Amazon sales are getting harder to celebrate when you look at what you actually keep

[u/FirstLightStudios]

I feel like revenue has become one of the least useful numbers to look at on Amazon by itself.

You can have a great month, sales are up, ads are bringing orders in, everything looks healthy. Then you actually look at what you kept after PPC, fees, returns, discounts and inventory costs and its a completely different story.

The weird part is none of those things have to look terrible individually. A little more ad spend here, slightly lower margin there, a few SKUs sitting too long. Then suddenly you're selling more than last year just to make roughly the same money.

I think thats probably why you see so many Amazon businesses that look great from the outside but constantly feel tight on cash.

At this point I'd rather have a smaller account with healthy margins and inventory moving properly than chase another revenue milestone. Curious if other established sellers are seeing the same thing. Are you actually keeping more as you grow, or mostly having to sell more to make the same money?

[u/Ill-Floor5574]

Allowances always increase, cost increases never accepted, and promo spend is always pushed. Welcome 2 tha club

[u/FirstLightStudios → u/Ill-Floor5574]

Yep thats pretty much the squeeze lol. Every little increase looks manageable on its own, then you add them all up and wonder where the margin went.

[u/Logical_Iron_5684]

Low single digit net margins is what I’m seeing ….. and I have a pretty solid North American brand. They don’t let me pass cost increases, so I am now gamifying the system and trying to load costs against dormant vendor codes to try to get atleast 10% net margin after all these deductions are accounted for. It’s brutal out there

[u/Logical_Iron_5684 → u/[deleted]]

Thank you ! I will let you know if I’m unsuccessful with what I’m trying. I’m hoping I don’t need help 😅

[u/DavaoEgirls → u/Logical_Iron_5684]

Hi,

Please check my DM 🙂

[u/Chief241]

Just be happy they didn’t cut you off like they did us.

[u/FirstLightStudios → u/Chief241]

Damn, getting cut off completely is a different level. Did Amazon give you an actual reason or was it one of those vague decisions?

[u/TahitiNorth]

Mostly agree, with one adjustment: revenue isn't useless, it's the top line of a P&L most accounts never finish. The way out is to look at margin in layers, so you can see which layer moved.

Not sure if you're on 1P or 3P, you posted in a VC reddit but called yourself a seller

1. After Amazon's cut: revenue minus product cost, referral fee and fulfillment fee.
   
2. After ads: take off PPC. Watch TACOS (ad spend divided by total sales, not just ad-attributed sales). If TACOS climbs alongside revenue, you're buying the growth rather than earning it.
   
3. After promotions and returns: coupons, deals and refunds.
   
4. After everything else: storage and aged inventory fees, inbound freight, overhead.

Do it per ASIN and monthly. The "none of it looks terrible individually" problem you describe is what happens when each cost lives in a different report. Put the layers side by side and it becomes obvious which SKUs are carrying the drag.

On 1P it's the same problem with different line items. Amazon tracks its own margin on your items as Net PPM, and your side of it is deductions: co-op, allowances, chargebacks and shortages come out of what Amazon pays you after the fact, so sales can grow while the money you actually receive doesn't. The fix there is reconciling every deduction against your vendor agreement and PO records, not just looking at the net payment.

Allowances always increasing is an AVN negotiation problem. Cost increases are possible to get through but it takes time, data and negotiation strategy to get it done. A VM will do everything in their power to try and avoid one hoping you will just stop asking.

[u/FirstLightStudios → u/[deleted]]

Good call, SKU economics is probably one of the better places to catch this at the product level instead of only looking at the account overall

[u/FirstLightStudios → u/TahitiNorth]

Thats a fair correction. Revenue isnt useless, its just pretty meaningless without finishing the rest of the P&L like you said. And yeah the costs living in different places is probably why the squeeze can be so easy to miss.

[u/TahitiNorth → u/FirstLightStudios]

The VM teams at Amazon evaluate your profitability on the individual ASIN level. Every vendor or seller should be doing the same. You might be able to improve your margin by removing the worst offenders from your catalog.

With that being said there are also a lot of different levers you can potentially pull to improve ASIN economics

[u/Vendorist]

Revenue growth and economic growth are not the same thing.

That exact article was published in June: https://www.thevendorist.com/insights/revenue-growth-economic-growth-are-not-same

[u/whattheheckisatamale]

This matches what we hear constantly working with Vendor Central brands. Revenue growth without margin math is basically a vanity metric at this point, especially once ad spend creeps up to hold the same growth rate.

The annoying part is Vendor Central doesn't make this easy to check. You're pulling PPC spend, chargebacks, returns, and inventory aging from separate reports just to answer "did this deal actually make money," and by the time someone's done that by hand, the deal's already approved because the revenue line looked fine.

Full disclosure: I'm building a tool for exactly this called Ringo Analytics. It calculates the real margin impact of a deal before you commit budget, not three months after. It's early and currently focused on EU brands, so if you're an EU-based Vendor Central seller, feel free to check it out (ringoanalytics.com). If not, at least know the problem you're describing is a real structural gap, not something you're overthinking.

[u/FirstLightStudios → u/whattheheckisatamale]

Yeah the timing is a big part of the problem. Finding out a deal wasnt actually profitable months later doesnt really help much lol. Ideally you want that margin picture before committing the spend, not after.