Why Vendors Should Pay Attention to the New Amazon Price Protection Policy
If you’re a Vendor on the Marketplace, you likely received an email from Amazon earlier this month outlining the new “Amazon Price Protection Program Policy“.
If you’re unsure how this new policy will impact your performance (or what you should do to prepare) – we’ve got a breakdown of the announcement as well as our own expert feedback.
Important Change – What is the new Price Protection Policy?
According to the Amazon announcement:
Beginning February 4, 2019, we will implement a new automatic Price Protection Program Policy. If you reduce the cost price of your products to Amazon, the Policy will allow Amazon to automatically apply the lower cost price to all outstanding purchase orders, products in transit, and existing on-hand inventory.
How does Amazon Price Protection work?
In simple terms, if a Vendor wants to lower the price of existing ASINs, Amazon will automatically apply the new price to all their inventory (for that particular ASIN).
Why is this a big deal to Vendors & advertisers?
In the past, Amazon required Vendors to approve the change before the charge was applied. With the new policy in place, it could have an impact on profitability – especially if Vendors do not understand how the new policy applies to their ASIN(s).
Here’s how Amazon explains it:
Amazon will automatically deduct any amount under the Policy from subsequent payments due to you as reflected on price protection documentation that we will send to you.
Due to the new automated nature of price protection, we are eliminating a requirement for you to log on to Vendor Central and manually approve price protection agreements.
This will reduce the likelihood that you’ll receive returns of high-cost inventory and also allow our systems to incorporate the updated cost price of your product faster and more consistently, which may result in the retail offer being the featured offer on the detail page.
How will the Price Protection Policy impact Vendors?
“With this new pricing/costing policy, it is now more critical than ever that Vendors understand their profitability goals when introducing new products to avoid surprises when managing costs once the product is fully in the Marketplace,” Eric Kauss, Manager, Vendor Operations – Amazon at CPC Strategy said.
“Knowing at the beginning of the lifecycle what base profitability is needed, will limit future adjustments and position products at competitive retail price points in the Marketplace.”
To learn more about the Price Protection Policy, you can sign into Vendor Central and review the entire policy in the Resource Center or visit Amazon’s Price Protection help page.
Got questions about Amazon’s Price Protection Policy?
You can also email [email protected] for more information or to speak to one of our Vendor Operations Experts.
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