Amazon vs Traditional Retail: Understanding the Amazon Mindset for Vendor Success

Podcast transcript

Paul Sonneveld
Hi, everyone, and welcome to another episode of Marketplace Masters. Today's session is focused on a topic that many brands really struggle with when they first start working with Amazon, and that's understanding how Amazon actually thinks. Many sales directors and account managers are incredibly experienced working with major retailers like Tesco, Woolworths, Coles, or Bunnings here in Australia. But when they start working with Amazon, they quickly discover that the same playbook doesn't necessarily work. In fact, Amazon has a very different mindset when it comes to decision-making, vendor relationships, and how it goes about growing categories. 

Now, to help unpack that today, I am joined today by Benjamin Bolshinsky, founder of Vendor Launch, a marketing agency specifically for Amazon vendors. Now, Benjamin used to work at Amazon as an AVS brand specialist in the retail team, and he worked at Amazon for almost three years, after which he left to start a business selling surf wax and repairing wetsuits on the northern beaches of Sydney, Australia. As a former Amazon AVS brand specialist, he saw firsthand how frustrating and difficult it was for vendors to navigate the platform and how much money some vendors were actually leaving on the table.

This unique perspective really led him to build a marketing agency dedicated to solving exactly those types of problems. So in today's conversation, we're going to talk about the Amazon mindset, how Amazon vendors should think about working with Amazon and also do a little dive into Amazon Vendor Services or AVS and whether it's actually worth it for vendors in markets like Australia. Benjamin, it is absolutely fantastic to have you on the show with us today. 

Benjamin Bolshinsky
Pleasure to be here. Thanks for the warm intro. 

Paul Sonneveld
I must say, as I went through your intro, there is obviously a question there about, oh, you know, what happened to your surf business, right? The surf wax and the wetsuit. So are you still running that as well? Or is that getting less and less love these days? 

Benjamin Bolshinsky
No, yeah, so the surf flats is quite short-lived, but it was, yeah, lots of learnings for sure. You know, the business didn't kind of take off. So I moved on to the wetsuits, which also didn't work but for completely different reasons. So yeah, lots of learnings, but then I stumbled upon the AVS or the vendor vendor launch, which in hindsight was right under my nose the whole time, given that I'd spent the last almost three years working at Amazon, but it's never a straight line, I guess. 

Paul Sonneveld
No, no, never is. Although it's kind of, once everything comes together, it's like really obvious. I've got a couple of those stories as well, but I wouldn't bore our audience with that now. All right, well, let's talk about Amazon, right? You've worked inside Amazon and now as buys brands. So maybe a good place to start is, you know, what do you see as the largest misconception or misconceptions that traditional retail teams have when they start working with Amazon, you know, particularly in the context of Amazon vendor, of course, that's kind of the overarching theme here. 

Benjamin Bolshinsky
Yeah, yeah, sure. So I think it's a great question. I think to backtrack, so, you know, I've kind of been on both sides of the fence. So I've worked at Amazon inside of Amazon and also now on the vendor side, on the other side of the fence. And I think one of the biggest things is vendors, particularly more established, you know, companies, they treat Amazon as kind of any other retailer when in actual fact they shouldn't. It's completely different. And I think there's a couple of things that stem from that. 

So firstly, they kind of think Amazon cares about the vendor relationship, when in actual fact, from Amazon's perspective, it's more of a numbers game. There's just so many vendors, each product comes down to a barcode and an ASIN number. It's a more objective, number-based kind of approach. For example, with a traditional retailer, maybe there's more of a relationship you have to build. You have to convince the buyer. It's more subjective. 

But on Amazon, it's more of a numbers game. And yeah, I think that's one of the biggest differences. It really should impact how you take the approach. It should be very different. With traditional retailers, the suppliers might want to build a relationship. They might want to get in front of them and tell them the story of their product and then the effort they put into it. But on Amazon, it's just an objective numbers game. Does that make sense? 

