How can we strive for an ideal dividend or commission mechanism for ourselves? How should we negotiate with our boss?

Background before Amazon started:

We found this factory in October 2022. It is a traditional OEM factory that has never been involved in cross-border retail business. Its basic business is to accept OEM orders from foreign Amazon customers or orders from domestic Amazon customers.

Due to the explosion of Amazon platform in 2020 and 2021, the factory orders also exploded. Later, due to the lifting of the epidemic blockade and the economic downturn, the orders from major customers plummeted. So the factory wanted to expand its business with Amazon. When we met for the first time, I roughly understood the situation of the factory and the boss's determination and willingness to enter Amazon. I roughly explained to him the problems that would be encountered in developing Amazon business and what kind of cooperation the factory would need. Because at the beginning I talked about helping the factory develop projects, the boss also asked about how to calculate the commission salary.

The first boss was willing to let me invest and invest in technology. The second boss wanted to do the project. I offered a base salary of 10,000 yuan, and the commission and dividends would be calculated after the profit. Later, I went back to do an industry analysis report. The second interview was also because I couldn’t invest a large amount of money, so I chose the latter (I was very optimistic about the category of pioneering at the time). Also, because the project was launched in a hurry, I didn’t discuss the commission and dividends with the boss in detail, thinking about getting started first. (I blame myself for not discussing and signing the contract at the beginning)
 

My background:

I have 4 years of experience in cross-border business. Before I came to the factory to start a business, I was a shareholder of a previous company. I led the team to hold 30% of the shares in the form of technical shares and received a basic salary of 8,000. Later, the former company leader was forced to disband the team because his capital chain was broken.

Later, I came to this factory to open up new areas. After the business started, I also brought the artists from the previous team here. Because the factory had no experience in this area, the new business license, account registration, brand design/registration/filing, brand website domain name registration and website building were all completed by me. Because the factory processed the products on behalf of others, some styles were already very old or were picked up by other customers and no longer wanted.

Now I am here with the artist to complete the development and modeling of new products, and then do the proofing. I find photographers to take pictures and videos. Logistics and evaluation are also provided here, and the price here is also competitive. We can give you credit from the beginning, and we also help with tax refunds (a friend of mine has shares in the logistics company). Basically, the factory provides products and funds. Basically, I am now responsible for the front-end and back-end construction.


Factory Background:

The boss wanted to expand the business through multiple channels at the beginning, so he said that it was acceptable not to make a profit in one or two years (because the orders from the factory's major customers decreased, the Amazon market in this category was also sluggish, the orders from peers decreased, and it was becoming more and more inward-looking). So basically, I was delegated the Amazon business, and I would be given the support I needed if I could speak up. I also asked the factory's foreign trade manager to connect with me, and I could communicate with the foreign trade manager about anything that needed cooperation, reducing friction between the business process and the factory. Anyway, the boss basically delegated power, so I didn't have to be too timid when I went to fight.

The factory's product prices are similar to those for other customers. They should have left a profit for the factory. That is to say, when necessary, the boss said that the price can be lowered to compete in the market. The factory's advantage is that the goods are delivered first, and there is basically no pressure on payment. Anyway, Amazon will pay back the money to the factory.
 

Amazon platform development:

It took about a month to do market analysis and competitive product research. Later, I redesigned several new products. Basically, there were exquisite main pictures and videos when they were launched, and they were all advanced A+. Because I took the boutique white hat route, I could only constantly polish the main picture details page and constantly try to optimize and adjust the advertisements. Anyway, I was very concerned about this project, and I worked overtime every day to think about how to optimize it and make it profitable as soon as possible.

