Welcome to another episode of The Ecommerce Braintrust podcast hosted by Acadia’s Head of Retail Marketplaces Services Julie Spear and Director of Retail Operations, Jordan Ripley.

Today we’re joined by Martin Heubel, founder of Consulterce and leading expert on Annual Vendor Negotiations or AVNs. 

Martin spent nearly 5 years internally at Amazon in various category and vendor management roles before founding Consulterce to help brands better understand and navigate their vendor relationships and negotiation process with Amazon. 

For today’s episode, we’ll be diving into next year’s AVN cycle - how it might be different than years prior and how brands should ultimately be preparing for this process now to ensure they’re in the best position for success next year. 

Make sure you tune in to find out more!

 

KEY TAKEAWAYS

In this episode, Julie, Jordan, and Martin discuss:

• Duration and Challenges of Annual Vendor Negotiations:

• Typically take 3.5 months to complete.

• 72% of brands encounter difficulties.

• Key issues include direct and hidden costs like charges and trade marketing investments.

• Strategy for Reducing Trading Terms:

• Only 9% of brands have managed to reduce trading terms.

• Success often linked to diversified sales channels and less dependency on Amazon.

• Influences on Profitability:

• Trade investments have increased by 69 basis points year-over-year.

• Focus on understanding costs such as shortages and chargebacks affecting net sales.

• Amazon's Operational Focus:

• Emphasis on automation, offshoring, and efficiency, including a 15% reduction in corporate headcount.

• Decreased inventory holdings, impacting vendor negotiations.

• Shipping Speed and Customer Spending:

• Faster shipping correlates with higher annual customer spending.

• Critical for vendor discussions as Amazon targets fulfillment reliability.

• Market Focus and Strategy Differences:

• Variation in Amazon’s focus by market maturity and region.

• Differences between mature markets (US, UK, EU) versus expansion markets (Japan, Australia).

• Vendor Negotiation Strategies:

• Importance of preparing proactively, setting negotiation anchors, and involving cross-functional teams.

• Emphasis on data-driven discussions, leadership alignment, and clear negotiation objectives.

• Amazon's Balance Between Profitability and Growth:

• Shift from a growth-focused pandemic approach to current profitability optimization.

• The impact of rising competition from platforms like Shein and TikTok Shop.

• Preparing for Future Negotiations:

• Clarity and objectivity as critical elements for successful negotiation outcomes.

• Preparing for the 2025 negotiation cycle with clear expectations, mutual growth goals, and thorough data analysis.

• Anticipation for Continued Collaboration:

• Future discussions planned to evaluate the effectiveness of strategies and insights shared.