Podcast transcript
Introduction
Good morning, everyone, and welcome to the Amazon Vendor Strategy Summit for 2025, the European edition.
Paul Sonneveld
I'm your host, Paul Sonneveld, and I'm delighted to be your host for today's event. Now, before we dive in, I actually want to make this as interactive right now. So why don't we change things up a little bit and let's do a really quick live poll. I'd love to hear from you. Let's jump right in. If you could come with me to menti.com or just scan that QR code there, menti.com and enter the code 68177970. I'll just put that on the banner here as well. Make sure we can actually see that. That will give us a sense of what are some of the biggest challenges that you're currently facing as an Amazon vendor professional? And it will really help us to get a real time pulse of what's top of mind for you. And we'll try and reference some of these responses throughout the event.
Now, of course, today, I do want to also acknowledge MerchantSpring. MerchantSpring has made it possible to really put on this event. And as the co-founder of MerchantSpring, I am incredibly proud of the work our team has done to support marketplace agencies and their vendor clients with really deep analytics and actionable insights.
So actually, I've got a little bit of a goodie for our audience and just for our registrants of this summit to celebrate the launch of our latest Amazon vendor profitability feature, we're actually offering an exclusive 50% discount for the first six months on our vendor plan, but to only new customers and only for those that have registered for this webinar via our website. So if you haven't done that, go ahead and do that. If you're looking to gain deeper financial insights and really optimize your vendor margins, this is a great opportunity to take advantage of this special, special offer.
Now, let me move on to the agenda for today. What to expect? Well, we have a jam-packed agenda covering some of the most pressing topics for Amazon vendors in 2025. We actually have five very focused 20-minute sessions really designed to provide very practical and actionable strategies.
We're going to cover things like market trends, alternative channels, vendor negotiation strategies, collaboration with Amazon, vendor profitability, chargeback fees, and operations and logistics, including the PICS program. And look, if you can't stay for the full two hours, don't worry. Each session is being recorded and will be made available to all registered attendees in the next 24 to 48 hours. So again, reminder, if you haven't registered yet via our website, head to our website and put your name down so you will get these recordings in your inbox before the end of the week.
Now, we do, as you can probably recognize from some of the pictures here, we do have an incredible lineup of industry speakers for you today. We have Carina, who's going to kick us off really with a deep dive into key market trends and alternate selling strategies, followed by Martin, who will walk us through the vendor negotiation process and really give you some practical advice on how to optimize terms, strengthen your margins in a negotiation position. Asha will then pick up and share her insight on how to best collaborate with Amazon, whether or not you actually have a vendor manager. James will then talk about profitability, chargebacks, all of those undesirable fees, and really get into how you can retain more revenue and minimize costs.
And then Bruno is going to do the last session on logistics and operations and best practices within Europe, with a particular focus on the PICS and the SuperPICS program there. So rather than give you full introductions to all of our speakers, I'm going to ask each of them to really briefly introduce themselves so we can maximize time for insights and discussion. And, you know, just note that all the way at the end, we do have our Q&A panel.
So if you haven't If you've got questions, all of the speakers will be available. And I encourage you to either to use the LinkedIn comments section or go to menti.com to see some of those, to put your questions there. So if we briefly go back to menti.com, you can, we can start to see some of the biggest challenges popping up already there. Vendor negotiation terms, profitability and chargebacks, competition, market situation, really interesting. So, you know, please continue to do that.
I'm actually going to move to the second part of that survey where you can actually enter your questions as well. So I'm just going to flip it there. As you can see, we've got no questions yet. We'll come and check this later, but you can use the same code to submit your question, uh, and even upvote if you see others contributing great, great questions as well.
All right. Well, let's get into it. Let's get started. Our first speaker, Carina, she is going to be covering really the market shifts impacting Amazon vendors to diversify your sales strategy and to reduce risk and growth. I was going to say, put your hands together to give a warm welcome to Carina, but that might be hard to hear. But yeah, just bringing her on stage now. And yeah, over to you, Carina. Let me give you your slides. There we go.
Carina McLeod
Thank you, Paul. Thank you for the introduction and lovely to meet you all this morning. So really, thank you for all joining us today for the mini summit. So for those that don't know me, I'm Carina McLeod. I'm the CEO I'm founder of eCommerce Nurse, an Amazon-focused agency, and Vendor Society, which is a global community for Amazon vendors. So just a little brief background.
I've been in the Amazon space for over 20 years, started at Amazon working in vendor management, and then 12 years ago moved over to the other side where I've been supporting brands ever since on the seller and vendor side, helping them grow and just navigate the platform on Amazon.
So today, I'm going to be covering off, taking things a step away from the Amazon vendor part and focusing also on what's going on in the overall market and what are those alternate channels available to Amazon vendors that might be feeling that crunch currently on the Amazon platform.
So I'm going to first talk about and give you an overview of the landscape. So as many of you are aware, and some of you that may be tuned in today might have been impacted by this, is that increased closure of Amazon vendor accounts. So what I mean by that is that those emails that you receive letting you know that your Amazon vendor account is no longer in Amazon, we'll be closing it. And the only option for you is to move over to Seller, which has been unfortunate for some. So that has happened to a number of vendors globally, particularly within the US, but also within Europe as well.
If we then also talk about the increasing costs, which has been a conversation that's been going on for years really, but it continues to rise. Manufacturer and supply chain costs continue to increase, yet Amazon is constantly pushing for improved margins. So there becomes that point where many vendors are actually questioning whether the vendor platform, being on Vendor Central, is actually profitable or not only profitable but sustainable so looking at the survey the results that came up earlier and that you're keen as a key topic to talk about negotiations and profitability it really just highlights where we're at when it comes to the vendor platform at the moment.
So then what that does is of course when you're sort of questioning profitability, you're questioning sustainability, that also along with all these closures of vendor accounts, the big thing here is that it creates that feeling of uncertainty. And you start questioning, right, is the vendor platform right for me? Should I be on seller? Where should I be investing all our energy going forward? What does that look like in a few years' time? And so when you are under pressure and you're feeling it, it does make you then question what you're doing. And it should ultimately make you question what your overall strategy is.
So we're also seeing alongside that a number of vendors are taking on hybrid strategies. So it may be that you are a vendor, but you haven't necessarily been hit with that dreaded email saying, we're going to close your vendor account. But actually, you're looking at, OK, well, what if that email does come? What does that mean for me? Or I'm not really gaining the profit that we used to be getting on vendor. So a number of vendors have also opened up seller accounts, and then they're managing their portfolios between the two becomes a great backup. But then, it's also a great way to understand another platform and also be able to diversify and spread risk.
And of course one thing that we're seeing a lot as an agency, partly because we're sort of involved in TikTok shop these days, is that rise of social commerce, where you will see there are a number of brands, emerging brands, that are gaining traction by going social first, going D2C, and actually driving a lot of business and market share in the industry, not just on Amazon or even without Amazon as well.
So that's really to give you an overview of where we are with the current landscape. And that sort of feeling, I'm guessing, of uncertainty for a number of you, which is always why we jump on these webinars, is to understand, OK, where can I make those improvements? Where can we see growth? Or it may be that you're not even looking for growth. You might be looking for maintaining the sales that you have. You don't want to lose any more market share or you don't want to lose any market share, you could be in many different circumstances.
And so that's where I want to start talking now in terms of how do you manage that risk of when you're working on a platform that could be squeezing you dry on the margin side, you could risk having your account closed. I'm not saying that that will happen, but it's always good, you know, and I always see things as signs, as in warning signals as well, as in if these things are happening, you can sit there and say, oh, it won't happen to us. But sometimes it's always good because it gives you those trigger moments to start thinking, OK, does this mean that we've got too many eggs in one basket? How do we diversify where we currently are? Are we really, really dependent, heavily dependent on Amazon? We need to start thinking about other avenues.
Now, one thing is I'm talking about mitigating risk and thinking about other mediums or other channels. At the end of the day, Amazon is the biggest marketplace out there globally. So if you really want to get traction and you want your products in front of the customers, without a shadow of a doubt, Amazon is the place to be. So in terms of what I'm saying, it's not to question Amazon as a platform, it's more about how do you diversify, how do you spread risk, but also how do you evolve as well in the overall e-commerce landscape.
So those that may be sort of questioning that viability with Amazon, or you may be currently going through a negotiation stage at the moment with Amazon where you're negotiating terms, that's where you really need to think about, okay, if you what you want to make sure that you're doing is that you're showing that you're you're working with Amazon. And at the end of the day, you don't want to not saying that if you don't agree certain things with Amazon, then they're going to shut your account down. But it is one of those situations where you need to show that you're collaborating with Amazon.
Now, I'm not going to go into negotiations. Martin will be covering all of that off. Asha is going to be covering off collaboration. But it's really to think about, OK, if you're feeling uncertain about where your future is on the vendor platform, you really need to think about how you can then strengthen your vendor relationship.
Now, vendor managers come and go. You may not have a vendor manager, but it's still thinking about if you are showing Amazon that you're working with them, it's trying to find that happy medium. So that's one way of just really mitigating to some degree that risk by showing Amazon that you're working with them rather than just sort of saying no and not agreeing with any of their annual requests or just requests that might come up throughout the year.
The other way, of course, is in terms of the audience today, there's going to be, I'm guessing, some smaller vendors, some larger vendors, all different sizes. And so you might see yourself, or you could be, potentially, a strong player on Amazon Vendor. That, of course, allows you to gain a lot more negotiating power, right? Because you're less at risk, because Amazon is more dependent on you. So it's a bit of a game in terms of that balance of power, right? if you're a smaller vendor where you're not agreeing to terms or you're not agreeing to things, there's more like risk of your longevity with Amazon than there is if you are a stronger player as well. So that's thinking about that.
The other part is thinking about, like I mentioned earlier about this hybrid strategy and many vendors now that we speak with have all sort of, opened up a third-party seller account as well and gone on to that hybrid model. And that's down to a couple of reasons. Yes, it could be down to mitigating risk, but it's always that part of the grass is always greener, right? You hear there's lots of information out there, whether it's correct information or misleading information, there is information out there that is saying almost that Amazon seller is the promised land, which isn't the case, right? It is very case-by-case specific.
