Managing Margins and Protecting Profits

Quartile’s “Friday Feature” webinar series continued with our “Playbook for Amazon Profitability” featuring Canaan Schladale-Zink, Chief Revenue Officer of Quartile, and Yoni Mazor, Co-Founder and Chief Growth Officer of GETIDA. Dedicated to improving the overall operations of Amazon FBA sellers, GETIDA audits  more than $2 billion of transactions per year with a combination of machine learning-software and industry experience. With e-commerce growing annually by at least 30%, it’s become exponentially more difficult to discover and resolve the logistical and financial discrepancies that can amount to anywhere from 1-3% of annual revenue.

Yoni and Canaan shared lively conversation on the new obstacles to maintaining margins, as well as tips on how to thrive on Amazon when cost per sale is going up and profit margins are tightening. They agreed that the solution is multi-faceted and there is no single approach that will ensure profitability. During this time when optimizing margins – and staying on top of the small details – is more important than ever, here are five questions that every Amazon FBA seller should be asking themselves:

  1. Do I have an operations auditing system in place that clearly and easily tracks inventory, transactions, refunds, seller data analytics, and reimbursements?
  2. Does the team filing FBA reimbursement claims on my behalf have an established and strong working relationship with Amazon?
  3. What is the margin that is going to work for me at scale?
  4. How does that margin grow or plateau as I sell more units?
  5. How will I know if I’m overspending on ads?

Amazon sellers used to the ACOS (advertising’s cost of making a sale) on Amazon being around 22 percent are still reeling from the effects of the pandemic when online shopping became dramatically more popular and much more competitive. The average cost of making a sale on Amazon in 2021 is now 30 percent and climbing. Worse still, conversion rates have remained pretty flat – around 12 to 13 percent – meaning that sellers across the platform are paying more for sales of the same product. 

Since the Amazon marketplace was formed in an environment in which volume could save the day when a single product was underperforming, it wasn’t always crucial to understand the profit and loss potential of each individual unit. But thankfully, as the need for scrutiny has grown, Amazon’s portfolio of accountability tools has expanded as well. COVID variants, labor shortages, and increased shipping costs may be the defining issues as we enter 2022, but smart sellers know that new external market pressures will always emerge, and having the following in place is the key to longevity:

  • A system to anticipate and absorb the shock of market crises and track Amazon's increasingly labyrinth-like seller reconciliation programs
  • A mechanism to scale advertising campaigns and seller accounts in tandem
  • A daily tracking of advertising impact on organic sales and seller rankings
  • A reputable and experienced team to manage exchanges with Amazon

The webinar closed out with further discussion of what brands can do to adjust their business models while inflation plays out. Definitely timely and helpful for any sellers looking to secure healthy profits in 2022. 

 To access our “Playbook for Amazon Profitability” webinar, please click here

 Can’t wait to learn more about your e-commerce advertising options? Schedule a demo with a Quartile representative today.