Paul Sonneveld
Yeah, no. It definitely resonates, and I spent many years at Cole's actually talking to probably hundreds of suppliers, and you're right about, hey they want to get in front of you, they want to put their product in front of you. They want to tell the wonderful story. And obviously, that's different when it comes to Amazon. Which sort of leads me to kind of the relationship angle, right, and we'll probably get on to it a little bit longer but how important is that relationship? It's very important in a lot of offline retail still today. I think many retailers don't like to admit that, but it's certainly true. But when it comes to building relationships with Amazon, what's different there, particularly bringing back that mindset piece as well? 

Benjamin Bolshinsky
Yeah, sure. So I think like suppliers, vendors should understand that Amazon's approach is data-driven, which means like it's more of a democratic kind of process, right? If the numbers support, if the customer wants the product, it will sell, Amazon will buy it, right? You don't really have to convince anyone to buy the product. Like I understand in like traditional retailers for them, kind of like if they're bringing on a new product, it also means they're getting rid of another product, right? At the core of it, they have an essential space. Whereas Amazon effectively has unlimited shelf space, right? Like, there's, you know, they can almost add an infinite number of products. 

Particularly, you know, if they're not holding the image from their warehouse, you know, which is possible through programs like drop shipping and all that. But at the core of it, they effectively have an almost unlimited shelf space, right? So with a vendor manager at Amazon will always work more often than not will want more products. Whereas with a traditional retail model, the buyer kind of has to make that decision because if they're taking on a new product, they're effectively removing an old one. 

So I think that's kind of probably one of the more foundational kind of differences. And so suppliers, they might be used to a traditional retailer where there's more of a collaborative relationship where they want to get in front of the buyer. They want to show them the product. They want to feel them the product. They want to touch it. Whereas with Amazon, it's a bit different. I'll give you an example. 

So when I worked at Amazon, one of the vendors that we worked with flew us out to their warehouse. Even now, we have clients that work with us that invite us to their office, to their warehouse, to showcase, for example, if there's a new product launch. If they're going to launch a new product, they want us to see it. They want us to look at it. But from Amazon's perspective, it's like, does that matter? If the customer wants it, great. Put it on Amazon and then let the customer decide. The buyer, the vendor manager at Amazon doesn't really have to make much less subjectivity if that makes sense. 

Paul Sonneveld
Yeah, which gives us more to the like what are the factors what's the approach by which Amazon buyers really make decisions whether to range something or not like you're right like i know the retail side very well right there's a planogram you don't want to know the story you know exclusivity can be important you want to make sure it's not duplicating the range it's customer choice all of that But, you know, Amazon's different. 

You're saying, you know, they're essentially they don't have to deal with, you know, one in one out type arrangement when it comes to physical shelf space. You know, there's some restrictions, I guess, around the warehouse, but their considerations are really different. What are the key kinds of metrics and factors that an Amazon buyer will sort of go through in their mind to evaluate, hey, whether this product is worth ranging or not? 

Benjamin Bolshinsky
Yeah, sure. So Amazon's approach, generally speaking, it's customer driven. So they work backwards from what the customer wants. Now, probably the most important metric is selection. It's just ranging products. If a product is being sold by competitor retailers, that want that product. So if you're a supplier, you should also kind of leverage that, right? If you're about to add a product, which other retailers, you're currently selling to other retailers, know that Amazon wants that as well. It's probably part of their KPIs to range that product or that range. So definitely leverage that. 

But yeah, competitor, like retailers, raging products, that's obviously a factor. But then also like profitability, ASP, which stands for average selling price. It's a metric that Amazon vendors, vendor managers track, especially as the market matures and they need to make it more sustainable from their end. And they start looking at selling price of products, profitability, are they actually kind of making more money on those products. I look further down the P&L. So it's a range of those things, but I think at the core of it, it's like, it's customer driven. It's what the customer wants. 

And then also that kind of feeds into another element, which is suppliers should care about sell out. So what Amazon is selling to customers, not only what they're buying from you. I think going back to that, like misconceptions is a lot of vendors or suppliers think, I'll just get Amazon to raise the PO for the new product. I'll get it into their warehouse and then it stops. That's it. But the actual fact is like, Amazon's not going to sell your product for you. In fact, probably less so than other retailers where you really have to be more concerned to get Amazon to sell to the customer as opposed to them just ordering it from you. 

