because hazmat or heavy bulky products are not part of this PICS program in general, but the standard products, so sortable or unsortable products, they are part of the PICS program. So this is the program in the middle.
And on the right side, the best program is SuperPICS. So this means that you consolidate all the orders into one FC for the whole European setup. So, in that case, you don't have to set up one PICS FC per country, but you just deliver to, for example, next to Dortmund to the main SuperPICS FC. So this is the first one. Very, very beneficial, very important. So if you have bigger sales, this will help you also to reduce shortage claims because it's just easier for Amazon to manage all these inbounds.
And last but not least, at the end, this is not only the only thing to optimize. If we later talk also about the LPR, EDI, CLI, couple of little information. If you combine some of these programs together, this will have a lot to reduce the shortage claims. So, this is the first one. So the consolidation on order level. The next one is the consolidation on pallet level.
So if you have a top, top, top seller, and you ship every week five pallets of this, You could also align with Amazon, the so-called Acapulco program or pallet ordering. So Amazon will directly order full pallets from you, which will also save you for sure cost. But to be fair, I'm not the biggest fan of this program. Why? Because if you use PICS, the normal consequence should be that the amounts of products are increased and you will have automatically pallet ordering. So I'm not the biggest fan of it, but if you don't have PICS for sure, pallet ordering could be an option for you.
And last but not least, the full truck load. So the FTL, this is the next level of pellet ordering. So if you have one full truck, just with one product, for sure, this is just for a very, very big vendors. This is also an option to deliver. Yeah, quite easy, quite with low process complexity, full truck to Amazon.
Paul Sonneveld
And I'm assuming, I mean, does it go hand in hand with the SuperPICS? Because obviously the closer you are to that program, the more likely it is that Amazon can order full truckloads. Is that even possible? I mean, unless you're like, you know, a mega seller with one product and you sell thousands of widgets, you know, a second. I imagine it's usually that combination.
Oliver Tomaschewski
Yeah, it's possible to combine it. But as mentioned, I'm not a big fan because for all of these programs, for sure, you have an agreement within your vendor central, so you pay for it. Nothing is for free. So, if you pay already for pigs, why should you pay in advance for the pellet ordering? So you pay twice for the same service because at the end, all these three programs are focused on consolidating volumes into smaller or into better process, uh, process that, that, that you can get. So, um, I'm not a big fan of combining this.
Paul Sonneveld
Yep. Well, at least not paying twice. As a principle, you might be happy to do two, but you only want to pay once.
Oliver Tomaschewski
Exactly. And as I mentioned, if you have PICS or SuperPICS, it will come automatically that Amazon will order pallets or in the best case scenario, also full truckloads.
Paul Sonneveld
Great. Okay.
Oliver Tomaschewski
Yeah, then we have auto optimization. Next category. So, when we start the collaboration with vendors, the first thing that we are doing is always to analyze if the ASINs and the EAN connection is set up correctly. So, in some cases, we see that Amazon is, for example, ordering two different ASINs, but at the end, both is the same EAN code. So this is something to clean up from the beginning.
And in the second step, there is also a program which is called EAN Gold List or GDSN. This just means that if you have multi-unit packaging, so for example, if you have a ball, this is one unit which is sold on Amazon, and five of these balls are in one Mastercard. And the master card have another EAN code instead of the one unit piece for sure. Then it can help and reduce also shortages if you just share these data with Amazon.
So if they inbound your product, they can just scan the EAN code of the five units and they directly know, okay, this EAN code stands for five single units. So this is the EAN gold list. Very important. Most of our vendors, they never heard about it. They never have done it. So this is very easy. Send an email to Amazon. There's a special email address in the template. Share this data. It takes two weeks and they will upload all the data in the system and it will reduce shortages.
Then the Vendor Central product availability. There are two different ways to update this data. An active and a proactive way. So, you can log in into the Vendor Central and just share with Amazon proactively your availability on the product. So this is the proactive way and the active ways if you receive an order from Amazon. So if you just reply to Amazon with a special code, which is part of the EDI communication with Amazon, that this product is not available. So there are two ways. And at the end, Amazon needs this information. Otherwise, they cannot order correctly.
