Every year, Amazon sits down with the brands that sell to it wholesale and asks for better terms. That yearly round of talks is the Amazon annual vendor negotiation, often called AVN.

It sets how much Amazon pays for your products, which fees you pay back and how long Amazon takes to pay you. For a brand on Vendor Central, it can matter as much as any sales campaign.

This guide explains what the process is, when it happens, what gets negotiated and how each step works. It also covers what vendors are facing right now and how to get ready.

What Is the Amazon Annual Vendor Negotiation?

AVN is a set of yearly meetings where Amazon and a vendor agree the terms for the next twelve months. SPS Commerce says these talks decide pricing, trade terms and operating plans for the year ahead, and that they are also called Joint Business Plans, or JBPs.

In plain words, you and Amazon settle the price of your goods and the money you give back to Amazon for doing business with it.

The money adds up fast. On $1 million of sales to Amazon, every extra 1% in terms costs you $10,000. That is simple arithmetic, and it is why vendors watch each line of the deal.

Who it applies to

AVN applies to vendors, also known as first-party or 1P brands. These brands sell wholesale on Vendor Central. Modern Retail describes it as an invite-only program where Amazon buys products in bulk at wholesale prices and sells them itself.

Third-party (3P) sellers work differently. They set their own prices and pay Amazon a commission. They do not go through an AVN.

The wholesale side is large. Modern Retail puts wholesale vendors at about 40% of the products sold on Amazon. Amazon's own Q2 2026 results show sellers made up 61% of paid units, so about 39% were sold by Amazon itself.

When Does AVN Season Start?

Most vendors see it start late in the fourth quarter. SPS Commerce says Amazon then sends a performance review and first trade proposals, and the main talks happen in the first quarter, often over several weeks. MerchantSpring also places the season in Q4, running into Q1.

Here is a simple timeline:

• Months before the kickoff: review your numbers and get ready.

• Late Q4: Amazon sends its review and first proposal.

• Q1: the main rounds of talks take place.

• The rest of the year: you carry out the terms and check them.

The new terms last the whole year. Choices made in these weeks shape your margin until the next round.

If you sell on Vendor Central, that window is close. Preparing now gives you far more time than starting at the kickoff.

Who Takes Part in an AVN?

Your main contact is your Vendor Manager. This Amazon employee reviews your results and proposes changes to prices, allowances and terms. Amazon finance analysts and category managers also take part.

On your side, SPS Commerce lists sales or account managers, finance and operations teams, and sometimes legal advisers. Finance matters most, because every term comes down to margin.

What Gets Negotiated in an Amazon Vendor Negotiation?

Every contract is a little different. Most talks cover the same five areas.

Cost price

This is what Amazon pays you for each unit. Vendors often ask for increases when their own costs go up. Consultants told Modern Retail in 2025 that these requests were often met with silence or a flat no.

Base accrual and marketing funds

An accrual is a percentage of sales that Amazon keeps as a fee for doing business. Reason Automation, which builds tools for Amazon vendors, compares both base and merchandising accruals to a slotting fee, meaning a cost of getting shelf space.

MerchantSpring's guide says marketing development funds often run 5% to 10% of net sales, or more.

Freight and damage allowances

Amazon also asks vendors to help pay for shipping and damaged goods through allowances. These can sometimes come down if the vendor joins Amazon logistics programs that lower Amazon's costs.

Payment terms

This is how long Amazon takes to pay. In the 2025 round, a common ask was to move from 30 days to 60 days, which puts pressure on vendor cash flow.

Paid programs and services

Amazon also sells vendors extras such as A+ Premium content and the Vine review program. Amazon has told Modern Retail that it sets Premium A+ fees with each vendor one by one.

Net PPM: The Number Amazon Watches Most

Net PPM means net pure profit margin. It is the margin Amazon makes after costs and vendor terms, compared with the selling price. Vendor Managers use it to judge your account.

MerchantSpring says Amazon's talks have leaned toward profit since about 2022. Reason Automation adds that Amazon moves between growth cycles and profit cycles, and that it entered 2026 in a profit cycle.

Two details help explain Amazon's asks:

• A merchandising accrual counts toward Net PPM whether or not the money is spent. That is why Amazon can ask for more even when last year's funds went unused.

• Advertising has its own profit and loss account, so ad spend does not count toward your Vendor Manager's profit goal.

How the Amazon Annual Vendor Negotiation Works, Step by Step

The process has three broad phases: preparation, negotiation and putting the deal into action. Here is how it plays out.

Step 1: Amazon opens with a review and a first ask

Your Vendor Manager shares last year's results and Amazon's plan for next year, along with proposed terms. Expect the proposal to ask for more. MerchantSpring expects Amazon to push for higher accruals and fees again in 2026.

Step 2: You reply, and quickly

Amazon often expects an answer within 5 to 10 days. Use that time to check the numbers behind each ask. Reason Automation suggests asking the Vendor Manager for the data behind a request, so you can run your own analysis.