Paul Sonneveld
I remember many situations where, hey, the product is in Coles' warehouse. It's now Coles' problem. Although I think over the years, Coles got better at trying to get suppliers to do that. But you're right. You have to do the marketing, the content, you have to drive it, all of those things. Just comparing and contrasting those traditional retailers, let's call them bricks and mortar or the like versus Amazon. What are some of the strategies that you feel like actually they tend to work pretty well in the offline world, but when it comes to Amazon, they just don't work. They don't translate. I keep seeing clients or vendors trying to do the same tricks and it just doesn't work. 

Benjamin Bolshinsky
Yeah, yeah, sure. So I think there's two components. The first is related to ranging. I think a lot of suppliers are used to the fact that maybe the retailers won't range all of their products. They might only range some. Again, going back to that limited shelf space. But on Amazon, you really should... include a wider range of your products. And obviously, you need to make money, right? Don't range products you're losing money on. But for the most part, you know, suppliers should range more than less. There's no, you should add more products. So I think that's kind of the first difference. 

And then the second is like, yeah, being concerned with that sellout, being concerned with where like your merchandising, your marketing trade spends going, like in a physical retailer, you know, you might have like tastings, you might have like store merchandising, pause, point of sale, like banners, that kind of stuff. Obviously, on Amazon, it's completely different. And I'd say the most important thing is advertising, is running paid ads to get your product in front of more customers, to advertise it against relevant keywords. And that way you kind of grow the business that way. 

Paul Sonneveld
Yeah. Is there anything, I mean, I'm sort of, I'm going to ask a very specific question here, but, you know, in retail, this is very common as part of, you know, arranging strategy, then the supplier may give you some straights or some, what do you call it, launch support money, and then return the retailer may feature you in their catalogue, or they're going to put you on a gondola end for a few weeks. So in other words, you can sort of negotiate kind of launch support and the retailer, you know, obviously, you know, subject to ROI will come to the party. With Amazon, clearly, you have to do a lot of these things yourself, like advertising and the like, but are there things that Amazon can do to help your products launch on Amazon? And I guess, what are the things that vendors should be asking for when they talk about ranging products and MPD? 

Benjamin Bolshinsky
Yeah, it's a great question. So, I mean, sure, the vendor managers, they can support with things like banners on the page, things like that. To be completely honest, I have found the greatest lever of driving sales, there's two things, there's promotions and then there's advertising. And advertising, probably the most important lever. The thing to understand is advertising is separate from your vendor manager's P&L, right? So if you're investing ten thousand a month in ads, that's ten thousand dollars a month your vendor manager isn't getting. It isn't going directly towards their P&L. The retail kind of buyer side of Amazon is completely different from advertising. So that's something to be aware of in terms of like incentives. 

But again, like I'd say, vendor managers really useful just getting the product range, looking after the commercials. I mean, it has to make sense for Amazon as well. There's no use kind of neglecting that. Obviously has to make sense of the supplier as well. Once you've got the product up and running and you've got stock, you know, in Amazon's warehouse, no operational issues, Amazon buying the product, there's a forecast. really most efforts have kind of shift towards that advertising side of things. 

Paul Sonneveld
Yeah, that's such a good point, particularly point around the fact that they're kind of almost two different worlds. Make sure that you keep your budget aside for advertising. Don't give it all to the vendor manager and then expect them to advertise because they're not going to. 

Yeah, that's really good. I was going to ask about the question of content right? I mean again let's draw the parallel. If i'm ranging a product at Coles, you typically, I will supply some images where in most cases, calls may even do their own photography, they will create the shelf talkers, the banners, the catalogue pictures, the digital flybys campaigns. All of that is done by you know the retailer in many instances. 

With Amazon, particularly when it comes to content, I know we've spoken about advertising, but when it comes to like the product display pages, as an example, I know on the seller side, it's a hundred percent the responsibility of the seller, right? But for vendor, how does that interaction between the vendor, you know, and the vendor manager and the Amazon, you know, who creates the content, who's responsible for it? 

