Amazon Vendor Central Net PPM should always keep 40% or above ?!
2024-04-11 17:33:48
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By Alan Luusama Lee
Net PPM is always a critical metric to track on profitability of the Vendor Central accounts. Amazon’s Net PPM within the Net PPM Report is read as a percentage and is calculated as: (Average Selling Price - Cost Price + Trade Terms) / Average Selling Price
Amazon 1P sellers or vendors usually negotiate these trade terms annually and meet quarterly with their vendor managers to review Net PPM of their accounts.
What is a good Net PPM?
As I have been working with vendor managers for years, there is no single definition of good Net PPM, as margins will differ by category and industry. In other words, your benchmark depends on what products you sell and how they compare in the category.
The general category guidelines for Net PPM are above 30% for softlines/consumable goods and above 40% for hardlines. The heavier your ASIN like furniture items is to ship, the higher your healthy Net PPM threshold will be for that ASIN.
It’s important to work with your vendor managers to understand the Net PPM thresholds they have been tasked by their upper managers, DMM (Divisional Merchandise Manager), to achieve for the profitability of their Vendor Central accounts assigned to them.
Vendor Managers are known to target a minimum of 40% Net PPM in hardlines categories and 35% in consumables categories. The closer you are to these benchmarks, the lower will be the margin pressure for Amazon, and the safer level your Vendor Central accounts will stay.
For more questions about Net PPM, please contact Masei & Ryland eCommerce via email to: sales@rylandhk.com
Author：
Masei & Ryland eCommerce Co
Alan Lee
Alan Luusama Lee is a founder of Masei & Ryland eCommerce as an international consulting firm with his over 20-year working experience in eCommerce & global trading business.
Alan Lee was born in Hong Kong, while educated in US & graduated at University Of Hawaii. He has 20+ years experience working in eCommerce sector worldwide. Based on the needs of each client, as an experiencial eCommerce consultant, Alan and his team assists clients worldwide to onboard many different platforms & set up teams for clients with his analytical, data-driven approach, & platform connection.
Alan Lee has also been well-known for his leadership & board experience on eCommerce businesses in China, Hong Kong & US. Please feel free to contact him via email to: Alan@amzhongkong.com or whatsapp: +852-9232-7550 !!
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