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NET PROFTIS, NET PROFITS, MARGINS. Lets Talk about it! / Black Friday + Cyber Monday + Prime days
Hello Fellow Sellers,
NET PROFITS, NET PROFITS, MARGINS. Let’s talk about it!
We’ve been a medium-sized seller on Amazon since 2007, manufacturing and selling our own private brand directly to consumers. Our approach goes a bit against the grain: we prioritize quality and healthy profit margins over sheer volume and low-margin sales.
For several years now, we’ve found that big sales events like Prime Days, Black Friday, and Cyber Monday just don’t work well for us. While these events can drive a significant increase in sales volume, they often come at the expense of profit margins. If cash flow is your primary goal, these events might make sense. However, if long-term profitability is your focus (and it should be if you’re aiming for sustainability), the math often doesn’t add up.
For example, why sell 5,000 units to clear a profit of $1,000, when you could sell 3,000 units and make the same $1,000 profit—without the steep ad spend or aggressive discounts these events typically require? Also take into account the sales lull before and after sale event days.
I’m curious: is anyone here actually getting ahead in terms of net profits during these high-spend sales events, especially when factoring in Amazon's ad fees, coupons, MSRP discounts? If so, what niches are you in? How do you balance the trade-off between volume and profit margins? Are certain sales events more profitable for you than others?
Let’s share some insights—how are you making it work?
17 replies
Seller_rI7BZIczK8iAC
We have the same philosophy like you:
We sell high quality products and I don't want to undervalue them by selling cheap. Customers looking for high value products are certainly less sensible to such events. We have never seen higher or lower sales on Black Friday and similar events. That is OK for me.
Seller_i6S8knzW6zU6Z
Hi @Seller_XvFEUPHS4TwMZ,
You make an important point—net profits are essential for running a sustainable business. At the same time, it might be worth considering the longer-term effects of sales events. Looking only at the immediate profit margins during the event can miss some of the potential benefits. For example, the increase in sales volume during these events often helps improve sales rank and keyword rankings. This can lead to better visibility and more organic sales in the following weeks or months, even if those effects taper off over time.
Of course, there are risks involved. Running out of stock during a promotion can mean missing out on those longer-term benefits. On the other hand, preparing extra inventory can also be tricky—if something unexpected happens, like a deal not going live as planned, you might end up with higher storage costs. These situations don’t necessarily mean the events aren’t worth it, but they do highlight the need for planning and managing the risks.
I see the discounts and ad spend as part of a marketing effort aimed at balancing today’s profits with tomorrow’s growth. That’s just my perspective, though. I’d love to hear how others approach this—your post raises a really interesting question. Thanks for starting this discussion!
Kind regards, Michael
Seller_lCX40xAkSs1xm
The ad fees go insane during black friday/cyber monday. We generally tone down all PPC advertising because we do not see an increase in sales, but we see a huge increase in ad spend.
Seller_dEERjnj9RPjaY
Same here. On Gourmet Popcorn much less. I have LOST my A-- on ad spend verses sales. I am in the hole! Will NEVER do that again. Thinking Amazon may not be the selling forum for me.
Seller_pdPNwT3IIPMAL
No ads, coupons or any giveaways. Only clearance for overstock items and that is it. I let other fight over ad traffic, my sales are good off season.
Seller_XjolGGpui9INo
Another issue with trading volume for profit during the holiday season is the additional fees and the extended return window Amazon offers to Buyers. The extended window creates a much big fraud opportunity for our products, I dread selling a lot of units during the holidays due to the late/fraud returns.
I would agree that lower sales with higher margins is a much better business strategy on this platform.
Best regards & Happy Holidays!
Seller_aNryBfYO3DTmL
I don't do anything on Prime Days/BFCM other than coupons based on inventory age. I just take advantage of the increased traffic.
Seller_aNsixtdBpnLRG
We too are have a niche product offering - we never offer sales or discounts as nearly all of our buyers are 1 off and done - this platform already takes too much income for the little bit they do for us. Let the Chinese sellers give all to amazon for pennies in return - NOT our business model.....
Joey_Amazon
Hello @Seller_XvFEUPHS4TwMZ,
Thank you for your recent post on the forums!
I'm Joey, a Community Manager at Amazon. I appreciate you creating this thread, which encourages other sellers to share their experiences.
Sincerely,
Joey
Seller_hLH0bAcCwYcos
You're right on the money with that statement. Some people just dont do the math. We know of a liquidator/seller in our industry (toys), that drops 500 units of a sku on here, cuts the price in half (usually right at or below actual dealers cost), and then grinds away, selling a $45 item for $20, making probably $1 per unit. Everytime they drop a years worth of inventory (500 units), they tie up the product sku for up to 6 months, and the other dozen of us selling on here's sales go to zero overnight, and sales are as dead as a ghost town until they are done moving their inventory at business destroying liquidation prices, and at market disrupting quantities. HAD THEY DONE THE MATH, they would have realized that they could have slow moved that inventory at 25 units a month, over 2 years, and made $15-20 per unit, vs move 500 units in 2 months $1-2 per unit. Difference?
