We frequently speak to business leaders struggling to ascertain whether their Amazon sales channel is truly profitable. They grapple with calculating Amazons many costs against the cost of product and of running their own business and struggle to align Amazon sales data with their own.
The fact is, Amazon is a complex beast, and one that requires a detailed level of understanding to master. This article takes some of the complexities CEOs bring to us most often, and shares guidance on how to address them.
Amazon as a “Sales Channel”
One of the most common pitfalls businesses seem to fall into is treating Amazon as a ‘sales channel’ rather than a fully integrated part of the business.
Why is this important?
What’s the difference?
Amazon is unique in that it touches finance, operations, supply chain, marketing, and customer service. If you’re not able to map your internal costs accurately back to Amazon activity, profitability becomes virtually impossible to measure.
In order to do that you need to have answers to:
- What is our true landed cost per unit on Amazon?
- How do internal operational resources impact Amazon margins?
- Which SKUs improve contribution as they scale, and which don’t?
- Are returns and customer issues eroding margin more than expected?
Without clear answers to these, decision-making is based on instinct and guesswork, becoming reactive rather than strategic.
The Hidden Complexity Behind “Selling on Amazon
At first glance, Amazon’s fee structure looks simple enough, right? Referral fees, fulfilment fees, maybe some storage… But the reality is, Amazon has its own operating model that your business needs to understand. Unless you assess it as a distinct sales and operations function, company margins can quietly erode and your growth can stall.
The true cost of selling on Amazon is cumulative and multi-layered. Beyond Amazon’s own fees, there are the operational realities that shape your margins every single day. We help leaders to understand the business impact of:
- How Amazon’s fees change with item shape, price and weight variations
- Storage costs: short-term, overstocks past 120 days and peak surcharges
- Returns processing and write-offs
- Amazon chargebacks and promotional requirements
- The cost of pay-per-click advertising
Each of these considerations may seem manageable in isolation, but there’s an art to combining them and building a picture as to whether a SKU is profitable or silently loss-making.
Why an Accurate Costing Model Matters More on Amazon
Accounting and reconciling Amazon charges and payments is a complex task for your finance team. Whilst applying a blended margin might be a tempting simplification, it can mask essential product profitability data that’s only visible through a SKU-by-SKU analysis. So we help businesses to push through the pain barrier and do the product-centric calculations.
Although unit sales might appear healthy, the fact is that profitability can only be accurately assessed in the context of each individual items cost of sale. This knowledge enables you to make informed decisions on where you can claw back margin or simply stop listing unprofitable products. It’s a really valuable investment in improving your net margins.
Marketing teams often request more budget tor Amazon advertising, where the CEO is struggling to see better than break-even results. Focusing on top-line metrics such as ACoS (Average Cost of Sale) can hide issues where budget can be better managed and margins improved. To accurately assess your PPC (Pay Per Click) performance, you need to understand your true contribution margin at SKU level. Only then can you invest in scaling sales of your more profitable products.
This is why winning on Amazon requires cross-team collaboration and the precision that comes from being in possession of all the facts, rather than a singular financial, operational, sales or marketing view.
The A-Team
Unlike traditional retail, Amazon penalises inefficiency. Poor stock planning leads to increased storage fees or lost Buy Box share. Weak margins restrict advertising scalability. Operational blind spots show up directly in performance metrics. That’s why running a successful Amazon channel is a ‘team sport’.
The person managing Amazon logistics/operations needs to work with the finance team to understand where the charges and payments are on Amazon, and Finance Directors need information from operations to calculate accurate Amazon P&Ls. They also need Amazon agencies or managers running PPC to provide monthly reports on PPC spend by SKU so that it’s clear where profitable products warrant further investment, and loss-makers require culling.
Amazon Rewards Clarity
Businesses that invest in understanding the full financial picture gain the ability to:
- Identify margin leaks and correct them
- Rationalise assortments based on contribution, not revenue
- Optimise PPC with confidence in true profitability
- Scale sustainably without nasty surprises.
Those that don’t, often grow turnover while shrinking profit in a dangerous trade-off.
A Holistic View Leaves Nothing on the Table
Amazon success isn’t about chasing top-line growth at all costs. It’s about building a channel that strengthens the wider business.
That requires stepping back and analysing Amazon holistically: every fee, every operational cost, every internal resource requirement, mapped against unit costs and contribution margin.
This analysis reveals opportunities. Pricing adjustments, packaging changes, fulfilment strategy shifts, and smarter advertising decisions can all unlock previously untapped and invisible margin.
Sometimes Analysis Reveals Amazon isn’t the Right Channel for the Product
Sales of Rock Rose Gin were soaring online and in-store, but Martin Murray, their CEO was concerned about the profitability of their Amazon sales. Our consultancy team worked with them to understand how Amazon was impacting their business and provide the insight on where to focus their sales and marketing efforts.
“Amazon is a huge opportunity and can be brilliant for some, but bad for others. Last year we had lots of sales, but we didn’t make any profit. To win on Amazon, you need to be up to speed with the constant changes and updates. Knowing whether you are making money and being able to cut through Amazon reporting is crucial to understanding your profit margins on this complex sales channel. Sell Beyond gave me clarity and the ability to make a sensible business decision. They are really nice people to work with, balanced, helpful and great listeners.”
Martin Murray, CEO, Rock Rose Gin, November 2025.
What it Actually Takes to Grow a Business Through Amazon Sales
LovJoy babywear had really found their niche on Amazon and were growing as fast as their clientele. Their challenge was to manage their purchasing, storage and inventory in support of their rapidly scaling Amazon enterprise. The Sell Beyond team worked alongside them to overcome operational issues, enabling accurate forecasting that empowered them to make better informed, braver decisions for continued growth.
“Amazon isn’t for everyone. It’s no longer a passive income generating option. You need to educate yourself and be willing to put in the hard work. It’s important to find experts you can work with who can help you understand what is required and give you guidance to be effective. I know if I come up against any more challenges in the future, I have a team of Amazon experts I can turn to.”
Kokila Mohan, CEO, Lovjoy, January 2025
How to Make a Success of Your Amazon Sales Channel
Amazon isn’t just another retail channel. It’s a complex, high-impact business model that demands rigorous analysis. To make a success of your Amazon sales channel you need to understand:
- Amazon fees
- How much time your team spend per week on Amazon
- Margins per SKU
- How your finance, operations and marketing teams are collaborating to support the profitability of your Amazon sales.
Businesses that can embrace this approach don’t just sell more, they build profit, resilience, and long-term competitive advantage.
If your team would benefit from support in realising the potential of selling on Amazon, then Sell Beyond’s team of coaches and consultants can help you to devise an informed and actionable growth strategy. We’re here to help your business succeed. 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