Amazon Bedding & Bath
Amazon’s own business in sheets, towels and pillows: goods bought wholesale from brands and sold beside independent sellers.
- Role
- Vendor manager, owner of the business’s profit and loss
- P&L
- $100M+ a year
- Review
- Every weekly margin change, explained to a hundredth of a percentage point
I owned the profit and loss of Amazon’s Bedding & Bath business, more than $100 million a year. I led the negotiations with its brands, set the supply-chain terms, and explained every weekly margin change to a hundredth of a percentage point.
What I decided
Negotiated cost and funding with the brands
I led the negotiations with the category’s brands, over the cost of each item and the funding each brand gave Amazon. Both moved the margin I explained every week.
Set the terms for stock and shipping
I set the supply-chain terms: how much stock to hold, and how each item shipped. When FedEx and UPS began pricing every ground parcel by its size, a comforter’s box became a cost to negotiate.
Explained every margin change, every week
Every week, in the business review, I explained each change in the category’s margin, down to one basis point: a hundredth of a percentage point.
How it worked
A $100M+ P&L, explained weekly to a hundredth of a point
Amazon bought sheets, towels and pillows wholesale from brands, owned the stock, set the price and shipped each order. On each product page, Amazon’s own offer sat beside offers from independent sellers. In 2014 those sellers sold more than 40% of Amazon’s units.
Brand funding counted as a lower cost of goods
Brands funded marketing, promotions and volume rebates, and Amazon booked that money as a lower cost of goods. A rebate usually depended on buying a minimum volume. Vendor managers also negotiated deals with their brands, such as holiday discounts.
Carriers began pricing every parcel by its size
From 1 January 2015 FedEx Ground priced every parcel by its size as well as its weight. UPS had started on 29 December 2014. Light, bulky goods such as comforters cost more to ship. UPS said it hoped shippers would use less packaging, in smaller boxes.
Machine-learning forecasts, which managers could override
A vendor manager decided how much of each item to place in each Amazon warehouse, and when. Machine-learning forecasts sat in the vendor manager’s tools. A vendor manager could override them. For example, a manager could raise an order before a brand’s marketing push the forecast did not expect.
What came next
In 2015 I moved from Bedding & Bath to Prime Now, which delivered within one or two hours.