Amazon FBA and margin: Are 20% of all products sold on Amazon sold at a loss?
Due to the constantly increasing competition, there is an enormous price war on Amazon. A larger seller with about 44,000 products alone makes almost 1 million price changes within 24 hours just 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 the sales figures of the products and responding to them correctly.
Amazon FBA: Calculating the margin
We wanted to know what an Amazon seller earns on average after deducting all costs on Amazon, given the complexity outlined above. For the evaluation, we looked at 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 offered products. 20% of the products are sold at a loss. Most of the offered products are traded with a margin of 10-75%. At first glance, the share of products with a negative margin at 20.15% is very large.
Reasons for negative margins
When looking at these products more closely, there are usually 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 an eye on key metrics to respond promptly to negative developments.
As is well known, data analysis is complex and requires a significant amount of time. This is where SELLERLOGIC Business Analytics for Amazon sellers comes in: It presents complex data on the performance of products, Amazon accounts, and marketplaces in a clear 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 make data-driven decisions, which may include cost optimization or even removing affected products from the range.
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 on various marketplaces and to adapt to the market situation in a timely manner. Small sellers often lack the necessary know-how to calculate the right selling price.
Avoid negative returns with the right calculation and make good use of your precious time. Leave the price control to SELLERLOGIC, which adapts to the market situation on Amazon around the clock. Also, 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
