The commercial groundwork behind a stronger Amazon - Annual Vendor Negotiation Process (AVN)
As an Amazon consultancy with deep expertise in supporting Amazon Vendor brands we work with a number of Vendor brands across Pet, Health & Household, Gifting & Office Supplies.
And one of the biggest challenges we see is that AVN conversations can quickly become focused on Amazon’s ask, rather than the commercial picture behind it.
If I joined your Amazon Vendor team tomorrow as a consultant, and your AVN kick-off was ninety days away, I wouldn’t start by preparing the negotiation deck.
I’d start by understanding what is actually driving the economics on both sides.
Because if Amazon wants more margin, the question shouldn’t immediately be: “What are we prepared to give?”
It should be: “What is actually driving Amazon’s position, and what other commercial levers do we have available?”
What matters before the meeting
Amazon comes into an AVN with its own profitability targets, priorities and asks.
Your job isn't simply to present a convincing growth plan.
It's to understand what's sitting behind Amazon's position, what any additional ask is worth to your business, where you have room to move, and what other commercial levers are available.
That work needs to happen before the negotiation starts.
Especially if you have a large catalogue.
With hundreds of ASINs, it's easy to understand the account at a high level but not know where the economics really sit product by product.
And that matters, because an account-wide profitability issue doesn't necessarily need an account-wide margin concession.
If I were working through AVN preparation with your Vendor team, these are five of the questions I'd start with.
1. Can you explain what's actually driving Amazon's profitability position - product by product?
Not just your overall Net PPM.
Which products is Amazon making good money from?
Which aren't?
Is the gap being driven by product economics, pricing, promotions, operational costs, terms, product mix, or a combination of them?
And can you validate that through your own analysis rather than relying solely on the numbers Amazon puts in front of you?
Until you understand the cause, it's very difficult to judge whether Amazon's proposed solution is the right one.
2. Which of your current Vendor terms are still commercially justified?
Every term in your agreement was introduced for a reason.
But does that reason still exist?
What is each major term costing you today?
What was it originally intended to fund?
Is the activity or performance behind it still there?
And where do you have evidence to challenge something that no longer reflects the commercial reality?
There's a big difference between knowing what your terms are and knowing whether they still deserve to be there.
3. What operational issues are affecting Amazon's economics - and your negotiating position?
AVN isn't just about headline terms.
Forecasting. Availability. PO performance. Returns. Pricing discrepancies. Supply chain performance.
All of these can affect Amazon's profitability on your account.
So before negotiating another percentage point, I'd want to understand whether there are operational problems contributing to the economics, and whether fixing those problems could strengthen your position.
An operational issue shouldn't become a permanent margin concession simply because nobody investigated the root cause.
4. What is actually sitting behind Amazon's ask?
If Amazon wants another 2%, why?
What commercial problem are they trying to solve?
Is it an account-wide profitability problem?
A specific part of the range?
Category pressure?
Operational cost?
A particular internal target?
Once you understand that, the conversation changes.
Instead of:
"Amazon wants another 2%. Do we give it to them?"
you can ask:
"What problem are we trying to solve, and what is the best commercial way to solve it?"
That might be terms.
But it might also be product mix, new launches, operational improvements, promotional investment, advertising or growth in products where Amazon already has stronger economics.
5. What are you prepared to give - and what would you require in return?
This is the question I'd want answered before the negotiation becomes uncomfortable.
What is another 1% worth?
What is 2% worth?
Where does the account stop making commercial sense?
What are you prepared to trade?
And where is the line you won't cross?
The same applies in reverse.
If you're prepared to invest more, support growth or make a concession, what do you want Amazon to commit to in return?
Every concession has a value.
So should every ask you make back.
A good relationship isn't a negotiation strategy
A strong Vendor relationship matters.
It gives you the opportunity to understand what's behind an ask, challenge constructively and find areas where both sides' interests can align.
But a good relationship doesn't remove the need for a commercial position.
Your Vendor Manager has Amazon's objectives to deliver.
You have yours.
The strongest negotiations happen when you understand both.
AVNs aren't won in the meeting
A lot of the outcome is shaped before the negotiation starts.
While there's still time to understand the economics.
Investigate the gaps.
Work out where Amazon is and isn't making money.
Define your boundaries.
And decide what you're prepared to trade.
That's why we've created an AVN Commercial Readiness Assessment.
It's 10 questions designed to test whether you're commercially prepared for the negotiation — not whether you know how an AVN works.
It takes around three minutes and should give you a good indication of where your position looks strong and where there may still be gaps to work through before negotiations progress.
And if your results raise questions about your own account, our AVN Power Hour gives you focused time to work through your actual numbers, Amazon’s asks and your current negotiating position with us.
Emma Bagley
CEO, ZEAL Agency
