Amazon Annual Vendor Negotiation: frequently asked questions
Preparing for your annual negotiation with Amazon can be a time-consuming process. It takes weeks to collect and analyze data, put together a strategic plan, and learn what you can about Amazon’s priorities this year.
We take care of your AVN analysis and insights. But developing your strategy also requires a blend of Amazon expertise with knowledge about your brand’s goals, resources, and strategy.
For the 2026 season we put together a panel of Amazon vendor negotiation experts to help brands get their specific questions answered.
AVN FAQ ARCHIVE BY TOPIC:
1. Amazon Relationship Strategy
Why should we invest in VM/AVS relationships when they churn so quickly?
Amazon tries to be 100% rational, but VMs and your AVS/SVS are people with opinions and feelings that can impact your business. VMs have some discretion about where they spend time. Your AVS might be your VM or your Advertising AE someday. And everyone leaves a debrief doc for their replacement: what do you want that doc to say about you?
How transparent should vendors be during AVN? Does oversharing ever backfire?
Be very selective about what you share with Amazon; they do not reward generosity. Your VM will take any insights offered and happily use them to negotiate against you. Share your strategic plans (e.g. moving selection to SIOC) as contingent on receiving help (e.g. chargeback waivers).
Should we submit cost increases during AVN, or after?
While it can be beneficial to separate your cost increase conversation from AVN, prioritize starting the conversation with Amazon as soon as you know: this gives you and Amazon more time to plan. Emphasize the increase is going to all retailers.
Why does Amazon suppress ASINs as a negotiation tactic?
With some exceptions, Amazon would rather not sell your product, than sell it unprofitably. This might be surprising to brands that see Amazon price match a grey market offer below PO cost, then asking for a straight payment to bridge PPM. But Amazon is notorious for stopping ordering, suppressing product, and even advertising competing products at the top of your detail pages as a lever. In 2026, suppression is one of the vendor manager’s only levers to directly influence profitability, because pricing and ordering are completely automated.
Ultimately, you will benefit most by understanding—and solving—the root causes of unprofitable products, such as price matches (valid or not), operational issues, or distribution strategy. But smart brands will also use Amazon’s tactic and consider holding back or delisting selection to meet their own goals. You don’t have to wait for Amazon to CRaP out your products. Being proactive can help you understand Amazon’s preferred outcome.
What do brands miss bringing up in negotiations?
AVN is an excellent time to escalate operational, tactical, and systematic problems that you cannot fix yourself with your AVS, VM, or CSM. Think of persistent issues that your main Amazon contact has told you they are powerless to influence because it is beyond their scope, it’s another team’s responsibility, or it didn’t make the priority list.
Do you have open support cases that are blocking your growth?
Are you experiencing persistent catalog, system, or data issues that you can’t fix yourself and aren’t confident Amazon will resolve?
Make your list, but be thoughtful about which issues to bring up and when. It may be tempting to turn AVN into a grievance airing session but your goal should still be to lock in agreements that support your growth and profit plans. If you’re getting 90% of what you need, consider whether ancillary items are worth the distraction or bringing you further away from closure.
2. Cost Prices and Trade Terms
How can I get Amazon to co-fund price promotions?
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.
Will Amazon trade lower terms, for lower cost prices?
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.
We signed a CSA in 2025. How can we avoid one next year?
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)
Amazon didn't spend our merch dollars last year. Why are they requesting more?
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.
How do we quantify and present our “cost to serve” Amazon?
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.
Amazon wants us to accept bulk buys with large discounts in exchange for accepting our tariff-driven cost price increases. What should we do?
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.
3. Special Programs
How can I model the ROI of investing in programs like Baby Registry?
You can’t. Instead of sharing data, Amazon will share “proof of performance” documents every month or quarter. These documents have relative performance insights (e.g. your ASIN was in the top 10% most registered products in March), but no specific performance data. Think of these investments as “brand exposure” opportunities.
What are the pros and cons of pallet order programs?
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.
How should we view bulk buys as part of AVN?
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.
4. Retail Media Strategy
How can we leverage our media spend in AVN?
Always remember that Retail and Advertising have separate P&Ls, and your advertising spend does not “count” toward your VM’s profitability goals. But the more you can get Amazon competing with themselves, the better.
Amazon ads account executives have variable compensation (commission, bonuses) tied to ad sales goals. That means you have direct leverage with the ad sales team by making retail media participation contingent on achieving retail goals. “We are interested in this Prime Day activation, but...”
Does our vendor manager care if we sign an annual DAA with Amazon Ads?
It’s unlikely today, due to the same P&L separation issue that keeps PPC spend out of the PPM formula: the investment simply doesn’t impact them financially. You might (might!) be able to sell your vendor manager on a dream of huge incremental growth driven by your advertising commitments.
In the US, some categories have begun looking at different profitability metrics that include advertising spend. Amazon has always included PPC fees in contribution profit (CP) and contribution margin (CM) calculations, but these are closely-guarded internal metrics. The new profitability metrics promise to make the role of ads clearer to brands.
How can someone with retail media background prepare for their first AVN?
Again, keep in mind that Retail and Advertising have separate P&Ls, and your Amazon Ads and DSP spend does not “count” toward your Net PPM. It’s also important to remember that retail managers do not have performance-based variable compensation; they’re working for promotions, not bonuses.
