While nothing is impossible, your chances are limited when it comes to renegotiating contracts in your favor. Unless you are a major supplier, in which case, Amazon will do everything in its power to keep you happy, so as not to jeopardize your relationship. On this basis, it is important that you negotiate the best contracts from day one. Despite the requirement for large quotas, Amazon`s margins can be narrow on the retail side. In accordance with competition, financing programs such as Prime and offering an excellent performance policy are three practices that strongly feed amazon in the margin. One of the reasons Amazon is asking for such high discounts is that it expects suppliers to help fund such programs. The following procedure shows how an agreement is set up for a debitor, but the procedure for a lender is similar and begins in the purchases and commitments window. Amazon will always put pressure on the longest payment terms and the lender will want the shortest payment terms. Payment terms are usually between 30 and 90 days, with an average of about 60 days.
In order to motivate Amazon to accept shorter payment terms, the lender may offer an early account. This discount is usually all 1-3%. The basic definition is also called Co-op Marketing, Marketing Development Funds (MDF) or Discretionary Cooperative. Amazon has said in the past that this allowance helps cover activities that promote product impressions and sales such as store promotions, pre-pitches, merchandising activities, emails, paid research and sponsored links to products, associated recommendations, the basic website and catalog improvement. In short, this allocation helps fund Amazon`s marketing initiatives and programs. It is usually about 10%, although I have seen that suppliers are more and even less agree. This is the compensation that most suppliers struggle to understand, because it is not based on results and creditors do not see what they receive. If you work with Amazon on wholesale, you need to make sure that you have the margins to support this model and include all certificates in your total cost calculations. If you don`t, you`ll find that your account isn`t really profitable and can no longer work with Amazon on the vendor`s site. The same goes for Amazon: you need to make sure you offer Amazon enough margins to keep them profitable. Otherwise, you`ll find that Amazon cancels orders and puts your products on obsolescence.
Offering additional discounts on wholesale prices is not new to large retailers. It is the nature and amount of the discount that Amazon is asking for that is becoming a challenge for suppliers. They are driven to give Amazon their best prices, with no guarantee that Amazon will move its business forward. In the stationary sector, companies typically work on discounts and put in place a discount structure to encourage retailers to buy more shares and receive a larger discount. In most cases, Amazon avoids these discount structures and demands a direct discount, no matter how much they order – and often much more than other merchants charge. If you work with Amazon.com, Inc. (“Amazon”) on the seller side, you play the role of wholesaler. This means that Amazon offers your products at wholesale prices and that Amazon offers additional discounts in the form of co-op agreements and allowances. With freight, the seller can either negotiate the prepaid (They-Pay) by paying for shipping or collection (We-Pay) which will pay Amazon for shipping and third-party shipments from Amazon.
Freight certificates are more common in the United States than in Europe. If Amazon pays for shipping, the seller funds these fees in the form of an allowance. The amount depends on the average shipping costs for these products.