And last but not least, this is also connected to availability. This is the Vendor Initiated Allocated Offer. So if you know as a vendor, for example, you will change the machine and within the next two months, you will not be able to deliver this product. But now you have enough on stock. This program is especially for this situation created. So, you share this information with Amazon. Please be aware I will not be able to deliver from April to September these goods but now I have enough and this is my proposal please decide if you would like to order this. So this is the this is the program or the idea behind it to stop out of stock situation if you could if Amazon could order in advance the units which were necessary.
Paul Sonneveld
So you're really asking you're sort of signaling to Amazon that there's a risk
and this is your opportunity. We've ring-fenced the inventory and this is your opportunity to forward by and cover that risk.
Oliver Tomaschewski
Exactly.
Paul Sonneveld
Okay. Makes sense. Makes sense. I mean, I've lots of follow-up questions, but I'm looking at the clock and I'm like, we probably won't get to that. So, I'm focused on rounding out the framework because I think it really helps to plug a lot of gaps in people's understanding. So, let's keep going.
Oliver Tomaschewski
Great. Yeah. So last category is the receipt and dispatch of goods. So, the first one is really technical. So LPS is the License Plate Receipt. So this is to make it easy, just a special label or a design how the label should look like and basically which information have to be placed in which area of this label. And within the LPR, there are also some codes like the SSCC code, the ASN code.
So I will not go too technically in this topic, but basically this helps Amazon to inbound your products correctly as they will know if the pallet or the carton will arrive. What is in the carton. So if you don't have this, they have to open each carton, each pallet, check which products are in there, and this will result in a lot of shortage claims. So, if you use LPR, they don't open it, they just scan it, they will measure it, they will check the weight and so on. And if everything is fine from the data perspective, they will just in launch your products much, much faster compared to the standard process.
All these data are shared through the EDI, the Electronic Data Interface and the CLI is the Carton Level Information so you can share in advance with Amazon which cartons are packed in which deliveries on which pallet etc. so that Amazon can already plan with it and they already know in advance which products will arrive. And in that moment, when the product arrived in the FC, therefore the LPRs and the LPRs connected at the end to the CLI. So very technical at the end. But this is a key topic to optimize your logistic processes with Amazon. Everyone should do it. At least, I would say, if I take a look on our vendors that we're working with, I would say 70% already managing this topic. And the other one have a lot of shortages.
And we have the prep-free packaging, the shipping-on-container and frustration-free packaging. So these are just three different categories how you can deliver products to Amazon. If vendors doesn't deliver SIOC cartons or packagings of their products, they already have to pay a penalty fee, I would say, to motivate the vendor to be more sustainable.
So everyone should really work on this. And if you develop products which will come within the next two or three years, already take this into consideration. Work on your packagings. Do it in that way that Amazon can directly take your product within your original product packaging and ship it to the end consumer. This is very important.
Maybe a fun fact by the way, so if you as a vendor doesn't deliver, so basically in Europe this is the case, if you don't deliver as a SIOC you will have to pay a penalty fee. If you are a seller or a hybrid setup, this is also possible, you will get a benefit from Amazon if you deliver in SIOC. So there are two different worlds. So there are many, many other topics, not for today, but sellers, they have some benefits instead of the vendor program. So therefore, we always recommend to have a hybrid setup to just take benefits out of both worlds.
And last but not least, as mentioned, do an analysis of shortages, understand why Amazon charged you with chargebacks. This is very important to, at the end, optimize your whole setup. So, Amazon is very open in part of data sharing. You can get everything what you want. They will share all the information about problems within the logistic. At the end, they also want to have the good inbound process. Therefore, they share all this data, really work on this. I know that it's not funny. It's a lot of work. We can help you also on this, but this is very important to reduce shortages. At the end, it will save you money. It will increase your margin at the end.