So a number of vendors are trying to understand, OK, well, if I go to seller, does that mean I can have greater margins? What does that mean? Does that mean I can control my retail prices? I can control my products? There's many different advantages. And today isn't that time where I'm going to go through the pros and cons. But those are the things that vendors are trying to evaluate whether or not that platform is right for them.
And the best way to do it, actually, when you have pros and cons of two different platforms is actually having that hybrid where you benefit from the two. And so there are a number of vendors that will be having a hybrid relationship with Amazon. So Amazon vendor relationship and Amazon seller relationship and managing the portfolio between the two.
Now, it's really important that if you are considering having a seller account as well or a hybrid, Or you're probably sitting there going, yeah, I've been a hybrid for years. Great, OK. Just make sure that you're not creating conflict with yourself. You're not competing seller with vendor on the buy box. You're not doing anything that could potentially risk and upset the vendor side of the business.
It has to be working in sync. And what I mean by that is we have many vendors that will say, OK, these products work really well on vendor because we know they're evergreen. They've got really good traction. We get good orders. We get large pallet quantities. It goes in, it comes out, and it just turns really well. Those products are profitable. it's not worth even sort of moving them, keeping them there. When they then might want to test a new product, or it might be that they want to then do some bundles and package those products up, then they're using this seller platform.
So we have vendors that are selling their singles, for example, on vendor, they're selling multi packs on seller and using seller almost as a testing ground as well and they've got a really effective business. So it's very, as I say, it is very much a case by case scenario. So there's sort of no one size fits all. So it is really important that when you're sort of, there's lots of information out there saying, vendor, no, move to seller, that you're evaluating that for your products, for your brand. And that takes into account what your margins are, what your infrastructure is, what your product type is. There's so many different factors involved that you should always take into consideration when you're reviewing the 3P model, you're reviewing your hybrid model.
It also requires a huge amount of resource, so you're probably already feeling that kind of pull in terms of the resource required to manage a vendor account, which is why of course those agencies exist, because there's a huge amount of work there. When you start going into seller, there's even more work there. When you start going into hybrid, you're almost doubling up. So those are all the different things that you should be considering as well.
Now, one big thing for me is about building an e-commerce strategy. And this is really, really, really important. So we talk about the landscape changing for vendors, but the landscape is changing overall in e-commerce. TikTok Shop has obviously started creating this with live streaming, shoppable videos. There's definitely a huge amount of growth now on the social side.
And as I said, there's brands that are appearing on socials that are focusing social first that aren't even on Amazon, but they are gaining real traction by focusing on social and then D2C.
So what I always say to our clients and anyone that I'm speaking to in the industry, yes, you want to have your Amazon strategy, which is hugely important. But your Amazon strategy should be fitting into your overall e-commerce strategy. And what I mean by that is, where are you wanting to go online? Where are you looking to take that brand? Where do you see your brand in three years' time? And make sure that you're in the right channels that are right for your product to help you go there.
So as I say, once you've built your overall e-commerce strategy, and you know the direction you're heading, you can then figure out, okay, what are the channels that I then need to be in to be able to achieve my overall e-commerce goal? Okay, Amazon is one of those channels because Amazon is a huge marketplace. What does my Amazon strategy look like? OK, I want to remain on, be vendor. OK, how do I make sure that I'm mitigating any risk on vendor? OK, it might be that I have a hybrid. That sort of sits in with your overall Amazon strategy.
It's also important that if you want to continue to grow and evolve, yes, Amazon continues to grow. It's also quite a saturated marketplace. You've also got a lot of socials where there's huge amount of growth as well. So it's thinking about, well, okay, so do we start investing in, are we investing enough in socials? Do we need to be figuring out TikTok shop? Okay, if we need to go and figure out TikTok shop, Then what do we need to do to make that happen? OK, we need to get stronger at video. We need to know how to create short form content. We need to really understand how that works, because it's definitely not a mirror or a carbon copy of Amazon. It's a completely different way of working.
So those are the things when you start thinking about, well, if I want to be here in e-commerce, I need to figure out all these other channels as well. But what are the areas that are currently missing in order for me to get there as well? So there's so much that you need to think about. And not only that, it's also thinking about your product range. OK, we've got this with one vendor who have a product range that is performing really well for them the physical stores. They're starting altering packaging to be a little bit more e-commerce focused. And then they're even creating different packaging for socials for things that are going to pop out more on pages as well and really sort of be more relatable to certain audiences depending on different channels.
So there's so many things that you need to be considering. But definitely one thing, and my biggest part here is a big takeaway, is yes, understanding that, being aware of what the current landscape is. But most importantly, thinking about okay, because you can get very tunnel visioned on on Amazon, I need to make this possible, I need to make this profitable, make it profitable.
But you've got to make sure that you know where you want to be going in the next three, five years time. And you have a plan for that. Because what can often happen is if you get very focused on what's in front of you, you can also lose sight of what's ahead. And that's when your competition can come in from behind and just completely come in and move forward and start swiping market share. So it's really important to be in the now and to be managing those current pain points. But it's also very important that you're focusing on that future in that e-commerce, overall e-commerce strategy and taking into account where the landscape is going looking into other platforms.
Also, I haven't mentioned Walmart. If you're a US brand, you might want to then, or you're based and you're selling in the US, you might want to be considering selling into other marketplaces such as Walmart. If you're in the UK, there are other marketplaces that are evolving depending on your product category. You might want to then go into Tesco. You might be in, if you're in tools, DIY, it might be B&Q that are more very focused. But it's also something that's really, yes, the size isn't as big but it's all about diversifying and just evolving and growing in the industry.
So those are the sort of the big takeaways for me is just really thinking about what your overall long-term strategy is and just make sure that you're managing all the different areas and not kind of just dropping one for the sake of the other. But of course, I know today, it's not just about e-commerce, it's about Amazon vendor as well. But it's also it's always really important to think about that, because that helps you when you're going into doing anything on Amazon is always having that bigger picture in mind as well.
Paul Sonneveld
Fantastic. Thank you, Carina. A really, really good way to challenge us. And I guess really the big challenge out there is, if you don't have an overarching e-commerce strategy, make 2025 the year or maybe make this quarter or next quarter the quarter that you're going to put it together. Do some hard thinking around that. So really fantastic.
We have a few minutes left before we hand over to Martin. So I did want to sort of ask you a few questions. One on vendor, we have a few TikTok questions as well. I know it's a very hot topic, but just a very sort of pragmatic question on on the vendor side of things comes from Mark. So thank you, Mark, for submitting this via LinkedIn.
Mark asks, without scaring clients it's really important to understand the strategy behind vendor account closures. I guess that means how Amazon thinks about what accounts they're going to close or not. I know this is very real, but from your perspective, Carina, I mean, putting yourself in the mind of Amazon, what accounts are at risk? I mean, what are you seeing?
Carina McLeod
I think, I mean, even there were accounts at risk when I was a vendor manager at Amazon, and I was there pre 2012. And it's all down to you've got to think there's less vendor managers to manage accounts. And so if you are, and so they're going to then want, it's almost like that 80-20 rule, or 20, I can never say it the right way, but basically where, you know, they're going to want to focus on what are those accounts that are going to help those categories achieve their overall revenue? And so can that be done by having tens of thousands or can that be done by having 2,000, for example.
And so very much their overall priority will be the bigger vendors, the bigger vendors that are driving the GMV, but the bigger vendors that are also showing that they're working with them. Because like vendors, Amazon also wants to be profitable as well. So that's going to always think about why is Amazon doing it.
Amazon's overall goal is to get the sales like yourselves and to be profitable. So how do they make that happen? And how do they allow themselves to focus, given that there's less vendor managers available? So that's always why I think about it. So what does that mean, then, who's at risk? Well, then, you could say, well, what size? It's really hard to be able to state that, because it's very category-specific. And that's also information that constantly changes as categories constantly grow.
But if you then become a, if you're, I'll be honest, require a lot more handholding, you're not necessarily driving the results and you're not profitable for Amazon, that's when you need to start questioning, okay, how important am I to Amazon? Or how can I make, and that's sort of what I was alluding to earlier, is how can I make myself important to Amazon? Or if you can't, start thinking about, well, am I potentially at risk and how do I need to back up myself so I'm not at risk?
Paul Sonneveld
Thank you, Carina. I'm going to hold the TikTok shop question until the end. There's some great questions there. We're really seeing them roll in on Mentimeter as well. Make sure everyone to upvote those. Make sure we get to the highest priority questions there. But for now, Carina, thank you so much for kicking us off. That was a great challenge. Really appreciate it.
Carina McLeod
Thank you. And thank you, everyone, for listening. And I'll be there for the questions later on.
Paul Sonneveld
All right, now that we've covered where you can sell and your overall e-commerce strategy, let's talk about something that every Amazon vendor has to face, negotiation with Amazon. Whether it's cost increases, unfavorable terms, or shifting requirements, I'm sure you agree, negotiating with Amazon can feel like an uphill battle. But of course, with the right strategies, you can position yourself for success and protect your margins. Well, that sounds easy, right? That's why Martin is here.
So leading the next session is Martin. He's an ex-Amazonian and a strategic negotiations expert who helps vendors secure better terms and gain leverage in their Amazon relationships. Today, he's going to share practical approaches to vendor negotiations so that you can walk into your next conversation with confidence. Martin, the floor is yours.
Martin Heubel
Thanks, Paul. And thanks, everyone, for joining us. I know it's a very busy quarter. We're planning the upcoming year. We still analyze and dig into the data of the past 12 months, what has happened and what the implications are from an investment and budgeting point of view for us. And in all of that, as if that is not complex enough to navigate in the political landscape that we are in and also the inner politics, inside of our own organizations, we have to deal with the adamant vendor managers who want to really drive up their bottom line further and further and further.
If you have taken a look at Amazon's recent earning reports, I think you have seen that Amazon has a significant upwards trajectory in its operating income and operating margin across divisions at, I think, almost above 11% now. And that really signals how Amazon is moving towards 2025 and 2026 and its Amazon retail strategy, namely to balance growth with additional profitability and not to swing like they've done it in the decades before, very binary speaking, from a growth focus Towards prioritizing their bottom line over different consecutive years and phases.
