Level the Playing Field in Your Amazon Negotiations

B. Cost Prices & Trade Terms

Yes, Amazon is sometimes willing to trade lower cost prices for an equivalent decrease in trade terms. To be successful with this strategy, proactively model the changes you’re requesting and their projected impact to your Net PPM. Make sure Amazon wins somehow, and help them understand how.

• Always understand the goals of your vendor manager and your category, and consider how this proposal will impact those goals. If they have goals to increase specific terms buckets, it will be very difficult to reduce terms in those areas.

• Be clear about what you’re trying to accomplish: “lower net costs help Amazon better manage market prices.”

• Remember that increasing costs later will be just as hard as reducing terms.

It’s tough to get Amazon to fund price reductions, but you maximize your odds by:

• Bringing a detailed, defensible deal forecast.

• Being generous about the relative funding you provide vs. are asking Amazon for.

• Bring additional levers like national media, PR, etc.

Cost support agreements (CSAs) must be mutually agreed to; if you can’t support the request, don’t sign. If Amazon requires a CSA in response to your strategic need, try proposing:

• A cap on the total value of the CSA

• Shorter true-up period (e.g. monthly)

• A specific list of ASINs to include

• Shorter time frame (e.g. one quarter)

It’s a mistake to view merchandising accruals (e.g. 1% of COGS) as a spendable performance marketing budget with ROI expectations. Instead, think of them as another slotting fee similar to your base accrual: it’s part of the cost of doing business with Amazon, and gives both of you something tangible to negotiate.

Amazon and your vendor manager get the PPM benefit of your merchandising accrual whether or not the accrued funds were “spent.” That’s why they ask for more: they want to improve category margin and profitability.

This is a critical strategic step when you run out of cost-reducing operational efficiencies to offer Amazon . Amazon is very process-driven: your VM and AVS are going to work backwards from their goals to determine their negotiation asks, without deeply considering whether your business can afford them.

Start by asking Amazon why they are making requests. Sometimes it’s obviously PPM and profitability driven. Other times, there may be strategic reasons or goals, such as enrolling X% of vendors in a program like pallet ordering.

• Don’t wait for AVN to help Amazon understand your operational processes. Make it part of your regular conversations with AVS and your vendor manager.

• Highlight your strengths and what they cost. For example, if your shipments to Amazon are very consistent and reliable, highlight your performance and show Amazon what the performance costs you.

• Visual tours are very effective. Invite Amazon to your operations in a reverse FC tour. Visually demonstrate the length, care, and expense that goes into your outbound processes.

• Ask to have an instock manager present at your meeting. Instock managers tend to be rational and understand the marginal cost of operational improvements.

Start by acknowledging what this request really is. Bulk buys represent stock that Amazon needs anyway, so the bulk buy requests just delay you claiming the value of your cost price increase (CPI). You can treat this as a purely mathematical exercise.

• Translate their bulk buy discount request from a percentage (e.g. 15%) into a cash value (e.g. $1,500,000). This is Amazon’s price for increasing the cost price increase.

• Use Amazon’s demand forecast to estimate how many weeks or months of demand the bulk buy represents. Consider how much this effectively delays your cost increase and quantify the impact to your business.

• Now you can directly compare Amazon’s price to the financial impact of accepting or declining their offer.

Keep in mind that Amazon will almost certainly treat tariff-driven price increases as temporary, and ask you to lower costs if/when the tariffs are reduced.

Bulk buys are generally negotiated separate from AVN and approved on a case-by-case basis. Vendor managers will deliver a bulk buy request as a lower priority than PO cost reductions, funding increases, and other special program participation.

If you want Amazon to make a bulk buy, Amazon treats the incremental discount offer as the value of the bulk buy.

Pallets are a win-win when used for high-volume products (e.g. 1 pallet every 1-2 weeks), even if they are seasonal. They’re ideal for reducing inbounding errors like shortage claims. Use them whenever Amazon’s kickback request (e.g. lower cost on pallet orders) makes economic sense for your business.

D. Data & KPI Performance Benchmarks

Approximate Net PPM benchmarks: Hardlines ~45%, Softlines ~39%, Consumables ~37%.

But remember that Amazon doesn’t consider these benchmarks and neither should you. Your VM wants to increase category profit by $X and will ask for it from anyone they think can/will pay it, no matter what your current PPM is. Advocate for your own profitability beyond PPM inputs.

You might feel trapped or defensive after receiving a major funding increase from Amazon, supported by lots of historical and category data to back it up.

While it’s always better to start with data, you don’t have to accept Amazon’s narrative just because you don’t have data of your own.

• Ask the VM for the data they are looking at so you can perform your own analysis and find the most productive solution. Frame it as a way to find an answer together, not double-checking their work.

• If you have time, work with a provider like Reason Automation to get all your historical data from Amazon systems in about a week.

Amazon only uses benchmarks that support their arguments, and will create new benchmarks as needed for negotiation leverage. Don’t assume that you have to conform, especially for non-financial requests like VLT and PO acceptance rates. Use the same strategy and focus on your own business and trends, especially if you can show improvement over time, incorporating benchmarks that strengthen your narrative.

Amazon goes through cycles of prioritizing sales growth, then free cash flow (profitability), and back to sales growth. Heading into 2026 Amazon has prioritized profitability at the expense of growth. Even if a brand has big growth ambitions, Amazon isn’t interested in that narrative and is tightly focused on PPM improvement.

Outside of negotiation season, Amazon’s profitability is a “secret input” to the retail formula. Normally the formula is focused on traffic, conversion, and being in stock, but it assumes your catalog is profitable. Amazon has built mechanisms to restrict growth when the growth is unprofitable: your PPM is an input to Amazon’s consumer demand forecast and you will see your Retail Analytics forecast decline in response to sustained PPM drops.

Since ASP is Amazon’s point of sale data, you ultimately have to rely on Amazon’s self-reported data in Retail Analytics. Thankfully, ASP or Average Selling Price has a discrete definition: shipped revenue divided by shipped units. Amazon is a price follower, so your ASP should only change based on market movement (i.e. competitive action) if you haven’t changed Amazon’s costs.

• If Amazon’s narrative does not align with your Retail Analytics data, ask Amazon for the contrary data and their best explanation of the difference. You need help seeing the problem so you can address it.

• Try to learn why Amazon is concerned with your ASP decline. ASP is not normally a focal point unless it is the driver of a PPM decline.

• Multi-buy discounts can have a strange impact on ASP—both Amazon-native offers, and when Amazon price matches them.

The good news: if Amazon wants you to lower VLT, your products are in high demand.

If you have already optimized your outbound operations and don’t see more potential gains there, your vendor lead time is driven by the receiving process at Amazon’s fulfillment centers. These are primarily driven by Amazon’s own processes,