Lots of the business leaders we speak to are confused by the metrics they ‘re served about Amazon sales.
Advertising ACoS (Average Cost of Sale) looks healthy.
ROAS (Return on Ad Spend) ticks the right boxes.
Sales are growing.
So why aren’t profits up?
That’s because the financial metrics that illustrate the success (or otherwise) of Amazon performance are rarely these top-line ones.
Why ACoS and ROAS Aren’t Enough
ACoS and ROAS are useful indicators, but only when it comes to knowing how efficiently advertising is driving revenue. They can’t tell you whether that revenue is profitable once the full cost of selling on Amazon is accounted for.
A low ACoS can still sit on top of weak unit economics.
A strong ROAS can hide products that lose money at scale.
Without sight of a dedicated Amazon profit and loss (P&L) report, these metrics can give a false sense of control.
The Case for an Amazon-Specific Profit & Loss Report
Due to the impact that Amazon has across a business, we encourage our clients to treat it as its own commercial entity.
A dedicated Amazon P&L brings together finance, operations, and marketing data to reveal what actually matters: contribution margin at product level.
This level of visibility allows businesses to understand:
- Which SKUs genuinely drive profit
- Where operational inefficiencies erode margin
- How advertising impacts contribution, not just revenue
- Which products improve margin as they scale
Without this, decision-making becomes reactive and margin leakage can go unnoticed.
Start With Product-Level Operational Costs
We find that one of the fastest ways to reclaim our client’s margin on Amazon is by understanding operational and logistics costs at SKU level.
Amazon’s fulfilment model is efficient, but not neutral. Costs vary significantly depending on product size, weight, packaging, storage time, and return behaviour.
We analyse key operational metrics such as:
- Cost of Amazon shipping per product
- Inventory holding costs after 90 days
- Amazon operational chargebacks
- Return rates by SKU
Small inefficiencies at this level can compound quickly and make otherwise strong products unviable.
Advertising Costs Must Be Measured Per SKU
The second major lever of Amazon profitability is advertising, and this is where many of the businesses that come to us have lost control.
Blended advertising metrics can hide underperformers and make it difficult to optimise spend effectively. That’s why we show clients how to evaluate advertising performance at both a SKU and product range level.
To calculate true contribution, operational, marketing, and financial data needs to be combined to reveal:
- Unit cost per SKU after PPC
- Conversion rate per SKU during promotions
- Advertising cost as a percentage of contribution, not revenue
Only then can PPC activity be scaled with confidence, in the knowledge that it’s enhancing margin rather than diluting it.
Combining Metrics to Reveal True Contribution
Amazon profitability lives at the intersection of data silos.
Operations, marketing, and finance each hold pieces of the puzzle, but no one department can determine profitability in isolation. We help our clients to gain clarity by combining these metrics into a single commercial view.
This granular understanding enables businesses to:
- Optimise logistics and packaging decisions
- Adjust pricing with margin confidence
- Rationalise based on contribution
- Invest advertising spend where it delivers the greatest return
Profitability Is Built, Not Assumed
Growing on Amazon isn’t just about selling more. It’s about selling better.
By breaking down logistics costs, understanding advertising at SKU level, and measuring performance through a dedicated Amazon P&L, businesses gain control over their margins.
The result is not just improved profitability, but a channel that can be scaled sustainably, strategically, and with confidence.
Sell Beyond help businesses to dispel the mysteries of Amazon and nail down the true metrics of success. If you’d appreciate a call about getting your Amazon sales on track then our team of coaches and consultants would love to hear from you, let’s talk.
Have you read The CEO Playbook yet? Six smart pages of fundamental ‘need-to-knows’ for CEOs of businesses looking to sell more profitably on Amazon. Read it now