But you can still leverage your retail media strengths, and drive coop ROI vs. PPC ROI conversations, especially backed by AMC analysis. Take advantage of your experience with advertising performance benchmarks, to ask hard questions about performance expectations for merchandising packages, event sponsorships, and more.
can we reduce coop accruals to spend more on sponsored ads?
This will be difficult because Amazon almost never decreases terms, and sponsored ad spend does not contribute to your PPM (or your VM’s P&L). You’re asking your vendor manager to accept lower profitability and get farther away from their goal. They need a reason to say “yes,” and increased advertising spend isn’t appealing to them.
Therefore, approach this through your Amazon Advertising account executive, whose goals and compensation are tied to your ad spend. Bring them into the conversation with your VM so they can advocate (internally, offline) for compromise outcomes that may allow you to move some budget.
How can I get my vendor manager and advertising account manager in the same room, if they are refusing to meet?
Consider pausing your investments until you get the help you are looking for. Tell your advertising contact that you cannot spend spend any more on PPC or DSP until you get alignment on retail terms; your budgets have already been set.
Remind your vendor manager that advertising spend is a great lever for managing their KPIs. For example, if you need to quickly improve PPM, your advertising strategy can focus on high-PPM products with high conversion to drive a mix shift.
5. using data and KPI Performance Benchmarks
What is my category’s Net PPM benchmark / goal?
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.
How can we push back on Amazon’s data-driven narrative if we don’t have our own data?
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.
Are there benchmark KPIs we can aim for, or are they always relative to peers?
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.
When should we prioritize Amazon’s profitability (net PPM) over sales growth?
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.
Amazon tells us that our ASP is declining but we don’t see this in our data. How can we validate Amazon’s point of view?
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.
Amazon wants us to lower our Vendor Lead Time (VLT) but we’ve done all the obvious things. What else can we try?
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,
6. Amazon Vendor Services, AVS, SVS
We pay 1% of net receipts for SVS. How do we evaluate the ROI of this investment?
Evaluate whether your SVS has been truly strategic: what ideas have they proposed, how did they help you understand the ROI, what were the incremental results of those investments? Were they focused on mundane tasks, or helping find and secure the right deals during marquee periods?
In absolute terms, spending $400-500K per year for AVS or SVS is not unusual. If you are paying a lower amount, your ROI might be higher than normal.
What should our relationship be like with our SVS manager?
If you meet with your SVS weekly, ask for a monthly sync with the manager so they are familiar with your growth levers. Understand when/how your SVS escalates to their manager, and when they both involve other internal teams. If you are not satisfied, request changes: escalation is a critical benefit of the program and your investment.
What strategic info and access can our AVS/SVS get?
Access to beta and limited programs.
GTM experimentation and coordination, especially for your off-Amazon efforts.
Additional data and reporting about your business.
Benchmarking and relative performance insights vs. your category peers.
Performance data for special programs like, Baby Registry.
How can AVS support our new product launches?
Start by asking for the basics: vine credits, free A+ Premium. Then consider more strategic requests, such as buying commitments / manual buying support. Show Amazon the carrot: willingness to invest in product launch merchandising, how you’re opening up a new category and helping Amazon grow, how you will drive purchasing traffic to Amazon.
Get your SVS and/or VM to make recommendations. Share your good/better/best forecasts for sales across channels, Amazon’s share, and what investments you’re considering. Then make that support contingent on Amazon’s mutual investment. Gently keep everyone aware that funding can be invested in Retail, Ads, or off Amazon depending on the ROI expectations.
When is AVS a bad investment?
Many people in the Amazon 1P ecosystem view AVS as a cost of business, similar to your base coop accrual. It’s simply money that Amazon extracts for the privilege of participating on their platform and receiving what they perceive as "unusual” service and you probably view as the bare minimum. And it’s true that the AVS value prop has evolved over time:
All AVS used to be onshore resources. Now your AVS is frequently located in a lower-cost region like Eastern Europe or India.
Brand Specialists and AVS used to be focused on a single brand. You paid for a headcount. Now AVS is a “service” without specific work or exclusivity guarantees.
But AVS is still generally a good idea, especially for top tier brands who may be allocated a “tier 1” AVS that is typically onshore, includes special attention from vendor managers and instock managers, etc. These are typically reserved for brands with $10 million or more in annual sales and strong relationships. If you believe you should be tier 1 but are not receiving this level of support, ask! Back up your request with market share data from Nielsen, SmartScout, or similar.
Set expectations that AVS doesn’t drive growth. They are operational lubricant that can resolve issues with Amazon faster than tickets, get you access to competitive benchmarking and insights, and more.
How should we use our AVS resources for AVN prep?
This is the time of year to go beyond using your AVS as ticketing and escalation support.
Get competitive benchmarks. Amazon won’t give you brand names or exact values, but your AVS can often share your relative position on a metric, e.g. “your brand is in the top 30% for total glance views in our category.”
Audit your prior year’s vendor improvement plan and your AVS’s role. Check it every month: is your AVS delivering on the selection increases, reporting, escalations, keyword ideas, and any other commitments you agreed to previously?
Review misses that occured through the year and claim value for them.
