VIR

VIR is a trade term commonly used in the 1P (vendor) model.
 It rewards Amazon for placing larger purchase orders by providing incremental margin benefits as volume increases.

These incentives can be structured as:

• a fixed percentage applied to all shipped units
• a tiered system where higher shipment volumes unlock higher rebate rates

Why vendors use VIR:

• encourage Amazon to order more units
• secure deeper inventory placement across FCs
• support product launches and category expansion
• strengthen relationships with Amazon retail teams
• stabilise PO cadence and forecast alignment

How VIR works:

• vendor and Amazon negotiate a VIR agreement
• rebates are calculated on shipped units over a defined period
• Amazon deducts or invoices the negotiated amount based on actual volume
• rebate tiers reset at predefined intervals (monthly, quarterly, yearly)

Tier structure example:

• 2 percent rebate for the first 20,000 units
• 3 percent rebate for 20,001 to 50,000 units
• 5 percent rebate for 50,001 units and above

This tiering motivates Amazon to order more to reach the next rebate threshold.

Benefits for vendors:

• increased PO volume
• improved market share due to better availability
• support for strategic growth periods (Prime Day, Q4, T12)
• enhanced presence in Amazon’s internal selection planning

Benefits for Amazon:

• cost savings at higher volumes
• better inventory coverage for customer demand
• stronger ability to offer competitive pricing
• reduced risk of stockouts

Risks and considerations:

• vendor must ensure funding aligns with margin goals
• overuse may reduce profitability if not monitored
• requires accurate forecasting to avoid unintended rebate costs

Example:
A vendor offering 5 percent VIR for orders above 50,000 units sees Amazon increase quarterly POs to hit the higher rebate tier, resulting in broader ASIN availability.

Why It Matters:
VIR aligns incentives between vendors and Amazon, helping Amazon scale inventory while vendors benefit from increased sales velocity and stronger presence in the marketplace.

In short:
VIR (Volume Incentive Rates) are vendor funded rebates that encourage Amazon to order larger volumes by offering fixed or tiered incentive percentages.