Margin Pressure

We hear from clients that the vendor negotiations this year have been particularly “robust” with marketplaces (especially Amazon) demanding significantly higher margins and concessions. Co-op marketing fees are increasing, payment terms lengthening and other services such as paying for a Strategic Vendor Services (SVS) manager or merchandising placements are being mandated. Indeed, we have heard that Amazon is framing that the only way to even have a full negotiation with them is to pay for SVS services.

Brands also need to leverage their agency relationships and broader knowledge to understand benchmarks for their negotiations. Sometimes a brand may be relying on their own past experience and not aware of other concessions that might be more beneficial to their business.