This episode is a must-listen for Amazon vendors. It explains the critical shift towards SKU-level profitability analysis, driven by Amazon's tightening margins and improved data availability. Understanding and acting on your true channel P&L is no longer optional; it is essential for smarter assortment decisions, optimized ad spend, and stronger Amazon negotiations.
Key takeaways
Implement SKU-level profitability analysis, focusing on Net PPM and Internal Brand P&L, to identify and address CRaP items.
Leverage Amazon's 2023 API improvements and new tools to automate SKU-level profitability reporting.
Re-evaluate advertising budgets to prioritize high-margin products over just high-volume ones.
Utilize detailed P&L data to strengthen your position in annual vendor negotiations with Amazon.
Foster cross-functional collaboration between marketing, finance, and operations to holistically manage Amazon profitability.
Welcome to The Ecommerce Braintrust podcast, brought to you by Julie Spear, Head of Retail Marketplace Services, and Jordan Ripley, Director of Retail Operations. Today, we're excited to welcome back a familiar voice on the show—operations expert Armin Alispahic. Armin is here to bring us up to speed on a recent phenomenon in the Vendor space — the availability of true channel P&L analysis. We'll explore why this trend is only showing up now and what it means for how brands assess their business with Amazon. KEY TAKEAWAYS In this episode, Julie, Jordan, and Armin discuss: Understanding Vendor Profitability on Amazon: Two main metrics: Net PPM (Net Pure Profit Margin) and Internal Brand P&L. The hidden third factor—Amazon's internal costs (fulfillment, packaging, and shipping expenses). Why Profitability Analysis Is Becoming Crucial: Amazon is tightening vendor margins, requiring brands to have a clear view of their own and Amazon's profitability. Increase in CRaP (Can't Realize a Profit) items, making it essential to assess profitability at the SKU level. Technology Driving P&L Insights for Vendors: Amazon's 2023 API improvements have enabled better data access for vendor P&L analysis. New tools now provide automated, SKU-level profitability reports. </
Frequently asked about this episode
What does this episode say about amazon strategy?
Implement SKU-level profitability analysis, focusing on Net PPM and Internal Brand P&L, to identify and address CRaP items.
What does this episode say about data-driven decision making?
Leverage Amazon's 2023 API improvements and new tools to automate SKU-level profitability reporting.
What does this episode say about profitability analysis?
Re-evaluate advertising budgets to prioritize high-margin products over just high-volume ones.
What does this episode say about vendor management?
Utilize detailed P&L data to strengthen your position in annual vendor negotiations with Amazon.
What does this episode say about amazon strategy?
Foster cross-functional collaboration between marketing, finance, and operations to holistically manage Amazon profitability.