- 500 units @ $20 = $10,000 revenue, (-) say $4000 commission ($8 per FBA unit), = $6000 net income. IF they are making $2 per unit. Congratulations. You just sold 2 pallets (500 units) of toys and made $2 profit per unit x500, or $1000 dollars. If even 10 people return their sets (1 in 50), those 10 returns just wiped out $200 of your profit, and you now made $800 on $10000 in sales, about 8% profit. You can make that much leaving your money in a money market acct, sipping tropical drinks in the Bahamas and do nothing. AND, NEARLY HALF YOUR PROCEED WENT TO AMAZON PROCESSING ($4000). GOOD JOB. On the other hand:
- 500 units @$35, (sold over 2 years vs 2 months) = $$17500 revenue (-) $5125 commission ($10.25 per fba unit) = $12375 net. Now you are making $2 PER UNIT + an addl $12.75 profit per unit ($14.75 x500 or $7375. You just septupled your profit FROM $1000 TO $7375. Only thing not included is holding cost to keep it for 2 years. Figure $5000 COST AMORTIZED OVER 2 YEARS, SOLD EVENLY, @15% IN CURRENT HIGH RATE MARKET, YOURE LOOKING AT $375 PER YEAR, OR $750 TOTAL INTEREST OVER 2 YEARS. That's ONLY if you arent going cash basis. Figure the same return rate of 10 units (1 in 50), and you deduct another $350 on returns, and you get $6375. Even then, with finance, you are still making $6375, vs $800, OVER 8x the profit you made before.
As a result of this disruption, they cause other sellers to either liquidate their product, or send it home, and move it completely off of Amazon. They are as destructive as someone setting up a dollar store next to a movie theather. While we all love to smuggle in $1 candy to the movies, its not so great for their concessions, where they are selling $14 popcorn and $5 candy bars.
They also cut Amazon's commission by 60%, selling things at half price, which I am sure Amazon doesn't love.
Case 1 @$20, Amazon makes $8 commission x500, or $4000. Case 2, Amazon makes $10.25 commission x 500, or $5125. The thing about that is, Amazon has fixed costs sunk into each sale, and if they make $1000 profit on that $4000 after logistics and shipping, that extra $1125 MEANS THEY MAKE DOUBLE, I REPEAT, DOUBLE, THE PROFIT ON THE SAME 500 ORDERS. AND IT SELLS AT A PRICE WHERE ACTUAL DEALERS CAN ACTUALLY AFFORD TO STAY IN BUSINESS. PLUS IN KEEPS THE PRODUCT FROM BURNING OUT IN 2 MONTHS, AND STAYS STOCKED FOR 2 YEARS, ATTRACTING BUYERS TO CONTINUE TO COME TO THIS SITE FOR THEIR PRODUCT, INSTEAD OF IT GETTING BLOWN OUT IN 2 MONTHS VIA LIQUIDATOR SALE, AND DISAPPEARING COMPLETELY OFF OF HERE, CAUSING BUYERS TO GO TO OTHER WEBSITES TO BUY.
MY QUESTION? WHY DO IT? WHY SELL $5,000,000 IN TOYS A YEAR AT LIQUIDATION VALUE, AND MAKE 8%, ABOUT $400,000, WHERE YOU COULD SELL 1/5 OF THAT, SAY $1,000,000 IN TOYS, AND MAKE THE SAME $400,000, SAY 30-40% PROFIT? YOU ONLY NEED 1/5 THE CAPITAL, AND MAKE THE SAME MONEY FOR DOING 1/5 OF THE WORK! And you can sell $1 million with probably 1-2 employees. If you sell $5000000, youre going to need 5x the space and 5x the employees, and they will be making like $10 an hour. ALL OF YOUR MONEY WILL GO TO EXTRA HELP. AND THEY WILL NOT BE MAKING ENOUGH TO MAKE A LIVING, BECAUSE YOUR WAGES WILL BE BASED ON AN 8% PROFIT MARGIN (MCDONALDS MAKES MORE THAN THAT, AND PAYS BETTER). WORK SMARTER, NOT HARDER, PLEASE!!!! STOP DUMPING PRODUCT ON HERE AND CUTTING THE PRICE IN HALF ,AND LITERALLY KILLING * ALL * THE SALES EFFECTIVELY UNTIL YOU ARE DONE LIQUIDATING YOUR PRODUCT AT HALF OF M.A.P. PRICE!
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