Vendor Summit | Amazon Vendor Turnaround Playbook

Session Transcript

Paul Sonneveld
Without further ado, I am going to bring Toni on and invite him onto the stage. Let's see. Toni, you've got your camera on. There he is. All right. 

Toni Turbanisch
I agree with Paul. 

Paul Sonneveld
Hey, how are you, Toni? 

Toni Turbanisch
Pretty good. Excellent. Excellent. How about yourself?

Paul Sonneveld
Yeah, very good. Very good. It's been a long two days, but very exciting. Lots of things to talk about. So thank you so much. Now, let me just introduce you for those in our audience that haven't met you before. Toni specialises in turning around really struggling vendor accounts. He's a former Amazon strategic account services leader, and he's managed over a twenty thousand Amazon cases, a one billion dollar in deals revenue and overseen fifteen complete vendor turnarounds. All successful. Interesting set. That's great. So, yeah, he's very well equipped. So, not just how do you improve performance gradually as an Amazon vendor, but if you are not in a great place commercially, how do you achieve some rapid actions and perhaps quicker results? So very much look forward to that. Toni, welcome. It's great to have you here. Thank you. 

Toni Turbanisch
Thanks for the invitation as well. 

Paul Sonneveld
Now, do I need to share a presentation with you, or would you like to drive? 

Toni Turbanisch
I can share from here, right? 

Paul Sonneveld
I’ve got it. It’s loaded. Here we go. All set. Yeah, the stage is yours.

Toni Turbanisch
All right. Thanks, Paul. So first of all, welcome everyone that joined my talk on Amazon vendor turnarounds and the playbook that I created for you today to have a little bit of a deeper look inside of what actually drives a turnaround in the vendor space or Amazon space in general. Yeah, and without further ado, I think Paul already introduced a little bit about me, but for anyone who doesn't know me, I recommend joining my LinkedIn. So you can also have a look on the post that I do, in terms of Amazon and the changes. 

But a part of that, Paul already mentioned it. I worked three years at Amazon. Firstly, at the seller support, so I handled more than twenty thousand cases. I've seen basically anything and everything you can imagine in terms of operative issues, which are much easier to handle on the vendor side, to be honest. So seller is much more complex, and the vendor system is basically based on it. Yeah. And a part of that, I was a youth POC in Germany, managing one hundred consultants at Amazon with a total volume of one billion euros. So anything related deals, top deals, best deals, whatever it is, I've managed in Germany for two years. 

I've been one of the strategy consultants in-house at the strategic account services team and responsible for a couple of the ten largest sellers in Europe. I also had my own brand, which I sold, and today I'm mainly focusing on turnaround consulting, struggling businesses in the vendor and seller space, but also focusing on international expansion, growth strategies, and finally working on my new project. All my consulting experience of the past six years is being put into a large Bible that I will share at one point next year. 

But yeah, let's get into the nitty-gritty of a turnaround. I created a little framework for you guys. And as you can already see, a person is taking the steps towards continuity and the rocket ship that we hopefully arrive at at the end of a turnaround. But as the title already states, it's a people game, so everyone needs to be on board. And that's why a people is also the first step that we are taking. And a part of that, we will today have a look at the second stage be analysis and goals and how they are interconnected with each other driving data to actually focus processes on the goals for the turnaround. 

Then a couple of quick fixes where we'll also share with you what Amazon really hates, what you can do as a vendor, but also things that you can do, even if your business is not struggling right away and implementing your processes and drive better results for your business or rather areas that I've seen in the past that caused a lot of churn for vendors and can usually be addressed quite quickly. 

And then, of course, there will no be final turnaround or no strategy execution if you're not implementing certain routines to continuously work towards those goals that you defined in the initial stages. And therefore, routines are essential and long-term success. And basically, this all contributes to continuity. But we won't talk too much about that, but continuity, like continuously working on what you set out to do will be mandatory to drive any good results for a turnaround. 

So the first point people without buy in, no change. It's kind of obvious if I've joined a couple of companies in the past before that were already bankrupt a couple of times, and there were still the employees from the first time the businesses failed. Of course, it not always have to be that the whole business fails. Sometimes Amazon is just one of the sales channels. But anyway, many times the people responsible in the certain areas were still there, even though they failed various times. 

So, this might be unpopular opinion, but sometimes,  if you cannot get through with your vision and the change that is necessary, sometimes a change in people will also be necessary, unfortunately. Unfortunately, I'm not an expert in leading people, so there might be better people out there. You can ask, on how to improve the mindset, but what I saw in the past, especially if you're entering into a business that already saw a couple of bankruptcy and you're telling them from your new vision, right? Now we want to do the things well, and we want to really drive the business forward and have the turnaround that we are looking for. Otherwise, we will go bankrupt. The reaction usually is just, you know, they shrug because they've seen it so many times, and they're still sitting in the same seat. 