That means that we also need to engage a little bit differently compared to previous years about when it comes to vendor negotiation strategies. And in order to do that in a little bit more of a data-driven way, I've conducted recently together with the fine folks of Stratably our annual vendor negotiation survey where we asked over 200 vendor representatives to really better understand their perceptions about the already kicked off vendor negotiation cycle for 2025. And we were quite lucky to get quite a lot of you, and I'm sure a lot of you who are joining us today have participated in it, to give their feedback.
Roughly 47% of survey participants were selling items in hard lines goods, product families. 45% are coming out of the consumer goods or fast-moving consumer goods, as Amazon calls it, consumables product family, and around 8% for manufacturers in soft lines. So think of fashion, luxury, and accessory items. What we're seeing here is that while Amazon focuses very much on growth as well as profitability, the shift on vendor side is quite significantly pointing towards a priority of sales growth for 2025.
Over half of consumables vendors cited that sales growth is their number one priority this year. In hard lines, it's over 60%. And if you're looking at soft lines, it's even over 70% of participating brands. Profitability growth remains a focus, but not the number one priority for this year. So it looks like vendors have more concessions to make. Top line and sales growth really becomes for them a key focus that they really want to get over and done with. And also Amazon to buy in as part of their investment strategy. And surprisingly, operational improvements are the least priority for a lot of the participants in our global vendor survey.
So overall, yes, the focus areas very much shifted towards growth. which also reflects a lot of, I think, the difficult negotiations that a lot of brands have had over the recent years, where Amazon, since the end of the pandemic towards the beginning of 2023, shifted its focus on profitability, really bringing home the kind of key communication that net PPM needs to grow, not only via structural terms, cost price decreases, but also increasingly, due to the fact that vendor managers are actively collecting cost support, or as they often refer to it, matching or margin support.
If you are flipping one slide further, we're then also seeing the key investment ask from Amazon reflect very much what we were just discussing. Amazon knows that vendors want to grow, but Amazon in exchange wants to also get fairly compensated for that. The word fairly, of course, being here put into quotation marks. You're seeing that a lot of vendor managers are asking particularly for higher base accruals. 45% of participating brands were saying that those are the kind of key investment asks that they have received, followed by an increased promotional spending.
So vendor managers are also very adamant about brands increasing or at least maintaining their share from a percentage point of view of their net sales of investment in the likes of Prime Day, Black Friday, Cyber Monday. So the classic tier one and tier two deal events where your vendor manager is also internally focused on increasing the sales share year after year after year. And supply chain initiatives, which really target cost saving opportunities in your variable handling and shipping costs, but also for Amazon and its overall logistics and fulfillment network are again, top of mind.
Then we are moving very quickly into the mid to long tail of us that will be more and more depending on whether you're joining us from the US or predominantly from Europe this morning. I think that the Amazon vendor service is still a key focus area, not necessarily as an upselling opportunity for vendor managers, given that a lot of the brands that they are directly working with are already subscribed to AVS, but certainly where Amazon wants to increase the accrual basis. That a lot of vendors are paying from 2% to 3%, from 3% to 3.5% and so on. Visiting typically that Amazon is aiming to increase AVS investments each and every single year by at least 50 to 70 basis points. And of course, that also requires some strategies for us to mitigate the risk that we are having of increasing our exposure from an investment point of view. And we will come to a couple of strategies and thoughts about that in a second.
Then when we are moving down the ladder, so to say, we're seeing that vendor managers surprisingly also want vendors to continue the advertising spend. Now, this doesn't mean that all of a sudden your retail vendor manager and retail buyer has now all of a sudden responsibility for this part of the P&L. But in light of recent events where Amazon, of course, wants to grow and outgrow its competition, also the Asian-based competition of TEMU and Shein and secure its own market share, Amazon is becoming more aware that your advertising and marketing investments are becoming increasingly important in order to secure that market share with brands, not also participating sellers, but particularly also their vendor base.
And this is one of the key leverage points that I would encourage every one of us to really hone into when it comes to our vendor negotiations. So if your vendor manager is very adamant about maintaining or even increasing your focus on advertising, that typically signals to us that your vendor manager is fine with the overall margin. Of course, they will ask for a slight improvement, but where you can really lean into is your advertising budgets and also putting that equivalently on the scale of your ask and into the mix of your overall negotiation offer.
In the long tail, we are then seeing free cash flow improvements. You see it here, Amazon often asks for better payment terms. This means that they would like, where legally possible, to extend their payment days from 30 to 60 days, 60 to 90 days, or if you're a direct import vendor, all the way up to 120 days is what we've seen in the 2025 negotiation cycle. Whereas packaging improvements, so SIPP, frustration-free packaging, have really fallen off the cliff with only 11% of vendors citing that Amazon has actually mandated them to focus on these areas in 2025 and also in 2026. So overall, a wild mix of different requests.
But what we are really seeing is that a lot of vendor managers remain fairly lazy. They are simply asking for higher base accruals. They don't really want to give you a lot of conditionality in exchange for it. So it is on us as brands and manufacturers to really kind of lean in here and to also safeguard any incremental investment and ensure that we either get additional growth from it so we can have a revenue attributable growth impact, with performance benchmark reports or we are having on the other side cost or at least time savings or slight profitability improvements if we are investing into new investment areas or new basic rules.
Followed by that is, of course, then also the question about cost price decreases, which we are seeing on the next slide. So when we asked about whether vendors have received a cost price decrease request during or right before their vendor negotiation cycle, A staggering amount of brands, both across consumer goods as well as hard lines goods, have cited that, yes, this has been landing in their inbox. So vendor managers actively ask to reduce the cost price basis of the products that they are selling to Amazon, too, oftentimes ranging all the way up to 6% on average. So it's not a small feast, right? Vendor managers are not just saying, we want to reduce and ask for a cost price reduction of, let's say, 0 to 1% or 1 to 2%, we're actually seeing that this is significantly higher.
39% of brands actually highlighted that they have received cost price decrease requests from Amazon that spend over 8% or above of their current cost prices. Which can be significant, particularly if you're selling, of course, to Amazon at razor-thin margins, or if you have, on the opposite, the mandate from your leadership team to improve your margins and thereby want to potentially push through a national cost price increase or also just rectify and bake in the risks that we are seeing right now with the inclusion of tariffs if you're also selling in the United States, which you will increasingly need to factor into your costs of selling goods towards Amazon.
So overall, quite a difficult trading environment and also really a very, almost to say, difficult vendor negotiation cycle after a lot of different and difficult vendor negotiations in the past that manufacturing brands need to navigate this year. Which requires us to really also review how we negotiate with this online retailer, finding our point of leverage, but then also, of course, ensuring that we are really leaning into those discussions where we feel we have a better power balance and a good market share in Amazon's overall category.
Which brings us to the kind of key strategies that I usually encourage brands to really focus on. So if you're flipping one slide further, we're seeing that we should certainly run proactive negotiations. And this is something that I see with almost all my clients, but also in general, when I speak to stakeholders in our industry, they often wait for whatever Amazon is tabling to them in those negotiations first. And it's like When you're wanting to buy a house, you, of course, envision how it should look like. And then you're looking at buying opportunities.
So you should equivalently also not just lean back and say, OK, let's see how Amazon is going to present their first offer to us, because that brings you in a very reactive state to then having to react to whatever your vendor manager is offering to you and also where they focus the negotiation narrative towards to. This limits your ability to set the framework of your own negotiation.
So if you need to increase your cost prices, then you should be at the forefront of requesting it and also sending your vendor manager a very concise proposal on which products need what cost price increase. Instead of waiting for Amazon to table their own proposal, which may include actually a demand for a cost price reduction. And then all of a sudden, it's much harder to once again, shift them towards the cost price increase conversation as well. So anchor your negotiation with your ideal investment setup and really communicate to Amazon, what does the ideal world look like? And then also pair that with concrete deadlines, but also the expectations.
So for example, if Amazon asks you to invest into Amazon business, well, what you want to do and what you want to understand ideally is first and foremost, why Amazon is so adamant about this and whether they can share with you any industry reports of comparable peers in your category and their performance on Amazon Business or also which products are already actively sold of your portfolio on Amazon Business and which industry customers or which customers in which industries are purchasing these goods. So that you can then better identify whether this aligns with your overall marketing and branding purpose and ambitions as well as growth targets in 2025. Or whether you have to say, hold on a second, there's a significant risk here that these bulk volume discounts that you're going to offer on our products are actually diluting our distribution strategy even further. So this may not be a good opportunity to invest.
So make sure that you are asking for data and don't invest into any trade investments and trade terms where you do not get secured and guaranteed performance benchmark reports from Amazon in exchange. And for those accruals, like an automated marketing or a co-op, where we know that Amazon will not share with us anything, try to reduce the exposure and your exposure to these investment areas up to the point where it's comparable to the typical listing fees that you have with other retailers, right? I mean, we have with offline retailers listing fees to even get listed on their virtual and physical shelf. And automated marketing or co-op accruals tend to be and act as a similar way.
Second of all is then to also use your commercial leverage. And that requires us to first identify where we have commercial leverage. So ensure that you identify what is your overall market share in Amazon's category and how dependent is your buyer, i.e. vendor manager, from your brand in the respective category as well. There are qualitative signals that you can use. So if you have, for example, top-to-top leadership meetings where you've access not only to your vendor manager, but also a category leader or sales director at Amazon, chances are you're quite important to them. But make sure that you also pair that with qualitative insights. Use tools like Nielsen, GFK, or other tools that allow you to assess your market share on Amazon and in your respective category so that you really understand whether Amazon is more dependent on you in this category or vice versa.
This leverage assessment is very important in order to then also play the vendor negotiation going forward and to lean into your leverage points. We all know what leverage points Amazon has. They exploit the sales dependency of a lot of brands. They turn off or pulse all a buy box. And they may even sometimes prevent us from participating in deal events or exclude us from programs such as vendor-initiated orders, just to tighten our opportunity to expand sales at an unprofitable level. That doesn't mean that we do not have leverage points ourselves.
If you're in an active negotiation situation and Amazon is not moving forward at the pace that you would desire, or your vendor manager is very adamant about just increasing your investment but not listening to your demands of having them to also increase the conditionality respectively, make sure that you align with your leadership teams and you also lean in into the leverage that you're having.
