Viewpoint Standing up to Amazon – a successful trading terms strategy Asha Bhalsod Asha has 10 years eCommerce account management experience, including at Amazon and managing the Amazon/eCommerce businesses at Tomy UK and Melissa & Doug. She now runs Etopia Consultancy, to help brands create their eCommerce strategy and grow their Amazon business, and can be contacted on asha@ etopiaconsultancy.co.uk for guidance with trading on Amazon.
hat a year 2020 was! With the pandemic bringing such strong growth in eCommerce, I’m sure that many toy manufacturers experienced double-digit growth through Amazon. As a new trading year dawns, so do the much-awaited - some might even say dreaded trading terms negotiations with Amazon. This year, I suspect it will be even more challenging to find a win-win solution. For a business to successfully navigate 2021, they will need to understand and consider the impact of a vaccine, as well as differentiate between the lasting/ temporary effects of the pandemic to identify what the new ‘normal’ will look like. Only then will you be able to successfully negotiate the favourable Amazon trading terms that your business will benefit from. It is likely that 2021 will pose many challenges to businesses that have not traditionally seen strong growth through their Amazon channel. However, even those with a strong Amazon trading history will still face challenges. With the majority of toy companies not having access to an Amazon Vendor Manager, agreements will auto renew. With no human contact at Amazon, there is a strong likelihood that these increases will remain unchallenged – and if you do decide to challenge them, it certainly won’t be easy or straightforward (as anyone who has ever tried to navigate their way through that particular minefield will attest). Amazon will always push for incremental changes, exerting
its influence to grow its profit margins. This year, Amazon will also be demanding greater European integration. However, these changes are not inevitable if you have the correct Amazon negotiation skills. That said, businesses should be prepared for the fact that Amazon will be asking for more than usual in 2021. The pandemic caused exponential growth online, and when it comes to negotiations, Amazon will no doubt be considering the profitability challenges in the market and looking to leverage its dominant position in the eCommerce channel. Equally, the phenomenal growth spurt of 2020 will provide opportunities for vendors to restrategise their Amazon channel planning. Negotiations will need to be handled skilfully, based on the best investment opportunities. Amazon needs to be recognised as an additional marketing platform – your competitors are almost certainly becoming more competent in using the power of Amazon Advertising to their advantage. If your brand awareness has increased in 2020, then you may need to consider investing more in Amazon Advertising to sustain and defend that awareness. Don’t just look at what is in front of you, or base decisions on what has worked in the past. Think outside the box. Consider other marketing activities that can be pursued on Amazon - sometimes you have to pay to play with Amazon. If you have had stock and operational challenges recently, perhaps is it time to consider investment in
Amazon’s AVS program? An AVS can be very useful if working closely with Amazon, to help navigate through the platform’s operational complexities and forecasting challenges. With Amazon being such a datadriven company, now is also the time to study your Brand Analytics to gain insights from 2020. Amazon will be looking closely at its margins in negotiations and therefore you need to know where they stand ahead of the potentially lengthy discussions. Consider the fact that new EU markets have launched Netherlands, Sweden, and Poland: you could use this as an opportunity to negotiate introductory terms in those markets. Depending on the size of your business, structure, and logistical capabilities, you will need to assess whether the PAN EU approach with Amazon is more beneficial than a localised strategy for each individual market. You have a brilliant opportunity to dissect and understand the things you should invest money in. We are living in an accelerated digital era, and we should take full advantage of the opportunities it presents. Businesses should be prepared to challenge the norm, to unearth how to grow in a supercharged eCommerce landscape. It is time to get ready for trading with Amazon in 2021, and Etopia can help. Not every brand can afford to have a whole Amazon business unit in-house; we can work with you to develop your trading terms with Amazon and help build your eCommerce strategy.
2020 – a year like no other… John Baulch John has worked in toy trade publishing for over 35 years, and will be well known to our readers for his personal analysis of industry matters and forthright opinions. If they get past Anita.
When we come to look back on the year 2020, one word will surely be used above all others to describe this most eventful of years – unprecedented. At the start of the year, few could have predicted how dramatically the whole world would be affected by a virus which emanated from the Wuhan district of China. As I do every year, I visited Hong Kong in January, back when the
world seemed relatively normal. During the trip, talk revolved around the prospect of further civil unrest in Hong Kong disrupting our visit (a fear which thankfully never materialized), as well as the ongoing challenges being faced by the global toy community. All the usual stuff… the rise of the online retail channel and the threat this presents to bricks and mortar retailers; the lack of a standout toy craze and the pressures
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on toy pricing and margins, exacerbated by global economic headwinds. If only these had turned out to be the biggest challenges we needed to address this year - how little we knew then… As part of my round-up Blog from the trip, which was posted on 10th January, I made this observation: “A lot of local people are going round in masks, but that’s due to concerns over MERS (Middle Eastern