Paul Sonneveld
That's really fantastic. I just want to bring it back because we've got the picture now. We're also out of time, but I'm going to squeeze a few questions in there because we have lots. And apologies to our audience. I think we definitely have to talk about a follow-up session where we're going to break this down further.
But I want to just start off with asking you, I just want to get to some practical things. In 2024, right now, particularly with the European lens here, Where do you see vendors gain the most benefit by adopting certain programs? And I might just put the program slide back up there. But where do you see the benefits?
Oliver Tomaschewski
Yeah, so to be fair, you can't integrate all these programs. This is impossible and also not useful. So at the end, I would suggest at least to think about the PICS program. This will basically reduce your internal logistic processes as you don't have to pick 50 or 100 different packagings for different FCs, but you consolidate everything into just one FC. So this will reduce a lot of complexity within your own logistics.
So PICS is the first one, then Direct Fulfillment, but Direct Fulfillment for sure is only available if your own FC is able to manage something like this. But this will also help a lot, for example, to reduce out-of-stock situation. So if Amazon is out of stock, you can directly jump in with your direct fulfillment to close this gap for a short period. Then for sure, the basics like ASIN and EAN cleanup, as I mentioned before, the EAN gold list. So this is more or less master data management, setting up this correctly. It's maybe two days of work, but it will also help a lot.
Last but not least, the LPR. uh EDI and CLI this is more the technical perspective this was also a one-time workload but will reduce on a long term a lot of topics yeah and yeah sorry but last but not least the topic is analyzing shortage claims so this is the most most most important topic.
Paul Sonneveld
Yeah yeah so there's four of them PICS, Direct Fulfillment, if you can do it. Gold was it the gold list and the
Oliver Tomaschewski
Yeah, the Clean up Gold List and the LPR. Yeah, exactly.
Paul Sonneveld
Get it, get it. Now, my second follow-up question here is, I mean, some of these things are clearly in Amazon's interest as well, right? They must be sitting there from a supply chain optimization point of view and going, right, if we can move this vendor from this program to that program, there's benefits for them.
Oliver Tomaschewski
Exactly.
Paul Sonneveld
How does that come into play? Do they engage with vendors proactively around that? Or is it really for vendors to try and estimate and then extract some value out of Amazon? How does it work practically?
Oliver Tomaschewski
It depends. So, if you are bigger, the AVS or the vendor manager will come to you and ask you, for example, to do the PICS program or also the SuperPICS program. At the end, you also pay for it. So for Amazon, it's at the end also win-win situation at the end for both. But Amazon will also earn some money with it.
For the bigger programs, Amazon will come to you. But for the smaller things like the EDI, LPR, and CLI, and something like this. If you don't have an AVS, it will be hard that Amazon will ask you proactively to work on these topics. So, in that case, you should know about this. Therefore, it's very good that you do sessions like this to inform vendors about these programs or these opportunities. So, you should manage it by your own.
Paul Sonneveld
Great. I'm going to pick two more audience questions because actually we have a lot. So I just want to, we've got great questions from Susanna, we've got great feedback from Chris Khoo. Paula, thank you for your questions. There's a few anonymous LinkedIn users as well. Lindsay, thank you for your contributions as well.
I apologize, we won't be able to get to all of them, but feel free to continue the conversation in the LinkedIn comments section. I want to go back to Susanna's question here. Let's try and unpack that briefly. She's really asking, what's the price of Acapulco? And can you get Acapulco the back way by setting up A-specs or something else in the back end? So, can you trick the Amazon PO ordering system in getting you full pallets?
Oliver Tomaschewski
Good try. Let us try to answer the first question. So, price of Acapulco. Yeah, I know the prices which our vendors pay for it. But at the end, to be fair, it's not so easy to just say 5%. It's always 5%. So, it really depends on the size of the product, on the volume. So I would say, in average, it's something between 2% and 7% or 7%, 8% is already very, very high. Yeah, if you think about to do pellet ordering, take the money invested into PICS, this is much, much more useful instead of doing pellet ordering.