For example, don't list any new products with Amazon up until the negotiation has been concluded. Cut access to your leadership teams so that Amazon is redirected to you as the account manager, for example, but you as the sales director or VP of sales are no longer engaging in those conversations up until a certain point in the negotiation has been reached. Don't agree to backday terms. And if you have any terms that renew mid-year, serve a 60-day notice on those in order to also ensure that Amazon cannot just lean back and say, OK, great, these trade terms will renew for another 12 months. And to the point that was already mentioned before, shift your sales towards a hybrid or 3P approach, either yourself or with an authorized reseller, to also maintain your selling performance and your sales ranks on Amazon whenever your vendor manager is trying to cut you off and pressure you by pausing the buy box.
Lastly, define your escalation triggers. Now, I want us to think about escalations not as something bad. In fact, escalations are an effective lever to get access to Amazon senior level leadership teams that is usually very difficult to access without an escalation. Think of how many times you're talking to your AVS, your vendor manager, but then also think about whether you even know the names of the category leadership team or the sales director or vice president of sales at Amazon.
Oftentimes, you will know your vendor manager, but you have limited exposure to those teams above. So it's often also good to define your escalation triggers where you are willing to then utilize your leverage, such as what we've discussed in the previous point, and where you potentially initiate a stop ship, or at least initiate a temporary hold of certain products to be onboarded with Vendor Central going forward, in order to force the hands of your vendor manager, and also ensure that they are bringing in their leadership team to a top to top to overcome a gridlock negotiation situation.
Define these trigger points as early as possible, ideally up front of the negotiation. But even though if you are now in the ending stage of your negotiation, still align with your leadership teams when you want to have these top-to-tops and what you do in order to overcome those gridlock negotiation discussions as well.
For your next year, forecast for these potential sales disruptions. Because if you've seen already over the past couple of years that Amazon always reduced the ordering behavior with you in the months of February and March, well, then bake that into your forecasting and budgeting because that lets your leadership teams rest better and not panic whenever you're in a more escalated situation in your vendor negotiations as well.
So overall, if you take away only one thing from today, make sure you run proactive negotiations, make sure you plan your negotiations through, but then also get the buy-in from your leadership teams and ask them for the clarity that you need in order to effectively negotiate. Don't wait until Amazon tables a proposal to you or the negotiation reaches a certain stage up until you're facing the difficult discussions that otherwise nobody wants to make a decision on.
Be proactive, be concise, and hold your leadership teams accountable. And if you're in the leadership team yourself, enable your teams with clear decision making. Zoom out, understand how you can shift sales between retailers and online retailers to mitigate and reduce the leverage that Amazon has over you if they're entering punitive measures in those ending stages of your negotiation with you. That's all from me for today. I'm very much looking forward to any questions we may have in the chat. And I'll, of course, also stick around for the Q&A later on.
Paul Sonneveld
Thank you so much, Martin. I look forward to that. We've seen some lots of great questions here already from Chris Shelton, from actually someone from Matt Briggs and Olaf Greger. So really look forward to getting into those towards the end. So thank you so much, Martin. I look forward to continue the conversation in the panel. Thank you. So you've negotiated terms, right? Sorted.
Next challenge is how are you actually going to work effectively with Amazon to ensure your business is set up for growth and success? You know, some vendors have a vendor managers, other don't. Some vendors invest in AVS or Amazon Vendor Services, while others are left sort of navigating the platform on their own or through logging cases. This is exactly where Asha comes in.
So many of you will know Asha, but Asha is the founder of Etopia Consultancy and has worked directly with Amazon, helping brands navigate vendor relationships, unlock growth opportunities, and really maximize their collaboration with Amazon. She'll walk us through what's working in 2025 and what vendors need to know to stay ahead. A warm virtual welcome to Asha. Welcome and over, hi, over to you.
Asha Bhalsod
Thanks, Paul. And hi, everyone. Thank you to Martin and Carina. I was very much engaged and actually still continuing to learn despite having done this for 15 years. So a very small and short introduction, although Paul's kind of done it already. I'm Asha Bhalsod. I am the CEO and founder of Etopia Consultancy. We are a specialist Amazon agency. I am also the co-founder of Women in Amazon Business, which is a network to support and empower women in the Amazon space.
So today, I will be talking about how do we effectively collaborate with Amazon? I often get asked a question, which is, how do I get a vendor manager? And I often ask myself a question, which is, do you really need one? Do you actually need a vendor manager to succeed in the Amazon space? So, let's dissect this further. Vendor managers, now, how do we engage with vendor managers? Now, we know that this Amazon space recently has become rumored to be reducing vendor managers. And we are often experiencing vendor managers that have very limited time to engage with our businesses and help us.
So what can we do to efficiently and effectively manage the time that we have got with the limited resources that we've got with the Amazon space and the Amazon team? What I'm also seeing, by the way, as a challenge is vendor managers are not getting replaced very often. So again, you do need to have really good systems and processes in place on how to work with your vendor manager and how to engage with them.
Knowing your numbers. Now, when you go into a meeting with a vendor manager, you could start and talk about the brilliant basics. But actually, to have an engaging conversation with a vendor manager, you need to already know your own metrics and numbers. Your sell-in, your sell-out, your net PPM, your on-hand inventory numbers. These basic metrics you should know about so that can help you to have more detailed and strategic conversations with them.
You don't want to be sat talking about metrics that you don't understand. And you don't want to be talking about things that a vendor manager doesn't actually also understand. And you will face a vendor manager becoming very frustrated and looking at you almost like, don't you understand your brilliant basics with Amazon? Things like sourcing view and manufacturing view. Now there's a lot of ambiguity around what that actually means, but there's lots of information out there that you could educate yourself on with these metrics. So, know your numbers, which allows you to go in and have a much more proactive and strategic discussion with your vendor managers.
Understanding Amazon's priorities. Now, A vendor manager will have their own priorities and their priorities tend to be around growth and profitability. You need to keep this at the back of your mind because if your products and brands are not helping that vendor manager achieve their goals, really you're going to lose that vendor manager. You're going to lose that engagement.
So get their attention. How are you going to get their attention? Talk the same language with them. Talk about net PPM. Talk about how you're going to help improve their goals and their net PPM. Don't be just sitting there talking about your own business and your own strategies about the things that you're going to do. I often have gone into meetings with vendor managers and often we bring marketing managers along and we showcase products and brands. And a vendor manager will be interested to a certain degree.
Of course, product is king, but they want to know what you're going to do to help them grow the category and make their business look profitable. So make sure you have an engaging conversation in those areas all the time. Make their lives easier. Have you asked them questions about what is the target growth in the category? What your positioning is as a brand in the category? How your products are performing versus competitive products? Ask questions that engage the vendor manager and educate yourself around this.
You will get some insights into what the vendor manager's goals actually are. A vendor manager is typically targeted on AVN negotiations and Net PPM. So have collaborative conversations to help. Now, I'm not sat here saying that you've got to agree with all of the AVN negotiations. Martin's already gone through how to effectively do that in a better way. But Net PPM is an area that is often brushed under the carpet or overlooked in so many ways because you can't actually help Amazon achieve their net PPM.
But you've got to find ways and methods to improve that so that the vendor manager wants to work with you. The vendor manager actually wants to collaborate with you further. Be prepared. Have the data, market trends, and your clear objectives within your own remit so that you can have those conversations with the vendor manager. Don't expect the vendor manager to come to the table with all of this data themselves. Be prepared yourself. So you want to make your vendor manager's life easy. You want to make them talk to you about their goals and their priorities and you want to In every meeting that you have with them, almost benchmark yourself and say, how are you helping them hit their goals and their targets as a vendor manager? We have to also understand that vendor managers in the Amazon space are very different to buyers in the whole retail landscape.
In the retail landscape, you can often have a great relationship with a buyer. Take them out for dinner, take them out for coffees. Vendor managers don't have the time for this, and they don't really care. They want to know, as a brand, do you understand your Amazon business? Does the senior managers that are looking after the account want to grow the Amazon account effectively? Are they investing in the right areas of Amazon? Are you going to make them look good in their own team.
If you're kind of answering these questions with yes, yes, yes, yes, yes, that relationship you can truly nurture and you will have a good relationship with a vendor manager. However, when you then start coming to the table with basic questions that can be done through self-serve or having a good team, the vendor manager is going to get frustrated with you. They have very limited time. So just remember that too.
Now, moving on to the next slide. I also often get asked about the real important, well, do we need a vendor manager? And I sometimes see businesses that don't have a vendor manager and they are, I deem them to be in a position of strength. These businesses that don't have a vendor manager can sometimes go under the radar with AVN negotiations and net PPM conversations. And by not having a vendor manager to have those conversations, you can sometimes get away with lots. So, having a vendor manager isn't necessarily the be all and end all. How do you then grow your Amazon business? How do you do this without a vendor manager?
I would start with the three key points for me, which is leverage your data and insights. If you don't have an assigned vendor manager, you need to ensure that you know your numbers just as much as if you do have a vendor manager. These data points will be the key to unlocking further growth. If, again, you're not monitoring your net PPM, that might be the reason why you're not growing on Amazon. If you have got many chargebacks and shortages, that needs tackling. If you can't get brand registry unlocked, there are routes to doing that. You don't necessarily need a vendor manager to do that, but know your numbers, know your data, and look at the data that you have available to you that can help you grow your sales organically as well.
Ensure you have the correct skills to manage your Amazon account. Often businesses put huge reliance on having that direct line with Amazon. We have to remember that Amazon is a unique account. It isn't the same as managing a grocery account or a mass retail account. You can manage the algorithm yourself and drive success yourself. But you need to ensure that you have the correct skills within the business to manage this or outsource it to an agency. These skills could be a range of different skills, from account management, analytics, to operations, and Amazon advertising. But you need to ensure that you've got access to these skills within the team, internal or external, that can help you grow your Amazon business.
There is a huge over-reliance on, I need a vendor manager to do this. But actually, if you had the capabilities and the skills in-house or agency, you could grow the business without needing to have a vendor manager. These skills will also be, our specialist skills, will know how to work the Amazon algorithm. And ultimately, a vendor manager won't be able to work the algorithm.
