Why so many Amazon FBA sellers are broke

An Amazon seller can make $500k/year in topline revenue…

And be completely broke.

😔

My company works across 100s of Amazon accounts every month. So unfortunately, I’ve seen this first hand. And it’s heartbreaking, because it takes the same amount of time/energy to run a profitable biz than it does to run an unprofitable one.

So, why does this happen?

It’s because Amazon businesses have a bunch of micro costs that “sneak up” on folks, through no fault of their own.

$500k in revenue can easily shrink to $0 after:

– Amazon referral fees of 15%

– Amazon FBA fees, another 15%

– cost of goods

– shipping cost

– Amazon PPC spend

– customer returns/refunds

– and this is all pre-tax… yikes!

Then, with what’s left, sellers are expected to re-order inventory and do it all over again.

It’s a profitless treadmill.

A hamster wheel.

It helps consumers. It helps Amazon. But the seller needs to benefit, too!

Revenue is easy.

Profit is harder.

Yet, profit is what sellers need. Because we can’t pay the bills with revenue! 😉

Let’s talk about increasing profit.

The #1 thing that helps is starting with a specific PROFIT goal, then working backwards. For example, say you want to withdraw $10,000/mo from your business. That’s $120k/year. Quite respectable.

To safely withdraw $10k, you probably need to make $50k in topline revenue (my experience).

To make $50k in topline, you need about 10 products doing $5k/mo each in revenue (again, anecdotally from me).

So, if you have 3 products listed today, you know you need to list 7 more. And ramp each to $5k topline.

Basically:

We’re working backwards from our desired profit level, then taking action to get there. This is a small shift, but can make a big difference.

If you want a custom-made profit plan from my team and I, feel free to book a call with us below.

PS: sellers fare best when their retail price is at least 4x as big as their Landed COGS (cost of shipping + cost of goods). So in other words, if your costs (prior to ads) to get a unit to Amazon is $10, the item should retail for no less than $40. Food for thought!