So if you are the one responsible and driving a turnaround, it is very important. Then you get anyone to have a buy-in into the new turnaround. And this will usually cause a lot of insecurity in people. Churn and people are usually very behavioural and habitually driven. So they, you know, we are human beings. We like our comfort. We like our daily routines, the things that we always did the same, and change usually causes uncertainty. And the human itself is not very happy to be in an environment that is potentially chaotic, which change is. 

And so yeah, if you are the one driving the change and you have the vision to do it, then try to get as many people on board as you can in the initial stage. You won't be able to get everyone on board, but the ones you get are the ones that are when things are showing the first stages of improvement who get the buy-in from the others as well, who probably haven't from the beginning on. But yeah, so this is a very essential stage without the buy-in of the employees driving change, there won't be any. 

Then, part B analysis and targets, this is the foundation for everything in a turnaround. Usually, things should happen very quickly, but there shouldn't be rushed. Especially this stage is fundamental in defining the goals and where we want to lead the business to and setting all of the railroads that we need to go on, and therefore I usually tend to. As long as the time permits, this is also usually a cash flow question to go as deep as possible and define the goals as clearly as possible as we can.

And there are four stages that are not necessarily completely separated from each other, even though you can cluster them. Sometimes you go back and forth between those, but I will regardless present you the first stage here now. So gathering data, the right data is of utmost importance. I guess everyone is on the same page here. If you base your decisions on the wrong data, then anything that happens after that would just be in the wrong direction. I use a lot of MerchantSpring for that, especially because the vendor data is really good. But yeah, there are some sub points that you should definitely take into consideration. 

And the first one is also connected to where the data is coming from. So the validity of data. I usually use a combination of different channels where the data is coming from, different sources rather. So I'm not just taking the data that is coming from Vendor Central or from MerchantSpring or from any other tool, in-house reporting tools. I usually take all of the data and then put them into perspective to be sure that A and B are actually matching up because especially from the Amazon API, there's a lot of garbage incoming frequently. And so we really have to be sure that the data that we are having is as correct as possible. 

And then I also don't just isolate on what is happening in the vendor space. Because most businesses are multi-channel who are selling on vendor anyway. And sometimes one channel is cannibalizing the other one. And so I usually try to get as much data on different other sales channels as well that might be affecting the Amazon vendor business just to see if there's anything that is happening from external factors that are influencing certain parts of the business on the vendor side. 

And then secure with this, I don't mean necessarily data security. I hope anyone is practicing that anyway, but with secure, I mean, what is the source that the data is coming from or rather who? Because the people who are responsible for certain areas in terms of vendor or agencies for that matter, right? If you have an agency mattering your ads account, they will present you a different reality than probably what it is. And therefore, you should, in this case, maybe get some external support to really make sure that the data that is being evaluated is actually the whole picture and also showing the right timeframes. 

And then there's a little bit a strong statement, but data is useless. And this more or less connects to data is useless in terms of if you're just isolatedly looking at one figure, then this is basically not telling you anything. If I tell you our conversion rate in 2024 was five percent, then this is telling you absolutely nothing. So you need to put it into perspective and rather time or comparing it to other metrics or going deeper into them. 

So yeah, this also leads to stage number two, the drill down. So we usually go from top down, taking all of the general business metrics that happens on the surface level, return rates, revenue, of course, then what is my stock levels on each product, the returns that I had, the advertising spend, the net PPM, whatever top level metrics there are and putting them into perspective from one period of time to another. This can be either seasonal or in a yearly comparison or monthly comparison, whatever for your certain markets makes sense. 

And then I use two main tools. These are very basic, but basic doesn't necessarily mean not useful. It's making things actually easier to explain. That's why I'm using them. Two concepts. One is the BCG matrix is from the Boston Consulting Group. It's clustering the portfolio into four different sections. Poor dogs, which are products that don't perform. Rising stars, which are products that are currently in good growth. your cash cows and then question mark products that are, as the name states, not really sure where they are going to. 

And then an ABC analysis. I combine this with two other analysis. But yeah, ABC analysis basically clustering your portfolio into three different sections. The A portfolio are products that are driving eighty percent of your total sales. And this is usually a very reduced amount of total products, maybe five percent of the overall portfolio. Of course, when we are talking about the turnaround, these are the products that we absolutely need to stabilise. B products, these are usually the question marks or rising stars and are responsible for fifteen percent of the total revenue in the lower part. And as you can see, right, this usually happens then to be around seventy percent of the total products. And then the C products, and these are very often the ones that you cut out right away, but more on that later. 