Benjamin Bolshinsky
Yeah, great question. So it also falls in the vendor side. And again, this goes back to the fact that like Amazon will not sell your product for you. It is the responsibility of the vendor to make sure all of this is sorted. And that means making sure that your products have images and they're accurate. Yeah, it falls in the vendors, making sure you have a brand store. All of that does help drive sales. And then arguably it's significantly more important than with traditional retailers, because again, customers can't touch your product, it's the images that do the selling. You have to communicate the benefits of your product and how it's being used. So it's really important and it falls really within the vendors the vendor to do that.

Paul Sonneveld
Yeah, don't wait for Amazon. I know I have seen cases where, particularly in the early stages of a relationship. Amazon will try and pitch in and do some of that. But often it's not even like ten out of ten type content, right, it's almost like the bare minimum just to get the listing live which may not result in sort of great ranking and the like. Okay, well, let's take it up a level, right?

Like we've spoken about products and getting product range, but like, let's say the products have been ranged, the relationship's going, like how does Amazon look at the broader relationship, right? In terms of particularly, how do they evaluate success, right? You as a vendor, let's say we're doing business for a year, like, you know, how does Amazon evaluate your performance and how do they think about whether you're like a, brand that they want to continue to partner with and grow versus actually, you know, things not working out that well. Like what's the mindset there? 

Benjamin Bolshinsky
Yeah, yeah, sure. So your vendor manager will have a series of KPIs that they're assessed on for each vendor. And so these KPIs include like ranging, so selection. So again, if there's products which are being ranged in other retailers that are not being ranged at Amazon, red flag internally, that's what they'll go after. So that's the first piece is selection. Now, obviously, each vendor manages a P&L. So they are also KPI'd on like top-line revenue growth. So other vendors growing is the category growing that sales figure. And then also like margin. So Amazon vendor managers refer to that as net PPM, which I believe stands for net pure product margin. And so that's kind of the main margin figure that they kind of look at. 

Now, the other thing to note is, depending on the size of the marketplace and where it is in that trajectory, is it a new emerging market? For example, Ireland or Australia versus the US, they typically look at different KPIs, which weigh more heavily. And so what that means is as the market grows, they typically look after more profitability, more margin based further down the P&L. Because at that point they need to make money at the start when Amazon launches in the new market, that probably range anything regardless of how much money they will make. But yeah, as it matures, they typically look more towards profitability, which is what many vendors in Australia are currently, I'm sure, experiencing. 

Paul Sonneveld
I was actually going to ask you from an Australian point, you also have a very unique lens on the Australian landscape here. I remember, you know, seven, eight years ago after Amazon's launch it was all about range and selection right get any products you know, it's in JB Hi-Fi, we have to have it if it's in got like, how has that evolved, and how have you seen priority shift on the vendor side when it comes to Amazon Australia? 

Benjamin Bolshinsky
Yeah, yeah. So again, as you mentioned at the start, it was like, let's just range everything, all products, regardless of whether it makes money. But as it matures and as it grows, they start looking at profitability. So now it's more looking at profitability. Are they making money on each of the products? 

And then the other really important metric that they consider is called ASP, stands for average selling price. Again, looking at as the name suggests the selling price of the product. So if products are very low ASP, they might not be as keen to range them and sell them you know just because you know if it costs seven dollars to ship a product like you know you're not exactly making a lot of money in a five dollar type of chip. So yeah, ASP becomes important where they start to kind of more prioritise or look more at bulk listings, kind of larger pack sizes and kind of looking at that side of things. 

Paul Sonneveld
Yeah, yeah, very interesting. Yeah look, I think the point on ASP is so valid like, i don't know what the threshold is the is these days but i remember doing a some analysis i think over five years ago, where i think it said something like even on the seller side if it's below twenty dollars like and it's sort of a standard type product it's not like a greeting card or something that has some sort of favorable economics then you know actually it's just not worth doing because yeah you know once you add up all the costs logistics and the like. Obviously, we don't have that much time left, but I want to get into AVS because you spent many years at AVS here in Australia. Maybe let's just start before I go with my more specific ones. For those of the audience that don't really understand AVS, maybe you can just explain what is it, what does it entail, and what does it cost from a budget point of view? 

