How To Approach Amazon Annual Vendor Negotiations in 2026

Background on the Amazon AVN Process

It is that time of the year again; it’s cold outside, the post-holiday rust has been shaken off, and it’s time for all the strategic plans laid in Q4 to execute. It’s also the time of the year when Amazon starts engaging brands in their Annual Vendor Negotiation (AVN) cycle.

For brands selling on Amazon 1P, the AVN cycle has always been a critical moment for establishing how the rest of the year will unfold. Historically, it was a structured but familiar process:

1. Review performance
2. Align on growth plans
3. Negotiate cost
4. Set goals for the year ahead

While these negotiations were rarely easy, there was still a sense of predictability in how discussions unfolded and what Amazon was willing to agree to.

Amazon Brand Challenges With the Current AVN Shift

Over the past several cycles, we’ve observed a clear shift in how Amazon approaches these negotiations. The bar for vendor asks has materially risen, particularly when it comes to cost increases, funding requests, and other terms that directly impact Amazon’s margin structure. Conversations that once leaned heavily on topline growth, category expansion, or shared upside are increasingly anchored in margin preservation, operational discipline, and long-term retail sustainability.

Amazon’s Changing Priorities Impacting Vendor Negotiations

At its core, this evolution reflects a broader change in Amazon’s retail priorities. Growth remains important but is no longer the dominant driver in negotiations. Margin stability, predictability, and reduced operational risk now play a larger role in how Amazon evaluates vendor requests.

This change has not been formally announced by Amazon, but it is consistently impacting how negotiations are conducted. Vendors that adjust their approach based on this new normal are more likely to achieve their AVN goals.

The Conversation of Cost Increases Are Top Priority

One of the most visible expressions of this higher bar is Amazon’s stance on cost increases. Where general explanations or industry-wide pressures may once have been enough to secure cost increases, Amazon is now requesting more evidence that cost pressure cannot be mitigated elsewhere and requiring structured Cost Support Agreements (CSA) to limit their margin risk.

From Amazon’s perspective, these requests are a rational response to a more challenging retail environment. Fulfillment, labor, and transportation costs have increased, and Amazon has become far more disciplined about protecting its own contribution margin. Vendor requests are evaluated not only on their individual merit, but also on how they fit into Amazon’s broader margin and portfolio strategy.

Preparing for Annual Vendor Negotiations on Amazon

In the current environment, proper preparation is the most important factor in determining negotiation outcomes, and understanding true Amazon economics now requires more than a high-level P&L.

Step 1: Analyze Amazon Profitability

Amazon evaluates profitability at a granular level, and vendors must be able to do the same. This includes:

1. A clear view of fully-landed costs
2. Fulfillment and operational impacts
3. Promotional funding
4. Advertising expenses

Understanding ASIN-level margins can help you more effectively speak Amazon’s language when negotiating.

Step 2: Take Steps to Absorb Margin Impact Internally

Just as important, Amazon expects vendors to demonstrate that they have already taken steps to absorb pressure internally.

When vendors need to pass costs along to Amazon, there is an expectation that supply chain optimization, packaging changes, and channel pricing management are pursued to offset margin impact to Amazon.

Having an understanding of the common levers Amazon will ask for, and the costs and lift associated with pursuing them, will allow you to better manage the outcomes and tradeoffs of the negotiation.

Step 3: Optimize Daily Operations for Efficiency

At the same time, leverage is also built through daily execution. Various factors contribute to how Amazon perceives vendor value:

1. Stable pricing
2. Disciplined promotions
3. Reliable in-stock performance
4. Predictable investment patterns

In a margin-focused environment, slower, stable growth is often favored over volatile, yet rapid, topline gains.

How Amazon Evaluates Vendor Central Brands’ Value

This is where many negotiations begin to break down. Vendors often approach AVN focused on what they need Amazon to approve, rather than how Amazon will evaluate asks and apply their leverage based on the tradeoff between top- and bottom-line.

Amazon is not looking for a perfect business, but they are constantly evaluating the value your brand brings compared to “replaceable” products on site. If your product or brand doesn’t align with Amazon’s overarching goals, and Amazon deems there to be alternative selection offered for their customers, they can and will consider deassortment a potential alternative to achieve said goals.

This is a notable shift in how Amazon will apply their leverage. In the past, full selection and topline growth––occasionally at the expense of margin health––was the primary focus of many negotiations. Now, failure to align on programs or agreements to offset or improve Amazon’s margin impact can lead to a deadlock.

Considering Alternative Selling Methods to Amazon Vendor Central

For many 1P vendors, this leads to thoughtfully exploring alternative operating models, including pursuing 3P channels.

Importantly, this is not about making threats or forcing ultimatums. It’s about building optionality and resilience into the broader Amazon strategy.

When Amazon understands that a vendor has multiple viable paths to market, negotiation leverage shifts.

Deciding on Amazon AVN Terms

Not every Amazon vendor agreement that gets signed is a good one.

As negotiations tighten, there is growing risk in accepting terms that appear workable in the short term but weaken the business over the course of the year.

Cost concessions, funding commitments, or operational requirements that stretch beyond sustainable levels can quickly erode brand margin, particularly if performance assumptions made when planning do not pan out as expected.

Modeling the Impact of Negotiated Terms

Modeling the full-year impact of negotiated terms is now more essential than it has ever been.

Vendors should understand not just base margin outcomes, but also the implications for advertising investment, promotional cadence, and inventory risk if modeled margin impact is under-biased.

There should also be consideration around the precedent being set as compromises made once are often expected again.

Key Takeaway: Adapt to Amazon’s AVN Priorities

Perhaps the most important takeaway from this shift is that AVN is no longer an isolated event. They are the culmination of how a vendor has shown up throughout the past year and will be benchmarked and updated throughout the following year (Amazon internally refers to this as “AON”, or Always On Negotiations).

When negotiations begin, Amazon will evaluate partnership value based on your:

1. Pricing discipline
2. Operational reliability
3. Investment strategy
4. Internal alignment

Seen through this lens, AVN is less about winning or losing and more about earning confidence. Amazon is signaling, through its higher bar, that it values predictability, discipline, and long-term alignment over short-term growth at any cost. Vendor Central brands that adapt to this reality are better positioned not only to navigate negotiations, but to build more durable Amazon businesses over time.

At Brandwoven, we work with brands to help them interpret these shifts, pressure-test their Amazon economics, and prepare for negotiations in a way that supports sustainable outcomes rather than short-term fixes.

In a more disciplined AVN environment, preparation and strategy are no longer differentiators — they are requirements.