And then of course, as I said before, data is useless. You, when drilling down from the top level metrics that you're having and seeing the different comparisons in terms of time horizons or If you're making a competitor analysis and see, hey, they have a five percent or three percent higher conversion rate than us, then this is also telling you a lot of stories that you should dig deeper into why, for example, our competitors are converting better than we do. 

So benchmarking either over time, industry benchmarking or any other type of benchmarking internally makes absolutely sense and should be done. And then Causualties. Yeah, so many times we attribute certain changes or factors to other data points that are correlating, but it doesn't necessarily need to be the main cause. So with drilling down, you really want to identify the reasons for why things happen. 

Then stage three, evaluation of the data, finding the right levers. Profitability, and this is quite a tricky topic. You don't want to just evaluate profitability on a total account basis. And also, I think revenue and profitability in general are not good indicators for a successful business, but more on that in the KPI stage. Profitability, I mean, you should of course look at the account profitability because this also is directly connected to the cashflow you will be having, but also on a per product and a per parent level. 

Many times I saw, for example, bait products that have absolutely horrendous profitability, but they were necessary to up and cross-sell to different products in the lineup in that parent structure. So they serve a very important function, and therefore it's not easy to just cut them out because they're not profitable, because they have a strategic function in the total scheme. But anyway, you should be comparing all of the different products on the profitability level individually and see which ones need support. And then I also like to define a certain set of core products.

This should not be more than five percent of the total portfolio and more on that later why that is. And finally, when you're setting up the path to go, then you should definitely consider the potential that certain changes or options that you can do have. And not just look at the past performance and trying to recover where you've been once because maybe the market changed and now the potential of this product or this lineup is not there. is not there anymore in Amazon. So try to focus on what is actually the potential for the product in the next couple of years, or if it's really urgent next short term. 

And then part four is setting the right KPI targets. As I stated before, revenue and profitability are definitely none of them. And so you should find the right KPIs. For example, you discovered our conversion rate is bad because our creatives are not good, then the right KPI would be how much percentage of our total portfolio have we already reworked the images of? And then set them clearly into a timeline how much percent you want to achieve by which date. And this also connects to the next point, setting clear goals that are communicable back again to the people who are actually driving in the end the change.

And finally, the responsibility has to be set and also directly connect to KPI One person needs to be responsible for a certain KPI. Let it be the rework of the portfolio images or whatever it is. And yeah, the processes of the whole business should from now on focus on those KPIs. If we discover that other processes which are not necessarily relevant for the daily business, then we should think about whether it's something that we can just leave out if they're not really focusing in the process on the KPIs or we have to create new ones. 

And then, it's time to do something, right? Quick fixes, action beats strategy always, right? I don't know which one of the big consultancy companies this statement is coming from, but that's actually so true for a turnaround. Not just because you need to see results quickly to be able to survive either the channel to rectify to your upper management that the channel is still valid and good for the business, or whether it's coming down to the survival of the business. So yeah, you have to have quick results, and this is done by some quick fixes that I will show you now. And also stating which parts of this, especially Amazon hates. 

So we are starting from the bottom of compliance. Of course, if a product is offline, then you will not make any revenue. I think this is pretty clear. A part of that there are many lawyers roaming around Amazon just trying to find someone they can sue. This is something you wouldn't absolutely want to avoid because Amazon has an internal score where they're ranking you as a vendor and as a seller as well, which you don't see, you don't know. This will never be mentioned anywhere, except if you're responsible for the account. And this drives a lot of the growth of your account. So if Amazon sees you're not complying with regulations, either from their side or from a legal perspective, your score will reduce. 

So this, in my opinion, is the most important part of any business. Start with compliance, make it your main homepage or whatever. This has to be sorted quickly and directly. And yeah, then the next is the portfolio focus. I said before, try to find some focus products that you really want to drive forward and separate your portfolio for the relevant aspects. Poor dogs, as I stated before, these are the ones that you probably don't want to have a look at right away in a turnaround anyway. If not for one important factor, I usually cluster the portfolio into a visibility. So what products to have good or bad visibility, and what products have good embed conversion rates. 

If a product, a poor dog, for example, with enough data. shows that has a very good conversion rate, but absolutely horrible visibility, then this is something we can address very quickly, right? We can just increase our marketing activities, and it will drive results immediately. The same is true for all the other products, by the way. But for the poor dogs, there's the essential question, do we leave them in the portfolio or not? And if they cost money and are not a quick turnaround, then we just cut them out. 

