The video addresses a common frustration faced by Amazon sellers—managing profitability in the face of Amazon's various fees. The discussion begins with a seller who is losing money due to high fees, including referral fees, FBA (Fulfilled by Amazon) fulfillment fees, and long-term storage fees, all of which cut deeply into margins. The seller also mentions Amazon's occasional mishandling of inventory, adding to the overall challenge of turning a profit on the platform.
One of the main issues highlighted is that many new sellers, especially those who are not experienced in running a business, often underestimate how quickly costs can add up on Amazon. Without careful tracking of margins and a thorough understanding of all the associated fees, sellers can easily lose money.
The video also breaks down how sellers can account for various fees when calculating profit margins. A sample spreadsheet is used to demonstrate key costs, such as referral fees (typically 15% of sales), FBA fees, and storage costs, which can be accessed through Amazon's revenue calculator. Additionally, the video recommends strategies for managing inventory turnaround times, ideally selling stock within three months to avoid excessive storage fees.
The discussion further includes a 20% variable cost allocation for things like sponsored products, returns, damages, and other unforeseen costs. Importing costs, especially when using services like Amazon Global Logistics, are factored into the overall calculation. Ultimately, the video emphasizes the importance of having a minimum remittance amount—a specific profit target per unit that ensures the seller’s costs are covered and they remain profitable.
For more insights on how to navigate Amazon’s fee structure and maintain profitability, check out the video below.
One of the main issues highlighted is that many new sellers, especially those who are not experienced in running a business, often underestimate how quickly costs can add up on Amazon. Without careful tracking of margins and a thorough understanding of all the associated fees, sellers can easily lose money.
The video also breaks down how sellers can account for various fees when calculating profit margins. A sample spreadsheet is used to demonstrate key costs, such as referral fees (typically 15% of sales), FBA fees, and storage costs, which can be accessed through Amazon's revenue calculator. Additionally, the video recommends strategies for managing inventory turnaround times, ideally selling stock within three months to avoid excessive storage fees.
The discussion further includes a 20% variable cost allocation for things like sponsored products, returns, damages, and other unforeseen costs. Importing costs, especially when using services like Amazon Global Logistics, are factored into the overall calculation. Ultimately, the video emphasizes the importance of having a minimum remittance amount—a specific profit target per unit that ensures the seller’s costs are covered and they remain profitable.
For more insights on how to navigate Amazon’s fee structure and maintain profitability, check out the video below.