And the other way around, so to trick Amazon, You can for sure use the EAN Gold list. So this is the trick behind it so that you share Amazon. If you need 15 balls, please don't order 17 because 15 is in a master pack with an own EAN code. So, this is possible, yes. But this is just a recommendation. So, you cannot trick Amazon that they will order 15 instead of 17 because if they think they need 17, they will order 17. It would help, but it will not trick the system.
Paul Sonneveld
Great, great answer. Last one here from Paolo. How can we set a minimum limit on the number of products that can be ordered?
Oliver Tomaschewski
I just know the way that you can set up a minimum order quantity. So, in that case, you just align with Amazon that, for example, they have to order at least for minimum 2,000 euros per PO. And if they don't order, you will not fulfill this order. But basically, in that case, they will also not order from US eventually. So this is the usual process Amazon always, basically, I would say you can also set it up if you order a normal ticket within Vendor Central and ask for it. So just write them, please set up on these vendor codes a minimum order quantity, M or Q, with a volume of X euros or X dollars, et cetera.
Paul Sonneveld
That makes sense. Great. Look, I can't believe I'm saying this because I really don't want to, but I do know people have got to go back to their day jobs and actually running their Amazon vendor businesses. So, we're going to have to call time out here, unfortunately.
But Oliver, I think you have done a superb job in giving us a really good and digestible framework for understanding all the different options and how you think through them and how they work together and how it all fits. So really, really appreciate it.
I think you and I should have a conversation after this to say, right, how do we get into some of the more nuances around this? Because I feel like we've just set the stage here. I just want to really thank you for spending those nine years to prepare for this particular webinar.
But of course, there might be people who are watching this and they're like, they're really wrestling with some of these logistic trade-off discussions right now, and they may want to chat to you. What's the best way for them to get hold of you?
Oliver Tomaschewski
Yeah, so best way is just sending an email to info@dicommerce.de or just give me a call so you can also enter our website. All the necessary information is there. There are also partly some of these information are on our website to get a first overview. But the best is just contact us. We have a free session. The first session is always for free so that we can discuss about your problems and how we can solve this. And for sure, if we then go deeper, we can discuss about the pricing.
And last but not least, also really think about the audit topic. So, if you never analyzed the shortages, your chargebacks, please contact us. My team and me, we can do a free analyze for you so that you know how much we could maybe get back from Amazon to you. So, I really like this way of starting a collaboration. Because there are not so many companies that you contact in the first meeting. They will tell you, for example, if we start a collaboration, you could get 100,000 euros back. So, I really love this way of starting collaboration if we start with a refund from Amazon side.
Paul Sonneveld
That pays a lot of bills, right? That's great.
Oliver Tomaschewski
Exactly, yeah. At the end, it's the money of the vendors.
Paul Sonneveld
Yep, absolutely. Fantastic. Oliver, thank you so much. I look forward to doing a follow-up session with you. But for now, thank you very much.
Oliver Tomaschewski
Great. Thank you very much, Paul. It was great to be here. Thank you.
Paul Sonneveld
All right, everyone, that is it for today's episode. I hope it's given you a really good understanding of the Amazon Logistics space. I'm sure you agree we could have gone a lot deeper and we will. But remember, if you're hungry for other topics, don't forget to visit our on-demand library at merchantspring.io for a whole treasure trove of Amazon vendor websites. And of course, if you are looking for new analytics or more insightful analytics around Amazon Vendor, multi-country, whatever that looks like, feel free to get in touch with me. I'd love to show you how MerchantSpring can help you.
Last, I'm working very hard on identifying topics and speakers for Q3 in 2024. So, if you're really want me to tackle a particular issue, question, or you've got some people who are just absolute experts like Oliver in logistics, let me know, drop me a note, and I'd love to get them on the show. Until next time, it's probably going to be next week, take care and good luck with the Amazon channel. Thank you.