And then we come to part three. As I said before, I was the head of Incubeta's marketplace business. And so, yeah, I know the agency side, and I know what agencies do. I tell you, have a close look and what the agencies are actually spending your money in. And if you're at the stage, because at one point when you start with the agency, they're very engaged and try to drive your business as much as they can forward with all of their knowledge and convince you, gain your trust and so on. But at one point, it's like with your portfolio for the BCG Magics, you will move from a question mark or bulldog to cash cow. And then they will run you on autopilot. And therefore, when you're at the stage of a turnaround, and you are until now very satisfied or satisfied at least with your agency, whatever they're doing for your creatives, advertising, whatever it is, tell them clearly we have a new strategy. We need your support either in an audit or end in driving the way forward that we're looking for. 

And if the agency performance is not good enough or you're not very happy with what is going on right now, then you should absolutely check on drastic changes, either getting it in-house and doing it in a simpler way or doing any other activities. There are many different options that you're having, but agencies are usually one of the biggest spenders. And yeah, oftentimes just a quick tip, have a look on what actually they are targeting. If you have a big brand, oftentimes they're just targeting your own keywords and your own products and driving ACoS results without gaining new customers. 

And then we are looking at the second biggest thing that Amazon hates when you're doing, except of not being profitable for them, is returns. And I will explain this from an Amazon perspective first. If you have a high returns level or high returns rate, then this will also Amazon cause to lose money. Because what is happening is Amazon is determining who is getting top visibility, and this also drives back to the overall account Amazon score, who gets a lot of visibility for their main keywords on the search page, depending on the returns level. 

So, because Amazon, of course, is showing you a customer, customer buys and then sends back the product, Amazon will lose as well. And this is also not good for customer experience, which is in terms of Amazon priorities, the number one priority. Anyway, you're internally argumenting with any manager. It will always be, if you can argue, that the customer experience is affected by a certain action, they will actually have a look at or drive change right away. 

And a part of that, of course, your reviews go down. As I said before, your visibility gets affected and not just on a product level. Your visibility also gets affected on an account level because Amazon is saying, You have a bad performance, you obviously have a problem with quality control, maybe your other products are affected too. And we are not taking risks in showing you in especially high competitive areas when you are driving bad performance for all of us and causing bad customer experiences. And then eventually, yeah, you're also losing a lot of advertising money from a return, you're not recovering any of the advertising euros that you've spent. So this is another factor issue. You should consider a part of, of course, re-handling of the products if you're getting them directly back. Yeah. 

And then what I saw a lot is that this is something that companies that have their own shop usually are a little more aware of, but Amazon pure players or Amazon main players are usually not that much aware of. Try to go through the whole customer journey of searching your product, getting to find it, and then seeing the results. How does the page look like? What are the delivery times, price, and so on? Because very often what I saw, regardless if you're doing direct delivery or pallet ordering or whatever it is, the delivery times are much worse than they should be. 

And if this goes unnoticed for a very long time, then it doesn't matter that it's prime badge. People will just less likely buy, depending on what type of product, of course. But yeah, that's also another factor that affects the conversion rate greatly that you should dive a little bit deeper into. Yeah, and this is just, of course, a set of quick fixes. The list is long of quick fixes that you can do, but these are some that I always saw in turnaround projects that worked directly and had an immediate impact. 

And then the daily business, and maybe the most difficult part for any business is creating routines focused on the priorities for a long period of time. In a turnaround, it's even worse because the initial motivation is usually already pretty low. If you don't get any quick fixes or quick results, then even worse. But this is something that most companies struggle with, focusing on the priorities. And here are some points that I want to talk about when talking about focus priorities in your daily business. 

First is have weekly check-ins for anyone responsible for the Amazon business. Be it the agency, be it a consultant, be it the one that is currently restructuring your processes in the fulfillment area, the one doing the quality control compliance, setting up the new listings, whatever it is, you should have a weekly check in for anyone that is directly involved in the Amazon business in general and check on the KPIs that you defined the responsibilities before in the first part. 

See how is the progress going. I also recommend during those meetings to check the most important business KPIs. So KPIs that you track outside of the regular Amazon business and the most important Amazon business KPIs and see the changes in the KPIs based on your actions to really evaluate also whether you are on the right track. Sometimes you have the best plan, but you're trying to roll it out and it doesn't work. That happens. And if you're not having weekly check-ins and going deep into the KPIs, you will never discover it. And if it's too late, it's too late, especially in a turnaround. 