I've had many conversations in my 15 years of Amazon, which is, I need a vendor manager to raise purchase orders. Gone are those days. They can't raise purchase orders. They have facilitated programs that will allow you to go and get purchase orders raised. Oh, I need Vine credits. That kind of stuff doesn't really warrant to necessarily have a vendor manager. You can go and manage your Amazon business correctly without the need to have a vendor manager.
But again, I would ask a question to you is, do you really need one? If you have a good Amazon team that knows how to work the algorithm, that is constantly looking at the data that you've got access to, what it would a vendor manager add? I've also seen when a business hasn't had a vendor manager historically, but then has had one and all of a sudden their net PPM and the AVN becomes more aggressive and they are going to have to invest more to grow the Amazon business. Whereas if they went under the radar, they could have successfully managed that themselves. Maybe it's okay to not grow as much, but you're retaining your profit levels as well.
So moving on. We have discussed areas on how do we work with a vendor manager when you have one, or how do we not work with the vendor manager when we don't have one. There is an additional program on how we engage our relationships in the Amazon space better. And that is an AVS. I feel like, again, AVS, and for those that don't know, AVS is a term which is in the Amazon space that is a bit like Marmite. It stands for Amazon Vendor Services. Now, you either love your AVS or you hate your AVS, but please don't tell Amazon that you love your AVS.
Now, this program is allowing a person to be dedicated to your business and your brands and your products. But there is also a reality. This person is also looking after several brands and several businesses. So their time is also limited. So how do you effectively work with an AVS? Is it really worth it? Now, a question that I'm asked often, should we be investing in the AVS program? It's a bit like a drug. Once you've done it once, We may have had a good AVS, and therefore you've seen some good results. So you renew the contract. Or Amazon is pushing you to renew the contract because it's part of your AVS negotiations. So you then get a really bad AVS. So you then say, well, I really don't want to do this again.
But I think the way that we are looking at the AVS program does really need to be dissected. It's a program. It's a service. And it's not just one person. We do get access to various different paths that can help us grow our business. Sometimes we have to accept that the AVS program is a pay-to-play. If we're going to have to invest in terms in the AVN with Amazon to grow our business, AVS could be a term, if you can keep it at a very low percentage of terms, It could be a term that we can ultimately use to drive a return on investment. But if a business doesn't have a clear thought out strategy to begin with, how do we really measure a ROI? So often when I get into conversations as a consultant with businesses that have had the AVS program, they will say, My AVS is absolutely rubbish. I don't know what he or she does. I don't see any return on the investment I'm spending. I'm spending a huge amount of money.
So I always ask the question is, did you create a vendor improvement plan? Did you create a joint business plan where you had very clear goals and objectives? And is the AVS being measured on these goals clearly? Often I'm faced with a blank face. So one of my key shout outs and messages that I want to deliver here is, if you think your AVS is bad, please take a step back and ask yourself, have I created the goals and objectives on the business and shared that with my AVS and said that these are the things that we need to hit? Because that is a great way of measuring return on investment.
Now, this tracker, this vendor improvement plan, this joint business plan, these are the things that we need to effectively look at every couple of weeks and talk about with our AVS. Our AVS could be doing lots of stuff in the background, but it does need to be tracked. You do need to ensure that there is a continuously running spreadsheet that has dates and comments and make them accountable for what they said that they were going to do.
We have to remember that sometimes we have to pay to play in the Amazon space. And if we don't pay to play in the Amazon space, we will sometimes lose who we are as a brand on Amazon. Once you've defined your growth goals with the AVS, measure them against those growth goals. Make sure that they are hitting those KPIs. If, again, they're not, you have the ability to provide feedback. I think it's every quarter, I think it is. Provide them with negative feedback. Ask and escalate and say that you're not happy with your AVS and push to have a change in the AVS if you're really, really not happy with the person. And AVS can also sometimes help with things that isn't just what they say that they can help with.
Ask them questions about the category, how the category is performing, how your brand is performing against that category. Now, they might not be able to share all those data and insights, but they might be able to give you a few nuggets that you can use to demonstrate to senior leaders about actually how your Amazon business is looking. We also have to remember that an AVS makes a vendor manager's job super easy. We know that vendor managers' times are limited in lots of ways. And therefore, an AVS will help reduce the workload a vendor manager has on your brand.
Continuously monitor and track the performance of the AVS. And if you're not happy, provide that negative feedback. There are lots of ways you can effectively collaborate with Amazon. Remember, Amazon isn't a traditional account. So taking the buyer, vendor manager out for coffee or dinner isn't what's going to cut it. Know your numbers, know where to invest with, talk the same language and help them look good in their category.
Paul Sonneveld
Thank you so much, Asha. That's a great summary. For those of you that are really struggling to work out how do I get ROI out of an AVS, Asha and I actually did an extended session on this, I think about a year ago. So I'm sure a lot of that is still relevant in terms of how you make the most out of your AVS. So feel free to head to our website or drop me a message later and I'll dig up the recording for you. But with that, Asha, thank you so much. Really appreciate the tips. I know it's getting harder and harder to get hold of an event manager. So, you know, really some of those practical tips on how you can survive and thrive without a vendor manager has been super useful too. So thank you so much. And we look forward to continuing this discussion at the panel towards the end. Thank you.
All right, everyone. We are just over halfway through. We've got two more sessions to go before our panel. Before that, I do want to do a really quick check on how we are doing with all of our questions. So we've got lots of questions on LinkedIn. I've got them over here. And as you can see, on our Mentimeter, we've got 25 questions. So I would encourage all of you to really either add your question to it or scan through them and upvote the questions that you want us to tackle. You know, we're literally going to go from the top down to the bottom. So yeah, please review those. If you need the info, I'm just putting it at the bottom of the screen here. It's menti.com 68177970.
All right, let's move on to our next session now. Let's face it, being an Amazon vendor is getting more and more expensive every year. Rising costs, unexpected chargebacks and margin pressures. Profitability has really become one of the biggest concerns for vendors as we head into 2025. That's why our next session is all about how you can take back some of the control of your bottom line, how you can minimize chargebacks, recover some of that lost revenue and optimize profitability.
Guiding us through this is James Wakefield, an expert in Amazon vendor finance and profitability, and he's helped countless vendors track, manage, and improve their financial performance. So if you are serious about managing and maximizing your margins, keeping more of your hard-earned revenue, you don't want to miss this session with James. James, take it away. Over to you.
James Wakefield
Thank you, Paul. Thank you for inviting me, as ever. Really good summit you've put together today. Some really interesting insights. My name is James Wakefield, founder of Wake Commerce. We are a vendor-central focused Amazon agency, a team of 26 working primarily with CPG and grocery brands, mainly in the UK and Europe. And our teams are split out into very specific vendor disciplines, whether that's account management, consultancy, content, catalogue, Amazon ads, or one of our relatively unique functions is on the FinOps side, which will be particularly relevant to this conversation.
Everything to do with financial operations with Amazon, which for a lot of vendors can be a bit of a black box. So hopefully I will open that up for everyone today. So yeah, to kick things off, just wanted to remind us of our old friend Donald, not as prominent a Donald as he once was, but he had a very memorable quote about no knowns, known unknowns and unknown unknowns. And I felt that that was aligned very much with how vendors interact with Amazon and Vendor Central in general. It is a particularly complex and specific channel. And we do find that there's often significant knowledge gaps in certain aspects. And a lot of those can often be financially related which is obviously a big problem, because if you don't know your true costs, you can't optimize your profitability.
So if we look at some of the known knowns on the next slide, I think, Paul, can you find the slide 19? There we go. Yeah, that one. So yeah, in terms of our known knowns, we've basically got hopefully areas that you have got awareness of. The typical things in here are going to be your landed product cost. I'd certainly hope you have visibility on that. You're also going to have Amazon's margin in there, which is essentially the difference between your sell price and your cost price to Amazon. This is also known as front-end margin. You've then got your trade terms with Amazon, which are your backend margin.
Again, these are fairly simple things that you should have awareness of. If you don't, then kind of immediately go out and find them out. Inbound costs relate to the cost of actually getting goods into Amazon, various transport, logistic costs. And then you're essentially left with your margin. So if you take all these costs, and bundle it all together. What you're left with is your margin. And if we move to the next slide, we can see the consequence of some of these unknowns, which aren't included in that previous graph. So these are aspects that can have quite a significant impact on your margin. And what you'll notice is that these are eating into your margin and not anyone's else's.
So it's really imperative to understand what these unknowns are and manage them. See, if we move to the awareness slide, As I've mentioned, we've got various costs there, which hopefully you've got good awareness of, but the ones that often lack that awareness include chargebacks, shortage claims, price claims, and then various issues relating to invoices, payments, and also in some cases, return issues.
So if you move to the solutions slide, Paul, So how do we address these? First thing to mention here is that this is obviously quite an extensive list and these areas may or may not need focus depending on where your account's at, obviously different variables on your operation, how things are set up. And so I would recommend, if you have any lack of awareness around these topics, to work with a channel expert just to understand where the issues could be and where the focus should be.
Because if you're relentlessly looking at all these different aspects, it's obviously going to take a very considerable time and resource. You're probably going to get lost in certain areas because true to form with Vendor Central, some of these are very complicated. So yeah, knowing what to look at and where to focus your attention is extremely important. And that really comes down to awareness, looking at the data, understanding where you should be making optimizations. But if we look at each issue individually, obviously your product landed cost is very much on you. not really relevant to Amazon, but that's where you want to be making efficiencies in terms of your manufacturing, your inbound costs.
I'm sure that would always be a priority anyway. In terms of trade terms, also known as back-end margin, that really comes down to negotiation strategy, which Martin has covered in depth. But recognizing terms that are not adding value and trying to swap those out whenever you're doing your AVNs, I think is really important. So just really understanding what each trade term actually is and whether that's adding value to your account or not. Obviously, there's some that are non-negotiable, but there's others where Amazon should have some flexibility in being able to swap those out and actually give you improvements to your cost base.
In terms of front-end margin, so as I mentioned, this is the difference between your sell price and cost price to Amazon. And this should really be optimized for Amazon. Don't just give them your usual wholesale pricing. You really want to optimize your pricing in a way that is specific to the channel and giving them a particular margin target.
