As entrepreneurs and especially FBA sellers, you know how important it is to prepare yourself for negotiation.
Whether you’re chatting with your Amazon rep, writing contracts with your supplier, or looking into hiring a 3PL (third-party logistics) provider, striking good deals while nurturing key relationships is essential to running your FBA business.
You may not realize it, but you’re negotiating all the time—with your spouse, your kids, and especially with yourself.
The basic tenets of negotiation
Manage yourself first
In many ways, you’re your most demanding customer. Entrepreneurs are ambitious, insatiable, and often egotistical (in a good way, though). You’ll promise yourself dessert for one more round of squats, a beer after another half hour of work, or you give up some of your focused morning rituals to hit the snooze button. Just like when you’re motivating yourself and holding yourself accountable to your goals, you need to keep yourself in check when negotiating with others.
When you’re working with friends, colleagues, or people you vibe with, it’s easy to get caught up in the moment. Business relationships often come with a side of friendship. But, like in poker, you need to think about what’s in your hand and what’s in theirs.
Ask yourself what assumptions you’re making about this negotiation. What is the basis of these assumptions? As the old saying goes, “when you assume you make an ‘ass’ out of ‘u’ and ‘me.’”
Following your intuition has value, but it can also lead you astray. Ask yourself:
- Are you taking some things for granted that aren’t formalized in the deal based on your relationship with your counterpart?
- Are you discounting their expertise?
- Is it possible you’re over-valuing how important your business is to them?
Don’t let your assumptions about your relationship to the person on the other side of the table cloud your judgment.
Make the first offer
The official term for this is anchoring. Contrary to what it sounds like, it’s not a method to set yourself up for emotional warfare by establishing yourself as the alpha. Making sure to plant your flag before the other guy has a chance might sound cartoonishly aggressive. However, it does set the stage.
Anchoring sets the process in motion by choosing a number that is the basis for the negotiation range. Any numbers put out after that always relate to the first one.
As Thrasio’s Co-CEO (and fundraiser extraordinaire), Josh Silberstein, says, “If someone else sets the anchor, your job is to break the anchor. Reset the conversation.”
He gives the following example:
If you’re the client of a software company that suddenly calls and says they’re raising prices by 10%, respond by saying something like, “I was just thinking you should lower your price by 17%, so we don’t have anything to talk about.”
Listen & Learn
The best thing you can do in any relationship is giving the other person the opportunity to bather on. And listen to what they say when they do. Another Silberstein tenet of negotiation is, “It’s always, always about people.”
Find out what’s motivating the other person, and you’ll find the wiggle room in the deal. By listening, you’ll learn what you’re competing against—whether internal or external, you’ll know what the other person is afraid of or what they might be protecting. From there, you can start to think about unique ways to frame the deal you want in a way that they’ll go for because you’ll present it in a way that speaks to their needs.
Strategic philosophies aside, negotiation is a very real component of your role as a business owner.
Negotiating with Amazon Reps
You may not think there’s much of an opportunity to negotiate with your Amazon rep, and truthfully Amazon does have the upper hand in their relationship with you. It’s unlikely your rep will automatically reinstate your listing after falling prey to a few persuasive tactics you’ve picked up. However, you can use negotiation tactics to gather information, help you get better timing on deals, escalate any suspensions or issues you have, or point you in the right direction to help you grow your revenue.
After all, when your business does well and makes customers happy, that feeds into Amazon’s ultimate mission of being a customer-centric company.
“Amazon reps can seem vague,” says Lead Brand Manager, Chris Bereznak, “When trying to suss out the basis of a suspension or scrape, sometimes it helps to bring up other listings as a real-world example with your rep. Directly ask, ‘What about this listing? What are they doing that’s different from mine?’ It can be hard to pinpoint a straight answer because Amazon has reasons to keep their seller policies close to the chest, but you can leverage live listings to dig deeper toward what you’re looking for.”
Negotiating with suppliers or 3PLs
Your relationships with the organizations in your supply chain are the most classic business interactions you have. And with each contract, order, and policy mandate, you have the chance to negotiate a better deal for yourself in both cost and terms.
Where you may not have the upper hand with Amazon, you’ll find yourself on equal footing when it comes to these partners, leverage that to benefit your business.
Negotiating with an investor or acquirer
When you do everything you can to scale the best, most profitable business, the last frontier is to get a great payout when you exit.
Thrasio’s deals team approaches negotiations as a conversation with the end goal of a win-win deal. The best, most efficient deals process usually goes to sellers who have a good understanding of where the market is for FBA businesses at the time of sale.
When you work with Thrasio, you’re always in good hands. We take care to learn the nuances of your business, recognize what’s important to you, and write you the best deal possible.
Hone Your Skills
There are plenty of courses out there about negotiation.
- Former FBI negotiator and author of Never Split the Difference: Negotiation As If Your Life Depended On It, Chris Voss, teaches a negotiation techniques course on Masterclass.
- Marketing Expert Donald Miller’s Business Made Simple University offers a course on negotiation taught by John Lowry.
The best way to become a master negotiator is to get out there and get your feet wet. Get used to the idea of taking charge of your business deals, and the tactics taught by these experts will soon become part of your entrepreneurial expertise.