And then the Pareto principle.  Yeah, so 80/20 rule, right? In a turnaround, it's usually sixty, forty,  try to just focus on the things that are important and leave the rest aside. Anything that is not driving immediate results or is super business critical in the midterm should be just left out, even if it hurts. But it's more important, actually, to define clearly how you prioritise in this manner. And this is connecting basically point three and four. Balancing priorities is more the approach of having a focus more on the potentials. As I said before, not just on past performance and recovery, but trying to see really the potential. But more importantly, and this is restructuring the business on its own, usually, as I saw in the past, processes with the KPI focus. 

So you discovered that the images have to be reworked for the whole portfolio. You set up a responsible person for that. Okay, but that doesn't necessarily mean you already have a process for that. You're doing ten thousand other things. So the first step, or the most important step during the weekly reviews, is try to establish and improve the processes that improve the KPIs that you defined will drive the turnaround. And if you're doing that consistently, it will also balance the priorities itself. 

Because then questions, for example, from someone who is doing SEO will be obvious, right? They might be trying to more focus on how to communicate in the images better and working together with the image department and producing the best converting images instead of doing some keyword research for quadruple long-term keywords that are basically not really driving any results towards our KPIs that we focus on. And so, if you just take one thing away from today, it should be do weekly meetings and focus your processes on the KPIs that you defined. Rather, it's a turnaround or just your regular business performance. 

Yeah. And with that, we are already at the end of my presentation. I hope I kind of got into the right timeframe. Feel free to connect with me on LinkedIn. On the final note, I also have a seller and vendor support group. As I mentioned before, I handled a ton of cases, but this is not necessarily me helping you. But this is a community that helps each other. It's an advertising-free zone. You will not be contacted by anyone. If you want to join and have some questions regarding vendor or seller support cases, then feel free to contact me. I will send you an invite.

Paul Sonneveld
Thank you so much, Toni. That was great. We are almost out of time. We have about two minutes before we go on to the next session. So let's try and squeeze in maybe two questions. The first question is from me, and then I'll hand over to Luke, who's got a question as well. My question was, What is a realistic timeframe for achieving a turnaround performance? Of course, turnaround continues, but in order to get that initial set of performance turnaround so that you feel like things are really heading in the right, you've got hope again, right? In your experience, how long does it take when it comes to Amazon vendor businesses? 

Toni Turbanisch
It depends on what area it is, right? So there are certain areas where you can drive the results very quickly. If we discovered, for example, that advertising has a bigger issue, then if you get into expert or you discovered especially what it is, then a turnaround can be fairly quick. We are talking one to two months. Of course, you should always take about a month for the full analysis. Yes. It takes quite a while to gather all the data and make a really good proposal and plan that in the end.

But more importantly, instead of just focusing on when the results will happen, is when do you start? When is the right time to say, now we need a turnaround? And I tell you, basically any time is the right time. Even if your business is going well, if it's not skyrocketing, it's time for a turnaround. Most businesses are just growing with five percent year over year or even less. And this, in my opinion, is already a sign for something is not one hundred percent right. So this is the more difficult question defining on when do we start? 

Paul Sonneveld
Sounds like if you feel like you're asleep at the wheel, then let's start the turnaround. 

Toni Turbanisch
Yes. Yeah, that's a pretty good idea. Or if you're yawning, then maybe. 

Paul Sonneveld
All right. Quickly, let me try and squeeze Luke's question in here. In the context of a turnaround, how do you make an aging catalogue perform longer, especially when you say you're facing a delay in terms of new NPD coming to market or exclusive? So you've got to continue with an aging catalogue and squeeze as much out of it as possible, particularly when it's causing margin issues and the like. 

Toni Turbanisch
The first step, sorry. The first step is that the article cost can very often be increased for those old legacy products because it hasn't been done in quite a while. So this would be step number one. And then I would focus on the potential of those products. Are they old because they look old, or did the market actually evolve or is it just a cash cow because we focused on other areas? So I would determine that first before saying we're doing any actions. Try to identify the potential, maybe increase the article cost, see whether Amazon accepts it, and then see whether it makes sense to make any other actions. 

Paul Sonneveld
Great answer. Maybe the products are not as old as you think they are just because your NPD is delayed. It doesn't make the other products necessarily old in the eyes of the consumer. 

Toni Turbanisch
Exactly. 

Paul Sonneveld
Some really good points there. Okay, great. Toni, thank you so much. We do have a couple of questions left. I will carry those over to our vendor panel a little bit later in about forty minutes from now, and look forward to continue on some of these topics. But yeah, thank you so much. It was really fantastic. 

Toni Turbanisch
Thank you, Paul. Have a lot of fun still in the event and see you soon.