So it does vary between categories. It does vary between soft goods and hard goods. And often you can ask a vendor manager directly, you know, what is your margin target for this category? And it's a bit more difficult to manipulate on the older accounts, because once you've reached that net PPM baseline, if you're suddenly listing products with cost prices which are much more aggressive in terms of the margin, that's obviously going to bring your net PPM down in the long run.
But certainly on those younger accounts and new accounts, you should really be trying to optimize your pricing to Amazon to consistently give them a margin that is kind of sustainable over the long term. And then hopefully they won't come knocking every year with aggressive trade term changes.
In terms of inbound transport, there's areas on both sides, really, in terms of what you can do, but what also Amazon can offer to reduce those costs and just make things more efficient. So the most well-known schemes on Amazon's side are PICS, where you're consolidating stock into much fewer fulfillment centers.
Also, Acapulco, which is pallet ordering. But you really want to be regularly reviewing the rates that you've got with any carriers that you're using Amazon have recently entered into that space, not necessarily suggesting that you start using them for freight, but they do seem to be quite aggressive in terms of their pricing. And they do give a little bit more flexibility in terms of delivery times and delivery windows. So yeah, that should be regularly reviewed to understand where you can make cost efficiencies there.
Now, moving on to the lesser known or potentially completely unknown topics as we tend to find with the vendors that we deal with, chargebacks tends to have the most awareness, but it can be a bit of a misnomer, this one, because what we tend to find is that chargebacks are generally charged correctly. There's a whole host of different categories relating to late delivery, incorrect prep all these different kind of things and the dispute windows for these is extremely tight. It's 30 days.
So what's really important with chargebacks is to have awareness of any issues. It's quite easy download the report into an Excel, throw it into a pivot table, and that's going to give you a clear view on the very specific chargebacks and chargeback subtypes that are making up any charges that you're receiving.
But often what we see, as I've mentioned, is that these chargebacks are often correct. So there's certain cases where products have been incorrectly categorized for prep, for example, in which case you can go and fight Amazon to get those products recategorized and prevent those chargebacks from coming through in the future. But definitely the biggest ones that we see relate to late delivery. So having awareness of those is just going to allow you to improve your logistical processes to get those reduced.
Next one is shortage claims, which is by far the biggest issue and potential margin drain that we see, but also one that really lacks awareness. So a shortage claim is when Amazon claims that the stock that you've delivered to them is less than the amount that you've invoiced them for. So if you invoice them for 100 units and they claim you only receive 90, then they will raise a shortage claim for those 10 units.
Now we see very significant issues here and most of these seem to be occurring at Amazon's end in terms of inefficiencies during the inbound process. Any complications in terms of how you're sending in stock, in terms of cartons, pallets, if there's any issues in your catalogue data, any issues in your barcoding, then these can manifest quite significantly into big shortage claims.
So really important you have awareness of that issue and have got a system in place to monitor those and dispute those. The dispute window is a lot longer, typically three to four, potentially five years, so there is often an opportunity to go back quite a significant period to understand, is there anything that can be recovered? But again, awareness is really key here because it's just a potential invisible margin drain if you're not aware of it, but it's a little more difficult to monitor and audit than it is with chargebacks.
Price claims, not a massive issue, but it's where Amazon claim that you've invoiced them for the incorrect price. Certainly, not as big an issue as shortage claims and relatively easy to dispute. But again, you need to have awareness on those. Invoice, payments, returns, issues, various miscellaneous issues. Again, these come upon every account and having awareness and probably having someone responsible for that aspect of the account is really important so that you can flag and escalate any issues as they arise.
Next slide, please, Paul, recovery. So yeah, just a kind of overview really of the potential for recovery and also what the financial implication could be of all these issues. As I've mentioned, chargebacks can have a high financial implication, but the recovery rate is quite low. So having that awareness is really key. Shortage claims can also have high financial implication, but the recovery rate is quite high. So having visibility on those historic issues is especially useful for potentially recovering a lot of those historic charges.
And then the others, will vary from account to account. We do see issues where there's discrepancies with co-op charges being applied incorrectly, potential overlap or incorrect dates, all that kind of thing. And then returns is very much account specific, but we have in the past seen some very significant issues where Amazon's just returned a ton of stock, even if it's legitimate because it's part of an overstock return, the stock comes back damaged, you know it's just thrown into boxes, so in that situation you should really be fighting Amazon to recover the value of those goods because they're not resaleable.
And final slide please Paul. Yeah, just wanted to give a quick callout to the MerchantSpring P&L feature, which Paul is going to go into a bit more detail on shortly. This has been really useful for us. It's very easy to set up. There's some very minor manual entry, basically relating to your trade terms. And it's then going to give you a very clear view on your profitability, both from a sell-in and sell-out perspective. And obviously, if you can put your cost of goods in there, then you've pretty much got a live P&L, which you can refer to at any time. So yeah, really highly recommend that product. It stood us in good stead, so thank you, Paul.
Paul Sonneveld
Thank you, James. I didn't actually ask James to do that. But while he's talking about that, why not remind everyone of the promo that we are running specifically for anyone watching this webinar. So 50% off for six months. Go to our website or scan that QR code, and you'll be able to accept that exclusive offer.
But yeah, thank you so much, James. It was really good just to do this. It's a big topic. You've done really well trying to break it down into kind of what's visible and some of the things that are not as visible. So I look forward to picking up on some of these topics in a sec in the panel discussion. Thank you.
James Wakefield
Thank you, Paul.
Paul Sonneveld
OK, we have one more session left before we head to our panel. So if you're planning to hang around for the panel, make sure you get your question there. Make sure you upvote the ones you're really interested in. We've got a lot. So we're going to try and cover as many as we can. But we'll start from the top. So make sure you upvote if you can.
Now, the last session is about operational and logistics and supply chain best practice. It's one of the biggest challenges for vendors. As you saw in terms of James's presentation, there's a big link there with profitability as well. If you're struggling with inventory issues, compliance headaches or unexpected shipping costs, this session is certainly for you.
And to help us navigate this last session, trying to save the best until last. We have Bruno Ferreira. He's an expert in supply chain logistics. Bruno is going to walk us through some of the best practices to streamline your vendor logistics, reduce supply chain costs and the like. But of course, this is our European edition of our Amazon Vendor Summit. So he's going to focus specifically on optimising your logistics in Europe. Bruno, the stage is yours.
Bruno Ferreira
Thank you, Paul. Hi, everybody. A quick introduction about myself first. So I am the founder of BlueDot Ecommerce. We work focusing only on the internal operational and logistics with vendors. And it's just want to mention a couple of the, it was amazing to be able to listen to everybody in this summit and to learn so much. And it's, since we're going to jump now to more detailed operations, it was amazing to hear Martin and Asha James. And I was very surprised to still see from Martin's pool that vendors continue to disregard the operational part, the setup internal. because that's actually where you have your leaking buckets. That's where your profitability is eroding.
So I hope that vendors that are with us today can consider also to look internally. And I usually say to clean the house. So let's jump in now to the first logistic program that Amazon has opened a couple of years ago. To vendors, there's a few, we know about the Capulco that James just mentioned. It's a pallet program can be really efficient and cost-saving if done correctly. We also have vendor flags. But today we are actually check a couple of details and lookouts for vendors about the PICS program and Super PICS.
So first of all, let's just have a difference here. So PICS and Super PICS are the same program, but SuperPICS will allow mainly big vendors instead of six, eight fulfillment centers like in PICS, then they can select two or three according to Amazon negotiation and talks. So PICS is a logistic program it will allow you to inbound to two free fulfillment centers. It can be really optimized if done properly internally.
So my advice for vendors that hear about PICS or get the approach by a manager to consider PICS and what we know from this year negotiation is that Amazon teams are pushing vendors to move toward PICS. They want to also improve their operations and PICS might be a good solution for Amazon side. So we need to have an internal discussion. Is it good for us to, as everybody here, this group here, we always feel that saying yes to Amazon sometimes is just a yes because we need to continue the business.
We also need to learn how to say no and to evaluate internally. So we know that PICS, yes, it will reduce the number of fulfillment centers, but where are those new ones for the PICS located? First, we need to evaluate that. Thank you, Paul. So let's start then.
So first of all, PICS, consider the standard inbound. You received an order that can be in the case of UK to one of the multiple fulfillment center, 40 plus fulfillment centers. And that can be a very good perspective when you're considering to move to PICS because then you will be delivering to a cross-doc fulfillment center, meaning that that fulfillment center will inbound your stock and distribute it regionally according to demand. And what does that mean? It means that Amazon ordering system allocates stock to a fulfillment center where you have high demand of your products.
So if you are dispatching from Wales or London, but actually your products, the highest sales are way up north, probably your stock will be allocated to a fulfillment center closer to the distribution for the customers. So You need to, first of all, streamline the operation. That's the purpose and the objectives of it. So analyze it. And of course, that analysis needs to consider the cost. Just think about what we mentioned just now. So if you are dispatching from a to a further away fulfillment center selected through PICS, will that cost be efficient to you? So that will be the first thing to analyze. It can help if done properly.
Then it can help also to improve your visibility on your inventory on Amazon. Because as you reduce the delivery points, the fulfillment centers that Amazon holds your stock, of course, that inventory accuracy, we can expect a higher visibility and more accurate since you're not dispersing your stock across the country, of course, that centralizing it into one, two or three fulfillment centers, we can expect that increased and improved inventory accuracy. So what will the vendor actually go and what are those benefits for the vendors?
We can see in the next slide. A couple of those already benefits for vendor. And let's discuss each one of them very careful then. So reduced complexity. Of course, that the vendor, when engaging PICS, it can expect this reduced complexity of the logistics, the supply chain. Just think that when you engage in PICS, what you will expect immediately is an increase of the volume per purchase order. So the average unit requested per purchase order should increase. You should expect, depending on your volume, but at least a 60% increase in those number of units.
