Amazon FBA and Margin: Are 20% of All Products on Amazon Sold at a Loss?
The constantly increasing competition on Amazon creates an enormous price war. A larger seller with around 44,000 products alone makes nearly 1 million price changes within 24 hours in Germany. Sellers who do not engage in repricing have virtually no chance of adapting to the rapidly changing market situation on Amazon or monitoring their product sales and responding appropriately.
Amazon FBA: Calculating the Margin
We wanted to find out what an Amazon seller typically earns after deducting all costs, given the complexity outlined above. For the evaluation, we examined 583,891 products across various industries. The calculation of the net margin in % is done using the following formula:
The average net margin of an Amazon seller is 12.5% for 80% of the products offered. 20% of the products are sold at a loss. Most of the products offered are traded with a margin of 10-75%. At first glance, the proportion of products with a negative margin at 20.15% seems quite large.
Reasons for Negative Margins
When examining these products more closely, there are typically three reasons for this.
Monitoring Profitability with a Profit Dashboard
Product margins have a direct impact on the overall profitability of an Amazon business. Therefore, every Amazon seller should regularly analyze relevant product data and keep important metrics in mind to respond promptly to negative developments.
As is well known, data analyses are complex and require a significant amount of time. This is where SELLERLOGIC Business Analytics comes in for Amazon sellers: It presents complex data on the performance of products, Amazon accounts, and marketplaces in a clear and organized manner.
With SELLERLOGIC Business Analytics, you can identify unprofitable products and take appropriate steps to maintain the profitability of your Amazon business. Detailed cost and profit overviews also help in making data-driven decisions, which may include cost optimization or even removing affected products from the assortment.
Conclusion
With new customers, we often find that their selling prices are miscalculated. Large sellers find it very difficult to monitor products with different sales commissions across various marketplaces and to adapt to market conditions in a timely manner. Small sellers often lack the necessary know-how to calculate the right selling price.
Avoid negative returns with the right calculations and make good use of your valuable time. Leave the price management to SELLERLOGIC, which adjusts to the market situation on Amazon around the clock. Additionally, keep an eye on profit and loss developments using SELLERLOGIC Business Analytics and make timely data-driven decisions to maximize the potential of your Amazon business.
Image credits in the order of the images: © ra2 studio – stock.adobe.com / © SELLERLOGIC GmbH / © SELLERLOGIC GmbH