Benjamin Bolshinsky
Yeah, yeah. So AVS stands for Amazon Vendor Services. I believe it used to be called SVS, Strategic Vendor Services, in the US. But essentially, it's a paid program that Amazon will pitch to vendors, where as part of this program, you get an account manager, I guess, someone internally at Amazon that works under your vendor manager, and they kind of help grow the account. They help with day-to-day operations. So it's kind of like having someone internally at Amazon can help you with your account. That's the very high level. 

Paul Sonneveld
Yeah. And well, I was going to ask, because I've spoken a lot about AVS in these episodes, but usually more in the context of very established markets like the US or the UK. And it's become a really increasing topic as a substitute for the vendor managers who seem to have disappeared. So in the very mature market where Amazon operates, Amazon is certainly trying to drive efficiency, reduce sort of the ratio of vendor managers to vendors. And as a result, AVS is now looked on as sort of an alternative to having a vendor manager. 

But I think the situation is a little bit different in emerging markets or growing markets like Australia, for example. So my question really is around, you know, what's the role of AVS in a market where you're sort of growing, where Amazon is an emerging channel, it's not like the largest channel that you serve? You know, how can AVS really complement and accelerate your business? 

Benjamin Bolshinsky
Yeah, yeah, sure. So the first thing to understand is like vendor managers, if you're a supplier, you probably run into the scenario where your vendor manager isn't responding to you, where you've asked a question and they don't get back to you for weeks, if ever. And the thing is like a vendor manager probably has fifteen accounts, twenty accounts. So they're not as involved in the day-to-day. 

If a particular product price has been an issue, they can't kind of delve into the weeds of it on a day-to-day. So that's where an AVS can potentially come in. I guess they're supporting the vendor manager in a sense. You can think of them almost as an employee of the vendor manager. And they typically handle maybe like five accounts, right? So it's a lot more depth in each individual account compared to the vendor manager. And the idea is that they will support your growth. 

Now, in practice, what that means in markets like Australia, it's probably more of an operational place. Your AVS will look at things like your confirmation rate, how many orders are you confirming? How many are you shipping? What is the time it takes for you to ship products from your warehouse to Amazon's? The quicker the sooner you can ship, the more sales you'll get. So things like that they look after they look at that kind of day-to-day week-to-week how the accounts are tracking, the operational metrics they're also there to help with like executing so if you're setting up a promotion They can help set that up. They can help categorise it. They can help with merchandising. So they can help kind of more with the day-to-day.

But arguably, what's probably more important to understand is they don't help. And this is a case on all markets. They don't help with advertising. So as I mentioned, advertising is a separate category kind of area separate division so they don't help with advertising but the operational side they do help with and they also kpi and similar things to your vendor manager so it is kind of mutually kind of incentives are all similar everyone wants to grow the account and they kind of help with with that. 

Paul Sonneveld
Yeah, no, that makes sense. Whenever I talk to kind of my clients around AVS, I got very mixed responses, right? And it seems to be like a lot of it, I mean, I sort of summarise it as you need to manage the resource actively, right? You can't just assume that they're going to, you know, it's like you have to manage them like you do any team member, right? And actually, a lot of time, it comes back to make them feel like you're part of your team and treat them as such and all of that. 

I wanted to ask you, having this unique perspective, what advice would you have, particularly in the context of emerging markets like Australia, for a brand to get the most out of their AVS brand specialist, right? How do you best manage that relationship so that you're really satisfied? I mean, this service is not free. There's quite a lot of funds attached to it. How do you get a good ROI on that? 

Benjamin Bolshinsky
Yeah, yeah. So yeah, as you kind of mentioned, the first thing is like, they're not going to fix everything for you. They're not going to fix your business for you. They are a resource. And in some cases, it's, you know, it can be very helpful. In other cases, it can't. But yeah, you have to kind of understand that, like, you should be proactive. You should come up with initiatives as well. And you kind of get out what you put in, just like most things in life, I guess. 

So yeah, making sure like just being proactive, like having initiatives that you want to work on, like things, any ideas that you want to put forward, making sure that you're raising them. I think a lot of like brands, kind of, they're a bit more reactive. They don't kind of come up with them. They just kind of come to the meetings, wait for the AVS to do everything, but you know, you're not going to get the most out of it. 

