Strategic Vendor Negotiation Preserves Margin and Drives 10% Sales Growth

OVERVIEW

Compass Health, a Drive Medical brand, is a 9-figure Amazon healthcare company. The brand faced a major disruption when its top-performing product (representing roughly 25% of total revenue) was forced from a profitable 3P model back to 1P under Amazon’s Seller Code of Conduct. The shift created immediate risk around margin compression, inventory constraints, and potential sales disruption on a product that had not seen a cost increase in over a decade despite rising tariffs and freight costs.

APPROACH

Reengage Vendor Negotiations with Amazon
Reopened communication with Vendor Management to realign on pricing and maintain long-term performance.
Phase in Cost Increases to Protect Margin
Executed a structured pricing approach across multiple purchase orders, gradually increasing costs to preserve margin while maintaining alignment with Amazon.
Maintain Inventory and Sales Continuity
Coordinated bulk buys and adjusted media spend across 1P and 3P to keep the product in stock and avoid any disruption in sales.

CONCLUSION

The coordinated approach across negotiations, inventory management, and media execution allowed Compass Health to transition back to 1P without sacrificing performance. By aligning pricing through structured negotiations, maintaining consistent in-stock positioning, and actively managing advertising during the shift, the business avoided the typical disruption that often comes with channel transitions.

Margin integrity was preserved, sales continuity was maintained, and the product remained available throughout the entire process. Once the new cost structure was fully implemented within the 1P model, performance not only stabilized but began to grow, with daily sales exceeding prior 3P levels.

+15%

Increase in AMZ
Purchase Cost

+10%

Increase in Daily Sales

Sales Disruption During Transition