We are a branded store on Amazon with a trademarked brand and our own branded products.
I listed our first item on Amazon yesterday. It is not live yet, as we still need to get the products over to Amazon FBA, but after listing it, I can now see the projected net profit, meaning net profit as far as Amazon goes, excluding the actual cost of goods.
On our own website, the product is £9.95 for the small and medium sizes and £10.95 for the large. For the small and medium sizes, it is projected that we will walk away with £4.05 in “net” profit, with Amazon not taking into account the price we pay to have the product made, shipping to Amazon FBA, our wages, and ten other costs. Our product is £2.85 landed, which leaves us with £1.20 to pay for PPC, business running costs, and money to get more stock. Basically, it is not happening.
Unless we raise the price to £11.95 and £12.95 respectively, or play the long slog with volume selling, even then it still does not seem like enough to make it work. You simply cannot get this product made for any less. In fact, I know of no product you can buy for £1 that you can then sell for £15 or £20. That is just not happening.
I do not see how it is possible to make money on Amazon unless you are selling a product over £15, where a 40% net margin from Amazon is leaving you with £20 on the table to work with. Can someone tell me how £5 and £6 products make money on Amazon?
Amazon fees of £3.99 on a £9.95 product, plus COGS of £2.85, are squeezing your margins. Consider repricing or optimizing your supply chain to improve profitability.
Your confusion is real, but you are missing one main thing: people selling products at around the £5 to £6 price point are not playing the same game as you.
Either they are sourcing very cheaply, at around £0.50 to £1 landed in high volume, or they are already a big brand doing high volume, so a small margin still works, or they are not even making a profit at the start and are just pushing ranking, then making money later.
But in your case, your price is low, and Amazon fees plus PPC are eating everything, so your margin is getting killed. The simple truth is that Amazon is not good for a low-ticket product unless your cost is very low or you have strong differentiation.
A better move is to increase the price and improve your offer and branding, otherwise you will just burn money on PPC and nothing else.