First and second month due to Vine As well as advertising and promoting new products, I made a strategic loss of tens of thousands of yuan. In the third month, two models became a hit and basically always ranked first in the new product list of two small categories. The other three models also made a small profit and did not lose money. Anyway, when the overall orders in our category declined, we opened a gap and entered this market. The basic profit in the third month was 120,000 yuan, and the profit can be maintained at around 300,000 yuan afterwards. I should launch new models to enter the market in the second half of the year. According to the current situation, we can basically achieve long-term profitability.

 
question:

The problem I’m facing right now is that I’ve been here for almost a year, and I’ve already made a profit in the third month since my product was launched. I just started working rashly, and I’ve been receiving a base salary, and my boss hasn’t mentioned anything about asking for dividends. Because my Amazon sales have grown, my boss wants to speed up the layout of my second store, and asked me to adjust the products and start a second brand store (which means starting a new store from scratch). Now I want to discuss the plan with my boss before the end of this month.

I have tentatively proposed two plans: the first is a commission-based plan, where commissions are paid in stages based on the monthly operating gross profit. For gross profits of more than 100,000 yuan and up to 500,000 yuan, commissions of 10%-15% are paid in succession. The second plan is a project dividend plan, where annual sales of 20 million yuan, 30 million yuan, and 50 million yuan (product gross profit of 13-15%) are paid 13%, 15%, and 18% of the net profit, respectively. If you have better ideas or negotiation methods, please tell me.

"Wonderful Reply"

Anonymous user

Agree from: Sueeeee

You are facing a complex and important issue. Both options have their advantages and disadvantages, but based on your description and your role in the company, I tend to recommend you to choose the second option, that is, the project dividend form. I will explain why and provide some negotiation advice.

Why choose project dividend form?

1. Long-term value: From your description, I see that you have invested a lot of time and energy in developing new products, setting up new Amazon stores, and conducting market analysis and competitive product research. These are long-term investments that may not see benefits in the short term, but can generate sustained income for the company in the long run. Therefore, a commission system linked to the company's annual profit may better reflect your efforts and contributions.

2. Incentive mechanism: The project dividend form can motivate you more actively and innovatively, because you know that your efforts will directly affect your income. This model encourages you to seek new ways to increase the company's profits, such as developing new products or optimizing operating processes.

Negotiation Tips:

1. Be fully prepared: Before negotiating with your boss, make sure you are well prepared. List your contributions to the company in the past year, including but not limited to product launches, market analysis, new store openings, etc. This can prove your value and provide support for your proposal.

2. Clear goals: In the negotiation, be clear about what you hope to achieve. What percentage of commission or profit do you want to get? This goal should be fair, reflecting your contribution and taking into account the company's financial situation.

3. Be flexible: Be prepared for possible objections during negotiations and think about how to respond in advance. For example, if your boss thinks your commission is too high, you can provide industry standards or comparative cases to show that your request is reasonable.

4. Make a plan: Clearly state how you plan to achieve these sales goals. This will show your boss that you have a clear implementation plan and are confident that you can achieve your goals.

5. Leave a way out: Although project dividends are the first choice, if the negotiation is not smooth, you can also consider returning to the commission plan. This can ensure that you can get corresponding returns while increasing the company's profits.

Finally, remember that negotiation is a win-win process. Your goal is to find a solution that fairly reflects your contributions and is in the best interests of the company.

Anonymous user • 2023-07-26 14:21

Thanks for the suggestion. Indeed, when I started to formulate the plan, I was more inclined to project dividends, considering that the company needs to continue to invest in Amazon in the future, and it is not in line with the company's profits to share the profits generated in the short term. Plan 1 may also be a roundabout way after the dividend negotiations are not smooth.

Sunny Old Boy

Agree with: Operation with monthly sales of one million US dollars

1: Currently profitable: It is normal to discuss profits with the boss. There is nothing wrong with that. After these few months, I think the boss's vision and character are also important reference factors for you. Choose to trust while protecting your own interests.

2: Increase the base salary, otherwise there will be conflicts when recruiting people in the future. If you have a base salary of 10,000 now, you will have a hard time in subsequent team building. What kind of treatment will the new recruits receive? Do you recruit newcomers or experienced people? You need to consider the long term. You may help the company earn 200,000 to 300,000 per month. If the scale is not big enough, many things in the future cannot be handled by you alone. Even if you are very capable.

