WAP

 In Amazon’s vendor negotiations (typically annual vendor negotiations, AVN), vendors are often asked to provide additional funding, improved terms, or operational commitments. To protect profitability, vendors define a WAP - the lowest point at which they can still sustainably do business with Amazon.

How It Works:

• Prior to negotiations, vendors analyse margins, funding contributions (e.g., VIR, VFBD, AVS fees), and operational costs.
• They establish their Walk Away Position, e.g.:
  • Minimum margin protection (e.g., “We cannot fund more than 5% additional rebates”).
  • Limits on freight or defect chargebacks.
  • Non-negotiable service terms (e.g., lead time, exclusivity clauses).
• During AVN, if Amazon demands exceed the WAP, the vendor must be prepared to pause or exit negotiations.

Benefits for Vendors:

• Profit protection: Prevents agreeing to unsustainable terms.
• Negotiation clarity: Provides internal alignment before talks with Amazon.
• Confidence: Knowing their WAP gives vendors leverage and boundaries.

Benefits for Amazon:

• Encourages vendors to present realistic terms upfront.
• Establishes a clear framework for what is and isn’t negotiable.

Challenges:

• Requires accurate financial modelling — weak analysis can set the WAP too low or unrealistically high.
• Walking away may risk losing Amazon as a major retail partner.
• Amazon negotiators are highly skilled; holding firm on WAP can be difficult.

Why It Matters:
Amazon negotiations are intense and often one-sided. Defining a WAP ensures that vendors don’t compromise profitability in pursuit of volume. It is a key tool for long-term vendor sustainability on the platform.

Example:
A vendor calculates that after factoring in freight, returns, and VIR rebates, their maximum negotiable funding allowance is 7% of annual revenue. In AVN, Amazon pushes for 10%. The vendor declines, citing their WAP, and settles at 7%.

In short:
WAP (Walk Away Position) is the minimum acceptable set of terms in vendor negotiations with Amazon, below which the vendor would rather exit the deal than compromise profitability.