So I would say be proactive, track tasks, track projects that you're working on, and then try and I guess understand like if things don't get done, the AVS has a manager, an AVS team lead, ideally like you know ask to be introduced to them work you build a relationship with them as well and just kind of understand where the abs fits in, what are the other kind of departments at amazon you know there's an in-stock team right that looks at buying supply team and AVS will contact will have a relationship with them. So, try and kind of understand the different teams and then work with the AVS, potentially get introduced to them, just have more of a proactive approach. 

Paul Sonneveld
Yeah, for sure. That's great advice. Thanks, Ben. Last question from me. Actually, I might have to throw another one. But last question before I give it to our audience. We do have a couple of questions coming in. It's also a prompt to anyone. We've got about five minutes left. So if you do want to ask Ben a question, now's a good time. In terms of for brands that are operating in newer Amazon markets, I mean, we already spoke about the fact that Amazon priorities will change as it matures and as establish itself in different markets. 

But let's talk about newer Amazon markets, Australia, Ireland, South Africa, Belgium, some of the others where Amazon's really launched in the last couple of years as a vendor. what do you feel are the most important things to focus on? There's so many, Amazon is a complex beast. You could focus on probably a hundred different things, but in your experience, in the context of a growing and a new and a growing market, what are the most important things that vendors should focus on? 

Benjamin Bolshinsky
Yeah, I think overall it comes down to like just the learning. It's like the first, if you can learn how Amazon works sooner than your competitors, you know, you'll be positioned quite well. So like learning, like do you need to advertise, building out an internal advertising team, like merchandising, how like adding products, just learning how it works. I think that's probably the most important thing. 

And then figuring out how Amazon is different from the other retailers you supply to. And then in the first like, as I mentioned before, like ranging, getting products added, that's super important. And if you understand that at the start, Amazon isn't really concerned as much with profitability as say in ten years' time, then you can probably leverage that to sell products that maybe in the future you might not. But yeah, understanding that and then obviously like advertising, starting to advertise. 

Because again, look, if you've been advertising on Amazon for three years, you have a team build out for it, whereas none of your competitors have. In three years' time, when everyone's like, oh, Amazon's pretty big now, we need to start advertising. You'll be three years ahead. You'll know like how media buying works. You'll know how many resources to dedicate it to. You know, like what ad spend you're spending, what your return, your realises, your metrics and how you've kind of like positioned your team. 

Paul Sonneveld
Yeah, that's really great advice. There's so much vendors can do right now. It's almost like I would always add to that is find a peer that operates in a very mature Amazon market as a vendor manager, so that you can exchange ideas in terms of what the future is going to look like, maybe in five to ten years' time. So you can almost work backwards and say, what are the capabilities you can already build. 

I remember simple things like very few vendors at the start were advertising because it's like it's a new skill, it's all too hard, too difficult. But actually, the CPCs were just so affordable, right? And in Australia, I know that they still are relative to some other markets right so it's just not as much competition, so if you're in there and really leading the pack, you can really build your asset and drive your sales. And there's a disproportionate advantage, really. So very good. OK, we're almost out of time. I've got a question from one of our audience here from, Let me have a look. Let me bring it up here. Yep. From Gerard. I'm just going to bring it on screen here and I'll read it out to you as well. It's quite a long question.

But Gerard, thanks again for your question. He's a regular contributor to our shows. Appreciate that. And Gerard asks, from your time at Amazon, Ben, was there ever a moment where vendors misunderstood what Amazon cared about most? I'll be interested in an example where maybe the vendor thought one thing really was important to Amazon, but actually, Amazon was judging something completely different, right? Just to sort of mismatch about priorities and what's important. Maybe have a think for a couple of seconds, but love to understand if there's something that comes to mind. 

Benjamin Bolshinsky
Yeah, it's a great question. So I think it comes down to like that ranging pace at the start. So we worked with a vendor once that they put in a bunch of this effort trying to convince us to range this new kind of series of products, this new line they were launching. And so like they fly us out, they like show us like taste testings, you know, that they kind of sell it to us. Whereas Amazon, you know, are thinking like, well, this is a product, there's no issues with us adding the product, right? Instead that vendor should have been as like more concerned than selling that product to customers through advertising, for example. 

