Amazon Vendor Central Purchase Orders: A Guide
Amazon purchase orders are vital to the success of every vendor. They serve as the cornerstone of the transactional relationship between vendors and Amazon, making it crucial to comprehensively understand their intricacies.
Why is it important to solve purchase order-related challenges? The answer lies in the fundamental role that purchase orders play in the operations of Amazon vendors. They dictate the flow of products, influence inventory management, and impact revenue generation. Failing to navigate purchase orders efficiently can lead to missed sales opportunities, operational inefficiencies, and even financial penalties.
In this article, we’ll provide guidance to help vendors optimize their purchase order processes. From identifying signs of issues within organizations to implementing strategies for resolution, we aim to equip vendors with the knowledge and tools they need to navigate the world of Amazon Vendor Central purchase orders successfully.
What Are Amazon Purchase Orders?
Amazon purchase orders are the backbone of the vendor-retailer relationship, representing the orders placed by Amazon for your products as a brand. As an Amazon vendor, this transaction is fundamental to your business, as it allows Amazon to purchase your products and sell them on its platform under the trusted Amazon brand.
Why Are Purchase Orders Such an Important Metric For Amazon Vendors?
Vendors need to monitor purchase orders (POs) from Amazon – in fact, it may be the most important metric you monitor. Here’s why:
Revenue Potential: Monitoring purchase orders (POs) is vital because failing to confirm them promptly means missing out on potential sales and revenue. Every unconfirmed order represents a lost opportunity to generate income.
Future Revenue Risk: Amazon evaluates vendors based on various metrics, including PO confirmation rates. Consistently low confirmation rates can negatively impact your relationship with Amazon and potentially limit future revenue opportunities.
Once you receive a purchase order from Amazon, it's crucial to act swiftly. Vendors typically have around 24 hours to confirm their ability to fulfill the order. Upon confirmation, the vendor and Amazon agree on a shipment plan tailored to the product and the vendor's logistics setup.
Confirmation rates hold significant weight for Amazon due to its lean inventory management practices. If purchase orders go unconfirmed or get canceled, it directly affects Amazon's stocking operations and, ultimately, its bottom line.
You can prioritize and optimize your PO management processes by understanding the importance of purchase orders and their impact on revenue and vendor evaluation.
Tracking Purchase Orders and Shipping Windows
Tracking purchase orders and monitoring shipping windows are essential to effectively manage your Amazon Vendor Central operations. Let's explore how you can stay on top of these crucial aspects:
Where Do I Track Purchase Orders?
To track your purchase orders, follow these steps within Vendor Central:
1. Click on "Orders."
2. Select "Purchase Orders."
How Do I Track Confirmation Rates?
At each individual purchase order, you can find the quantity submitted and accepted. The confirmation or acceptance rate = accepted/submitted.
The Importance of the Shipping Window
Amazon will typically provide a shipping window for a vendor that confirms the PO. If a vendor confirms an order, it must meet that shipping window, which typically includes a handoff start date and an end date. In addition to confirmation rates, Amazon is closely monitoring how often vendors are shipping within these windows.
But shipping windows aren’t important just for staying in Amazon’s good graces: it also affects how quickly a vendor will get paid. A vendor can’t invoice Amazon for products purchased until that product has been shipped. So if you wait a day to ship a product, that’s another day added to the timeline to get paid.
How Do I Track the Shipping Window?
Ship windows can be found both on the purchase orders dashboard in Vendor Central as well in each individual purchase order.
How Vendors Can Get more Purchase Orders for higher volumes
If you feel like you could be doing better when it comes to POs, consider making some adjustments. After all, PO performance is a big driver on both your revenue and your relationship with Amazon.
Keep Products in Stock
A lot of times when vendors aren’t able to confirm purchase orders or ship within a certain window, it’s because they simply run out of stock of a product frequently. In that case, the vendor needs to focus their energy on recalibrating their stocking strategy to make sure a product is always in stock.
If you feel like you need improvement in this area, go back and look at historical order history and come up with some more accurate estimates of how much inventory needs to be on your shelves and when.
Retool Your Operations
Your business might benefit from setting up an EDI (electronic data interchange) feed with Amazon that better allows PO and invoice data to be exchanged between two servers. This will help you manage bulk ordering more efficiently, and give your PO confirmation rate a boost in the process.
If you're missing delivery windows, that's a sign that the left hand is not talking to the right hand. Somewhere, information is not flowing and there might be too much time between the confirmation and when the warehouse starts to package up the item for shipping. Or, perhaps you are confirming orders that are not actually in stock. If so, you will need to improve communication and organization in the warehouse.
The bottom line is that no matter how long your business has been around or how successful it is, there are always a million factors in logistics that can go awry. Problems with PO confirmation and shipping indicate it's time to make some fundamental changes to your logistics process.
Better Track Your Data
Even if you’ve got a great inventory operation, you still may struggle with POs if you aren’t tracking data well enough. For example, data could show you how POs ebb and flow during certain times of the week, month, or year that isn’t obvious with day-to-day operations. You need access to vendor data to grow your business.
Unfortunately, Amazon makes it quite difficult to access this data. You have to log in to Vendor Central, find the report, manually download it for that day, and do this with report after report, and then combine all of them manually.
Reason Automation was created to solve exactly this problem. Read more in our eBook below.
READ MORE:
Improve Profitability
Using Product-Level Operations Data from Vendor Central
As an Amazon vendor, you drive profitability with three levers: 1) selling as much of your product to Amazon as possible, 2) minimizing chargebacks, and 3) optimizing your product portfolio.
This guide will provide frameworks to improve your Amazon business's profitability and help you leverage Vendor Central's Operations tables for deeper insight.