3: If you can achieve a gross profit of 100,000 yuan, your 10% commission is completely ok. According to the tiered commission, the more you work, the more you earn. You can strive for it appropriately. In other words, if you can achieve a gross profit of 500,000 yuan, you can strive for a 30% commission.

Crazy Island Board Ha • Shenzhen • 2023-11-24 10:32

Hello, I have been working on Amazon myself before, and now I have found an additional operation job.

I would like to ask whether the general operation commission is calculated based on the gross profit of the month.

Or should we calculate it based on the accumulated gross profit of the store, for example: if we lost 100,000 last month and made 60,000 this month, will we get any commission this month?

Sunny Old Boy • Shenzhen • 2023-11-24 10:51

It is more reasonable to calculate the profit and loss on a quarterly basis. Calculate it once every quarter. Also consider the strategic loss of the company's new products.

Anonymous user

Agree from: Niko5420, Operation with monthly sales of one million US dollars

It is best to get commission based on tiered monthly profits + year-end dividends.

After reading your experience carefully, first of all, you have improved all the operating resources, which can basically be regarded as technology investment , but you have no funds to invest, so you did not ask for shares at the beginning. Then, if you convert your technology, you can get a dividend of 10%-20% a year at least.

Secondly, why do we recommend you to take monthly commission? The main reason is that people are evil, and the risk of taking monthly commission is lower. If the factory owner kicks you out or something happens to the store, you can still get some commission. There are too many uncertainties in annual commission, and the risk is high. A monthly commission of 10%-15% is completely fine. It is more difficult to run a new store, and generally a new store should be given a commission of more than 10%.

Think about it carefully. You, the factory owner, supply your Amazon department with goods, and you have already made a lot of money. Then the most important thing for the factory is orders. The factory must keep running to ensure that it has production capacity every day. After all, it has to maintain machines and workers, and a series of rigid expenses. From this perspective, even if your Amazon department's orders are loss-making, they have alleviated the pressure on the factory itself to a certain extent. After all, everyone is not living well now, and the factory orders themselves have decreased a lot. Therefore, under this premise, it is very reasonable for you to take a higher monthly commission and a certain amount of year-end dividends, given your ability. You are indeed excellent, and you should get a salary that matches your ability.

Anonymous user

If it were me, I would like to get 10%-15% commission every month when the gross profit reaches 500,000 or more. I am not sure whether the annual dividend can be realized, and if the profit is greater in the later period, the factory may change its mind. Your own operating ability will be visible in the third month, and you will not be too bad wherever you go. The main thing is to settle accounts clearly among brothers and sign the contract in black and white as soon as possible.

Anonymous user • 2023-07-28 10:00

Yueyue's plan is good, but it should be difficult to implement, because as the store continues to expand, short-term profits have to be invested in the payment of goods. Plan 1 is only the best. Plan 2 cannot achieve the result I want, so I have to go around it. Now I need a contract in black and white to protect my interests.

Anonymous user   • 2023-07-28 14:23

The short-term profit investment is the boss's additional investment. You should take a share of the profit. You are not starting your own business, so why should you keep investing money? If you are a partner, whether it is technology or capital, then 10% is definitely too low. Since you are working, you get what you sow. If the factory owner wants to expand blindly, you can let him find someone else to do it. You need to have your own promotion rhythm, time, and personnel arrangements. Don't disrupt the boss's thinking.

Mr. Wu

Basically, you don't need to draft it with the factory. If it fails, it's fine. If it succeeds, the factory will generally not recognize the agreement. Why? Because the profits in the later period will be eaten up by the inventory, and you will have no money to share at the end of each year.

Anonymous user   • 2023-07-26 10:07

We are indeed in a passive position now. The factory has fewer orders of its own. The boss is also putting pressure on me, saying that it is okay to produce more and keep more inventory. Indeed, the profits are eaten up by the inventory.