And so if they took those resources and just applied it to ads, they would probably kind of have more results. So that was an example where, and I get it, like other retailers where they probably do need to spend time, resources, effort, convincing the buyers, making a case for it. But Amazon, it's different. The vendor manager would, it's more democratic. You don't need to ask anyone's permission, essentially, is what I'm trying to say. You can just pretty much order product. 

Paul Sonneveld
Awesome. Thank you. I appreciate your question, Gerard. I have one as well that I'm really curious about. And let me just see if it actually works. I'm just going to pop them in the screen here so we can actually bring it up. Here we go. I mean this is probably unique to some markets right but Australia like other markets, is what we call like a high-low market right now, and particularly vendors are really good at working with all the bricks and mortar retailers particularly grocery right, you know, these two weeks it's woolworth's turn, and they've got this product on half price. And then after that it's Woolworth's turn, and then it's Mac Cash, and then you know, and they're sort of happy coexistence right? 

That doesn't work that well with Amazon because Amazon is a price follower and they see a low price, they'll match, right? And they see another low price and they match and as a result, your price is low all the time. 
And this is one of the sort of dilemmas that often comes up in the context of a market or a category that tends to be sort of high-low pricing in terms of promotion. So my question to you, Ben, it's a bit of a complex one. But do you run into this issue a lot still these days? And if you do, like, do you have any strategies or thoughts on how to best manage this? 

Benjamin Bolshinsky
Yeah, yeah. So yeah, very good question. Very pertinent in today's age. But yeah, the first thing to understand, Amazon, they will match the pricing of other retailers. Like in Australia, Coles, Woolworths, they will match the pricing. So if your product is in promotion in Coles, Woolworths, Amazon will match it. That's how their pricing algorithm works. They will never undercut, they will never go below that, but they will match. And so if you're an established brand working with a vendor manager, it's important to understand that. 

And I think it comes down to working with your vendor manager, being mindful that they have a margin target, and your vendor manager does. And so if they're going to be matching other you know, Coles, Woolworths, they're going to take a hit to that margin if it's unfunded. So yeah, I think it's about working with your vendor manager, having that kind of close relationship. And then when needed, supporting the vendor manager, you know, with funding, if need be, just to make sure it's worthwhile for them as well. 

Paul Sonneveld
Awesome. That's great. Hey, Ben, thank you so much. We're out of time. We're gonna have to wrap it up. But I just want to say thank you so much for joining me today, sharing your insights. And you know, for me personally, I think one of the biggest takeaways from this session is in this conversation is really success with Amazon really requires a different mindset. You know, if you're certainly coming from the bricks and mortar world, be open to thinking about things differently. 

You know, and that may be hard if you've been doing something for like, twenty years. But the quicker you get it, right, the more of an advantage you'll have over your competitors in the same category. So I think that's a really, really important point. But yeah, so Ben, I really want to thank you for your time today. I usually ask if anyone's tuning into this live or watching the on-demand episode after, and they want to maybe, maybe they're based in Australia, and they want to pick up a conversation with you around some of these topics. What's the best way to get hold of you? 

Benjamin Bolshinsky
Yeah, great question. So LinkedIn, probably the best. Quite active there. So just send a message and get back to you. 

Paul Sonneveld
Awesome. All right. Thanks for your time, Ben. Really appreciate it. 

Benjamin Bolshinsky
Perfect. Thanks for your time as well. 

Paul Sonneveld
All right, everyone, that is it for today's episode. We're doing one of these live every single week. So if you're looking for more great content, feel free to head to our website, merchantspring.io, go to the resources section. You will find over a hundred and fifty different episodes covering topics just like these.

And of course, we are back next week, where we're going to be talking to Hamish from Sell Global about, What does it take to build an Amazon agency for the long term. You know, he's just celebrated being in business for ten years, and I'm going to quiz him about all the mistakes he's made along the way, but also all the things he's got right and has enabled him to be in the position that he is in today. So make sure you look out for that session as well. All right. Thank you so much for tuning in, and look forward to seeing you next week. Take care.