- The AVN is the negotiation in which Amazon reviews its Vendors' commercial terms every year.
- Margin, co-op, damage allowance, freight allowance and payment terms are all on the table.
- Vendors who arrive with their own profitability data by ASIN negotiate better than those who just react to requests.
- Saying yes to everything for fear of losing orders is the most expensive mistake.
Every year Amazon opens a negotiation on commercial terms with its Vendors, and it almost always asks for more. Turn up unprepared and you’ll sign terms that weigh on your margin for twelve months. Here’s what gets negotiated, what data to prepare and how to handle the toughest requests.
What the Annual Vendor Negotiation is
The AVN (Annual Vendor Negotiation) is when Amazon and the Vendor reset the terms of their agreement: how much Amazon pays for the products, how much the Vendor contributes in funds and allowances, and how quickly payments arrive. It usually runs from the end of the year into the first months of the next, but timing and format vary from account to account. Some Vendors negotiate with a dedicated contact, others receive standard proposals in Vendor Central to accept or reject.
Amazon’s logic is clear: every Vendor has to deliver enough margin to cover Amazon’s costs and its low retail prices. If the numbers don’t add up, Amazon asks for bigger contributions. The Vendor’s logic has to be just as clear: know which terms you can accept without losing money.
What gets negotiated
The items vary, but these come up almost every time:
| Item | What it means | Impact on the Vendor |
|---|---|---|
| Margin / cost price | The price at which Amazon buys the product | Affects every unit sold |
| Base co-op or marketing funds | A percentage of purchases set aside for promotional activity | Deducted automatically from payments |
| Damage allowance | A fixed contribution for damaged products | Paid even when actual damage is low |
| Freight allowance | A contribution to transport costs when Amazon collects the goods | Depends on the shipping model |
| Payment terms | The number of days Amazon takes to pay invoices | Affects cash flow and working capital |
Other items can appear too: contributions for specific programmes, promotional agreements, terms on returns and unsold stock. Read every item for what it costs in euros, not just as a percentage.
Building your data before the negotiation
A good AVN is won or lost in the weeks before it starts. Vendors who negotiate well bring their own numbers, not the ones Amazon shows them. Here’s what to prepare:
- Profitability by ASIN: for each product, the price you sell to Amazon at, cost of goods, every deduction (co-op, allowances, chargebacks, shortages) and real net margin.
- Sales trends: volumes, growth, and Amazon’s share of your sales compared with other channels.
- Retail price and positioning: the price Amazon sells your products at and how it compares with the rest of the market.
- What your current terms actually cost: how much you paid over the year for each item, in euros.
- Scenarios: what happens to your margin if you accept Amazon’s request, accept part of it or turn it down.
The most useful figure is often the most overlooked: what your deductions are really worth. Many Vendors discover during preparation that undisputed shortages and chargebacks cost as much as a point of co-op. To get that view ASIN by ASIN we use Bettershop Analytics, which brings invoices, payments and deductions together.
A worked example
Hypothetical example: a product sold to Amazon at 20 euros, with a cost of goods of 12 euros. Gross margin: 8 euros, or 40%. If current terms include 6% co-op and 2% damage allowance, Amazon keeps 1.60 euros per unit. Real margin: 6.40 euros. If Amazon asks for another 3 points of co-op, margin falls to 5.80 euros. On 10,000 units a year that’s 6,000 euros less. Put like that, you can weigh the request with a clear head.
Mistakes to avoid
- Accepting everything out of fear: worry about orders being paused pushes Vendors to sign unsustainable terms. Sometimes the risk is real, but weigh it with numbers.
- Negotiating only on the co-op percentage: one point less of co-op can be offset by higher allowances or longer payment terms. Look at the whole package.
- Asking for nothing in return: if you give up margin, ask for something. More visibility, a place in promotional events, a review of the damage allowance, a wider range.
- Turning up without scenarios: if you don’t know how far you can go, you’ll either accept the first offer or refuse for no good reason.
- Forgetting to check afterwards: the terms you sign need to be checked against the actual deductions in the months that follow.
What to do if Amazon asks for more margin
It nearly always does. The request isn’t necessarily the final word. Some options to consider:
- A reasoned counter-proposal: use your own numbers to show why the request isn’t sustainable and offer a partial alternative.
- An exchange of value: concede part of it in return for something measurable, such as volume, promotion or advertising commitments.
- Reviewing your range: some ASINs can stay with Vendor, others can move to the Seller model where you control the price.
- Reviewing list prices: if your costs have gone up, a justified increase in the cost price can rebalance the negotiation.
Every choice carries a risk, for example fewer orders on some products. That’s why it pays to decide in advance which products are strategic and which aren’t. If the agreement has significant contractual implications, bring in your lawyer as well.
After you sign
One last point on method. Keep a written record of every proposal and counter-proposal, with dates and figures. Negotiations with Amazon often involve several contacts and several rounds, and a clear history stops you renegotiating points that were already settled. It also helps the following year, when you need to remember what you secured and what you gave in return.
The negotiation doesn’t end when you accept. In the months that follow, check that the deductions Amazon applies match the agreed percentages and start dates. Errors do happen, especially in the first months of a new agreement, and they should be disputed like any other deduction.
Also check that whatever you secured in return actually materialises: if you agreed more visibility or a place in an event, make sure it happened and see what it delivered. This data will be the basis of your next negotiation. A Vendor who turns up with twelve months of well-organised numbers negotiates very differently from one who starts from scratch every year.
What to do now
If your next AVN is a few months away, now is the time to prepare. Rebuild your real margin by ASIN for the last year, add up the cost in euros of each item and put together two or three scenarios. Decide in advance which products to defend and which concessions you’re prepared to make. If you’d like support from people who handle these negotiations every year, you’ll find the details in our AVN programme for Vendors.
Frequently asked questions
When does the Amazon Annual Vendor Negotiation take place?
Usually between the end of the year and the first months of the following year, but timing varies from account to account. It's worth starting to prepare your data at least two or three months beforehand, so you arrive with numbers and scenarios ready.
Can you reject Amazon's proposal in the AVN?
Yes, you can reject it or make a counter-proposal. The risk is that Amazon reduces or pauses orders on some products, so make the decision knowing what each ASIN is worth and what alternatives you have, for example selling those products as a Seller.
What can you ask Amazon for in return for more margin?
You can ask for more visibility, a place in promotional events, a review of the damage allowance or payment terms, or a wider range. What matters is that the return is concrete and can be checked in the months that follow.