Step 3: Offers go back and forth

Both sides trade proposals and counter-proposals over several rounds. Most vendors swap one term for another instead of saying a plain yes or no.

MerchantSpring suggests pairing each concession with something in return, such as a small extra discount in place of longer payment terms.

Step 4: Pressure builds if talks stall

When talks stall, Reason Automation says Amazon can stop ordering or hide products, and calls this one of a Vendor Manager's few direct tools. MerchantSpring says a meeting between senior leaders on both sides can help break a deadlock.

Step 5: The deal is signed and tracked

After signing, the vendor has to carry out the terms and follow the agreement through the year. Check invoices and deductions against the deal every month, so gaps show up early.

How AVN Works for UK and EU Vendors

Europe adds one question: which Amazon stores sit inside the same negotiation? SPS Commerce describes three set-ups: local, coordinated and managed. They range from one market at a time to terms shared across several countries.

Ask your Vendor Manager which set-up applies to you. That tells you who you will negotiate with and which markets sit under one deal.

What Vendors Are Facing Right Now

Costs are high and Amazon is guarding its margin. In 2025, Modern Retail reported that tariffs had complicated annual talks, and that some vendors were thinking about moving from wholesale to third-party selling because Amazon was slow to accept price increases.

When Amazon did agree to pay more, it often asked for a margin guarantee. That means the vendor pays Amazon back if its margin falls below a set level, even when Amazon lowers the shelf price.

Moving to 3P is not the answer for everyone. One vendor told Modern Retail that most of its items sell for $6 or less, and that selling third-party would push its prices up and its unit sales down. Amazon told Modern Retail it supports its selling partners through the business model that fits them best.

The wholesale side is still strong. Marketplace Pulse noted that the seller share of units fell for two quarters in a row in early 2026, and that Amazon's own retail units grew faster than seller units in Q1. Amazon's Q2 report put seller share back at 61%.

Amazon still needs good vendors, but each vendor needs a plan that protects margin. SPS Commerce says a growing number of vendors are looking at 3P or mixed models.

How to Prepare for Your Amazon Vendor Negotiation

SPS Commerce says strong suppliers often start preparing months ahead. A simple checklist:

• Know your Net PPM by product. Find the items that pull it down well before the first meeting.

• Track sell-out, not just sell-in. Sell-out is what shoppers buy. Sell-in is what Amazon orders from you. Weak customer sales lead to smaller orders from Amazon later.

• Check chargebacks and deductions. Chargebacks are penalties Amazon applies for things like late or incomplete shipments. Look for overbillings and missed reimbursements in past transactions, since they can strengthen your case.

• Build a give-and-get list. For every concession Amazon asks for, decide what you want back.

• Keep prices steady across channels. SPS Commerce advises consistent pricing on every platform, including your own seller account.

• Know your backup. Some vendors sell high-margin items on 1P and lower-margin items on 3P.

• Raise open problems. AVN is a good time to press for fixes to open cases and system issues that your regular contacts cannot solve.

Common Mistakes Vendors Make in an AVN

MerchantSpring lists several traps that vendors fall into:

• Going in blind. Walking in without your own numbers puts you on the back foot when Amazon quotes a metric you never tracked.

• Preparing only at the last minute. Vendors who track margin all year spot problems before Amazon does.

• Giving without getting. Say yes too fast and you lose the chance to trade.

• Ignoring what marketing funds return. A high marketing fund with no proof of results is pure margin loss.

• Working in silos. Sales, finance and supply chain need one shared plan.

Amazon Annual Vendor Negotiation FAQs

Is an AVN the same as a Joint Business Plan?

Yes. SPS Commerce uses both names for the same yearly talks.

Can a vendor say no to Amazon's terms?

You can push back and make counter offers. Some items need both sides to agree. Reason Automation says cost support agreements must be agreed by both parties, and suggests asking for a cap, a shorter period or a short list of products if you must sign one. Plan for the chance that Amazon slows orders while talks continue.

When should I ask for a cost price increase?

Views differ. MerchantSpring says AVN season is often the best time because Amazon is already reviewing terms. Reason Automation says to raise it as soon as you know, even if you keep it separate from the AVN. Back either route with data.

Why does Amazon ask for more accrual when it did not spend last year's?

Amazon and the Vendor Manager gain margin from a merchandising accrual whether or not the funds are spent. That is why the ask can rise even when spending was low.

What happens if we cannot agree?

Talks can move to senior leaders on both sides, and MerchantSpring describes vendors keeping a 3P option ready as a backup, which gives them a real choice if terms fall short. Amazon may slow orders in the meantime, so a plan B matters.

Get Ready Before the Meeting Starts

The Amazon annual vendor negotiation rewards brands that arrive with clear numbers and a plan. Shop Culture's founders have worked as category and growth managers at Amazon, Flipkart and Walmart.

If you sell on Vendor Central in the UK or EU and want an expert view of your numbers before the kickoff, book a consultation call. You can also read about our Amazon marketplace management and vendor negotiations services.