So if you were before PICS, you were receiving 200 purchase orders a month, you were delivering to 28 different fulfillment centers. Once you move to PICS, what you should expect is around 100, 120 orders, but you need to see the average unit count per purchase order to go up. So you reduce the number of purchase orders, but the volume needs to be bigger per purchase order. So that complexity of receiving less purchase orders needs to be with PICS and it happens naturally because the ordering system will immediately, once you engage with PICS, it knows that it's only two delivery fulfillment centers, so it reduces the purchase order quantity, but increases the average unit per purchase order.
Transport costs. Can we expect a lower transport costs we can, but we will see ahead that we also need to be careful and do a very deep analysis internally to actually make sure that we will have some savings on the transport costs. Of course, that transport costs are a big part of the inbound process of the supply chain. Once we move to PICS, sometimes vendors that I have conversations are like, Bruno, if I'm delivering to 28 fulfillment centers currently, and I'm delivering to two, I'm saving money. Yes, hopefully. But what if those allocated fulfillment centers and not all Amazon fulfillment centers are cross dock? What if they are actually further away from the ones that you've been delivering so far?
So in the initial conversations with Amazon, I would advise to make the question, okay, what are the fulfillment centers on the table for PICS for my vendor account, and then start that analysis with your logistic teams, analyzing the transport costs and the differences considering where you were delivering currently and what are those PICS fulfillment centers that I am starting to inbound. And hopefully, you will find some savings from there, too.
Faster processing times usually come with PICS, too. But once again, we need to do it properly internally. So if you have your team, you've been delivering, as an example, currently to 28 fulfillment centers, you agree to Amazon, a ContraCox percentage, you engage in PICS, and you will start delivering to two free fulfillment centers. The processing time should reduce because the volume per order will increase.
But you need to prepare your team internally in the warehouse to be able to also help fastening these processing times. It means that if you do not prepare internally with your team, the pick and pack team, it can also not put more faster process. It cannot actually delay it because the teams will be receiving less POs to process, but with a huge volume. And then it might even also happen, people that are in the audience that have experience with warehouse management systems.
If you have set up your warehouse for Amazon efficiency, you have the racks coordinated with your stock according to what you have now. What if moving to PICS, since I'm increasing the average unit per purchase order, then I also need to move that stock around so that my teams can efficiently and quicker to get to that stock for the process.
Better inventory visibility. Yes, it needs to be there, as we mentioned in the beginning. And it means that once you access on Amazon Vendor Central, you have your ARA, your retail analytics, and Amazon will allow you to access your stock on hand. If you have the brand registry process complete, you can even also access the manufacturing and sourcing view that Asha so very well described today. So that inventory will be more accurate.
Just think that if you are delivering to 28 fulfillment centers and you start delivering to two, three, that inbound is more accurate, meaning that the stock on hand numbers that you will see on the reports. You can expect it naturally to be more correct, more real and live because PQView hopefully shall reduce to handling all of those factors that happen in the fulfillment center at the Amazon side.
Since we are now delivering to only two free, that visibility should improve. Of course, that Amazon cannot allocate peaks to all the entire network of fulfillment centers in each country. Only a percentage of the total of those fulfillment center can be used as the PICS or super PICS. But you can expect definitely because these fulfillment centers are usually the big ones. They have usually the latest technology. They have the best management processes in place. And that will all help with that better inventory visibility.
Next, I would like now just to end with a couple of lookouts for a vendor when they start engaging and considering for PICS. Let's review how it works. So once you engage with Amazon, and if you want to get on board with PICS, what you will agree with Amazon is a contract called agreement, a co-op agreement. That agreement is in a percentage. And here comes the biggest and the first lookout that I would like to tell people. Consider that now what you are actually inbounding to Amazon. So you have your, you receive your order, your teams prepare it, people can pack, you ship. You have an agreement with your carrier partner. You pay to your carrier partner to deliver to Amazon.
Once you engage to PICS, you will have exactly the same process, but you will be reducing the delivery point. But keep in mind that you will still be paying your carrier, and then you will still be paying Amazon for the pitch. And that percentage, that contract COGS, will come every 30 days, and they will go on the total net receipts.
So here is my first big look out. I even actually, Paul allowed me to put an example here. Think about vendors that do products that have similar dimensions, weight, height, all of those dimensions that your carrier partner considers to charge you for the transport. So currently, with your carrier, you're paying on volumetric. And that's a fair deal because if you're shipping a box, if you're shipping a pallet, they calculate it according to weight, volumetrics, all of those criteria that they use to charge you. You will still pay that, but then you will pay Amazon that percentage for PICS.
So let's take a look at this example in the screen. Just imagine that you are a keyboard brand and you have, it's usual to happen in these categories, you'll have the same keyboard. It's the exact same keyboard dimensions, weight, the transport box is exactly the same, very similar or exactly the same. But you will be paying that countercogs, that percentage to Amazon based on the cost to Amazon. So in here comes the first big lookout. And I hope that everybody can regroup internally every time that they are considering to move to PICS.
So if I'm selling something to Amazon at 94 pounds, I will pay an additional countercogs on top of my carrier costs of one pound 41. That means that Amazon will deduct 1.5% that I agreed for the PICS cost. But I have another keyboard, the same model, the same dimensions, the same weight, but instead of Bluetooth is a USB dongle.
And we know that Bluetooth and wireless products are usually a bit more expensive due to the technology. But if you think that this one, this version of my keyboard, I'm selling it at 62 to Amazon, I will pay 93%, 93 piece through the PICS program. So think about that because what your carrier currently is charging you for the volume, for the weight. But the Amazon actually charge you the deduction, the conter cog will come from the cost that you invoice to Amazon. So look out to that.
The second thing is how Amazon suggests the fulfillment centers for PICS. And you need to look out because it might be a further distance. Just think that currently, and you can do that analysis. We do this with all our clients. Analyze the current fulfillment centers that you are delivering. What if one of the fulfillment centers that Amazon is proposing, because not all of them can be PICS, it's not one that you are delivering currently, or you're not delivering a lot of volume. And that is due to the demand regionally. So if Amazon proposes, if you are South UK, and Amazon proposes a fulfillment center way up north, it's not usual to happen, but it's a lookout, you will actually increase your transport cost. So be aware of that.
Be aware that you need to actually check which ones are proposed to deliver. Another lookout is that PICS, since you are delivering now to a reduced number of fulfillment centers and a lot of vendors are engaging in that program too. Be aware that during tier one events and peak seasons, there might be some delays in the inbound process. And Amazon will reroute them to different fulfillment centers that you currently are not working because you engage with PICS.
So be aware of this and consider them when you are reviewing internally if twin bound to PICS. And my biggest message will be that to keep in mind that it's a contract called from the invoice cost to Amazon. So do a very thorough analysis on that if it will be actually effective for you. Thank you so much, Paul, for the opportunity.
Paul Sonneveld
Thank you so much, Bruno, and really interesting. Definitely learned a few more things there. Really, really great. Thank you so much. All right, well, it's time for our panel. So I'm gonna ask, I'm not gonna ask them, I'm just gonna do it. I'm gonna bring all of our panelists back on here. Let's wait for Carina to come back on as well. Here we go. Let's see. All right.
So what we're gonna do is, look, I'm trying to be fair to everyone here. We've got lots of questions on menti.com and we've got lots of questions on LinkedIn. I don't think we're going to get to all of them, but I'm going to try and select obviously the ones that were upvoted the most. And then maybe I'm just going to make a commitment on behalf of our speakers, which they haven't had any input to, but I'm going to do it anyway is to say, well, we're, you know, we're going to pick the most important questions that we weren't able to answer today. And we're going to record like really short videos and post them on LinkedIn and YouTube and the like so that you still get some answers there.
So, let's start off with Menti, let's go here. First question, got a lot of upvotes here. These are in priority order. What, oh, by the way, before we answer, let's try and keep our answers like really punchy so that we can get through as many as possible. What terms should vendors be investing in and how can vendors keep Amazon accountable to agreed deliverables in terms? Do you want to take that one, Martin? I know you have to jump off very soon, so I thought I'd just go and get the benefit of your experience here.
Martin Heubel
Yeah, happy to here. Look, it depends on in which categories you are. I think make sure that you are investing into the base terms that really drive repeat purchases. So in consumer goods categories, make sure that you invest into subscribe and save. If you're in hard lines categories, make sure you utilize Amazon's installment payment plans for products that are priced above 50 or 100 euros or British pounds, just in order to ensure that you maximize your sales opportunities.
Asha said it before, utilize Amazon Vendor Service. So this should be a must, particularly if you're interested in having access to a vendor manager or buying resource, because vendor managers these days actively deprioritize their resources off from vendors who are not subscribed to AVS.
And then lastly, also take a look at Amazon Business. It is already the case that your products are offered on Amazon B2B. However, it's still a growth opportunity going forward. So make sure that you assess the opportunity, particularly if you have products that are B2B eligible, to offer bulk discounts who can drive your account sales outside of Amazon's B2C marketplace.
And as a bonus, which also integrates directly to what Bruno was saying earlier, make sure that you put a good chunk of your investments towards freight allowances or freight programs that can drive down your variable handling and shipping costs. Try to minimize your exposure to basic rules where you do not get any conditionality or performance insights reports from Amazon.
I know this is easier said than done, but really make sure that for any remaining percentages that you invest into the likes of auto marketing, co-op, a volume fix bonus, you are asking for additional conditionality in return. This could be, for example, asking for regular MBRs or quarterly business reviews, as well as top-to-top leadership meetings if you have a significant stance in the category and where Amazon also has an interest to engage with you.
If that is not the case, then you would rather like to pivot and focus on other concessions that you would need from Amazon, such as an overall assessment of the account or also opportunities to drive your sales promotions with a little bit more visibility through additional widgets, for example, on the category and product detail pages that you would otherwise not get any access to.
Paul Sonneveld
Thank you, Martin. Appreciate that. Let's move on to the next one. What are the right objectives or key indicators for opening a seller account in parallel to an already existing 1P account? So this is starting to touch on the hybrid strategy here. I know you touched on that in your first presentation, Carina. So I wanted to sort of give this to you. Others are most welcome to jump in here as well.
Carina McLeod
Yeah, sure. So right objectives. I guess this steers towards the reasoning in which you're doing or opening up a seller account and it can be for a number of different reasons. The one that I alluded to was more from a diversification perspective and managing risk should anything happen to vendor or even during your vendor terms negotiations when things get a bit sticky and potentially purchase orders aren't being placed by Amazon, then you've got the seller account to fall back on.
The other reasons many businesses will have seller as a platform as well as vendor is to use it almost as a launch pad for new products to be able to understand what the potential demand is there, when launching a new item on Amazon, because sometimes it can take some time for the purchase orders to ramp up on the vendor side. They're able to get that demand a lot quicker, have the stock ready to be able to start focusing on getting that product to start ranking a lot higher, which then Amazon systems already then detect and start placing those those orders.
So that kind of helps speed up that process of new products. As well as being able to control price, you might have products that have really small margins that aren't cost-effective on vendor, but they might perhaps be cost-effective on seller. It might be that you have certain products that you're that just will work better. Like I was mentioning one client, the bundles work more effectively for them on seller than they did on vendor, partly because they just couldn't get the they do fulfilled seller fulfilled prime.
So they fulfill their own orders. And so they're able to bundle the products, which they weren't necessarily able to do for Amazon's vendor requirements. There's a number of different factors in there. I think there were two parts to that question, but I think I've just sort of covered off more that objective. I can't remember what the second part was. Oh, no, we're on to the third one question now, anyway.
Paul Sonneveld
Yes, sorry.
Carina McLeod
I hope that answered that to some degree. But if there's any more questions on that, I'm more than happy to take that offline as well.
Paul Sonneveld
Absolutely. Net PPM and how you calculate it. Is there a way to calculate Amazon's real target net PPM by category, price range, estimating operational costs such as shipping, picking, storage returns, and other fulfillment expenses? Amazon's real target net PPM. Is there any way of working it out other than just asking your vendor manager?
Martin Heubel
I'm happy to take this one very briefly. Net PPM does not include any shipping costs, picking or storage costs, right? So this is important. The net PPM that you see in Vendor Central includes your average selling price, your average cost price basis and your trade terms. So those are the kind of key components. If you are looking to reverse engineer Amazon's contribution margin, which includes a lot of the variable handling and shipping costs that Amazon incurs, the best way you can do that is by utilizing Amazon's Fulfillment by Amazon rate card, so FBA rate card, which gives you a hint of what Amazon charges equivalently their 3P seller base for shipping this product. And it is the closest that you will get from Amazon in terms of a contribution margin reference.
So use your net PPM at the FBA cost rate card into this calculation. And then you can at least identify which products are heavily diluted for Amazon because they return a negative contribution margin and which products are potentially positive because they are not costing Amazon a lot of money to store and ship. And that can then also inform your decisions on how much you want to invest against those SKUs in your negotiations, as well as during your mid-year negotiations when it comes to price promotions and cost support agreements that Amazon often asks vendors for.
Paul Sonneveld
Thank you. Moving on to the next one there. Number four. How do you bring terms down? I'm going to skip over this one. This is probably quite a big one. So I'm just going to skip this one and feel free to.
James Wakefield
You don't.
Paul Sonneveld
It's yes. Maybe there's a short answer there. All right, here we go. Shortages. So maybe one for you, James, or maybe Bruno wants to pitch in as well. So why does Amazon persist to create shortages for goods we are 100% sure we have sent, and then persist to partially repay up to seven months later when they have found the goods somewhere in their warehouse? So it sounds like there's a little bit of bruising that's gone on here in terms of the relationship with Amazon. But, you know, nevertheless, a fair question, a fair question.
Bruno Ferreira
It will always be there, right, James? PQV and short-term claims are part of it.
James Wakefield
It's a greatly worded question. The answer is probably slightly convoluted. What I would say is that there's many different factors that can contribute to shortage claims. And the thing that I say to any vendor prior to us auditing their account is, we don't know what we're going to find. It is really impossible to predict in advance how big an issue this is on an account until we do that audit.
Just to give you an example, we did one a couple of weeks ago, and we found £8,000 in historic shortages. We did one yesterday, not expecting to find much, and the figure was over 1 million. So why is there such a discrepancy between two accounts which on the face of it look quite similar? There might be factors in the catalogue data. There could be issues in how the products are being sent in. There's a hundred different ways you can send stock into Amazon by nature of it essentially being a wholesale platform. There's many different types of labeling, different types of barcoding, different types of package hierarchy. All these things can contribute to either a positive or a negative experience when it comes to Amazon actually checking in and inbounding that stock.
What we see in our experience is that the majority of shortages seem to be happening due to issues at Amazon's end. And without sort of throwing any accusations around, it's really important for vendors to have visibility on that, get to the bottom of the issues, and then actually put processes and improvements in place to, first of all, try and get back what's been incredibly charged, but also prevent them or minimize them in the future.
To answer that specific question around how come we get a shortage and then suddenly it kind of result. Well, not suddenly can resolve itself several months down the line. Amazon's got a fairly horrible system called smart matching which will allocate stock from previous purchase orders that they thought didn't make it and allocate that to purchase orders further down the line. So from a reconciliation perspective, it's an absolute nightmare. Stuff does turn up.
A lot of shortages do kind of resolve themselves. But again having that visibility knowing which ones have kind of sorted themselves out and which ones need disputing is really key. So yeah, it's a difficult contentious topic Amazon should do better. They should make the processes better that they've actually started doing that for some grocery suppliers in the UK because they're under the cost a bit with the GSCOP legislation. But actually, that experience should be improved and rolled out globally to try and minimize these issues.
Bruno Ferreira
Yeah. Paul, if you allow me just to add to James' amazing, let's keep in mind that we are all wholesalers, right? You guys also have inbound in your warehouse. You also, sometimes it happens that receiving stock from a supplier and there's a mismatch and then later you find the stock. Amazon does it, it's exactly the same, but on a huge scale, on a much bigger scale.
Another thing that I would like to tell the audience about PQView shortage claims is analyze the data, guys. Everything is there. I recently helped a vendor and what we found out was that for the same ASIN, 80% or more than 80% of the PQ view and even chargebacks were coming from one specific fulfillment center. And if we can demonstrate Amazon that what's going on, I'm delivering to eight other fulfillment centers, this product or this group of agents, and I'm not receiving this level of shortage claims or chargebacks.
So what's going on in that fulfillment center? And Amazon will listen, and sometimes it will go back and waive those values, recognizing that, yes, they need to improve internally. So we analyze the data because shortage claims will be there. We just need to internally find a way, setting up processes to have this visibility and traceability so that we are on top of these topics, OK?
James Wakefield
I just wanted to add a very quick point, Paul, which I think it's really interesting for vendors to understand what actually happens to their stock when they reach the fulfillment center. So if you ever get the opportunity to do a visit, please do it because it's pretty fascinating regardless of anything else.
But one thing you need to understand is that your stock is either going to come in efficiently and get sent through a very automated system, very high tech, or it's going to hit a blocker. And if it hits a blocker, it might end up in a pile somewhere of stock that needs to be manually reviewed. So the optimal situation really is to be sending stock in a way into Amazon that's going to allow it to feed through that very automated system with no issues, no barriers, the appropriate data in place that Amazon can understand what's inside those boxes, If you don't do that, that's where you tend to hit issues. And if there's any manual intervention required, the people on the other end are dealing with an inordinate amount of stock. So that's where issues and miscounts are quite prevalent.
Paul Sonneveld
Thank you, James. One last question for this morning. We've run out of time, but I'll talk about next steps very, very shortly. Probably one for Asha here. Do you have some true insights, true insights on the line, on AVS rate cards for Tier 1 to Tier 3 vendors? Is it really impossible to negotiate outside those rate cards?
Asha Bhalsod
So I'll keep it really short and sweet. Yes, everything is a negotiation in the Amazon space. So yes, you can. The tiering, I don't think you can get out of. If you are a brand in the category that is delivering one, two, or three top vendors, the likelihood is that they're going to ensure that you've got an AVS that is dedicated to your business, and especially if you've got a pan-EU AVS as well. So I don't think you're going to be able to negotiate much in the way of the difference between a tier one to a tier three. However, everything's up for negotiation. And yes, it can be negotiated.
Paul Sonneveld
Thank you so much. OK, well, we are really at the end of today. As you can see, Martin had to excuse himself already because a lot of us need to get on with the rest of our day. So first and foremost, as we close, I want to say a huge thank you to our incredible speakers, Carina, Asha, James, Bruno, and Martin. Thank you so much for sharing your insights, strategies, and expertise with us today. I know it gave you a really tough challenge to try and give us as much insights and practical advice within 20 minutes. So your knowledge and experience have really provided practical, real-world guidance. And thank you so much for making yourself available and being generous with your knowledge and experience.
Bruno Ferreira
Thank you, Paul. Thank you.
Asha Bhalsod and James Wakefield
Thank you.
Paul Sonneveld
All right, well, of course, I also want to thank all of you for joining us live. I think we've had close to probably 160, 170 people joining us on LinkedIn Live, another 30 or so on YouTube. It's really, really amazing. So thank you so much. Thank you for sending in all of your questions as well. That's been really amazing. I'm sorry, we haven't managed to get to all of them. But we're not going to try and leave you hanging.
So here is what I think we're going to do. We'll go through all of your remaining questions, and we're going to either answer them directly in the LinkedIn Comments section. A lot of you have already provided great answers, and it's great to see that community spirit going on there. But those that are still unanswered, we will personally go in and answer those in the next 24 hours. And then we'll go through all of the menti.com questions as well, and we'll record a really short video with answers, and we'll post that again on this platform too. So if you asked something and didn't hear a response today, stay tuned. We'll make sure we get back to you very, very soon.
Now, for those of you who have registered for this webinar via our website, you'll receive an email with a link to the full recording of today's event by about tomorrow this time. And we'll also break it up into sort of each of the individual speaker sections. So you can share that more easily with maybe your colleagues or other industry counterparts too.
So if you haven't registered, make sure you go to our website and pop your details into the registration form. I think I've mentioned it a few times. I think that's probably landed by now. And that's it for me today. Thank you so much for being part of this summit. I hope you've gained valuable insights and strategies really to drive your Amazon vendor business this year. Stay connected, keep the conversations going on LinkedIn, and I look forward to seeing you at the next Marketplace Masters event. Take care and see you soon.