Ep 264 Decoding Amazon Sales for Profit and Growth

So an awful lot of what we see in CBG is a category.

A lot of it starts with unit economics.

There's a couple different factors here, but that's a good starting point.

A lot of brands lose specifically about $60K to $100,000 or more learning Amazon the hard way.

And learning Amazon the hard way is trying to, you know, sort of wing it themselves or they bring on maybe a marketing partner that is thinking about what great marketing metrics are, but don't know how to, or they're uncomfortable with a marketing plan that is responsible to a P&L as opposed to, you know, just getting excited by, you know, revenue growth, despite what the underlying, you know, financials might be.

So the place to start is always with making sure that your unit economics are healthy.

That's an easy thing to say, but what does that mean for Amazon specifically? And I can give you a couple of numbers here that I don't hear often out in the market.

So after there's a couple of numbers that we look at really quickly.

really carefully here.

One of them that I do a lot of talking about is pre-ads gross margin, which sounds complicated, but very simply, it's the percentage of what is left over after you were landed COGS and after you were Amazon fees.

And if you're not sure what your Amazon fees are, what they would be, if you're not an Amazon, there's a calculator that you can use for this.

You can just Google Amazon profitability calculator.

There's several out there.

Amazon has one itself.

And you can run through a calculation and see exactly how much is left over.

I want to see... before any marketing spends, before ads, before you invest in an agency partner like us or hire help internally, I want to see for CPG, I want to see a floor of 30% that is still left.

Ideally, it's higher.

And for durable goods, that number needs to be even higher than that.

Ideally, it's 40% to 50%.

One of the traps that brands get into is they see how competitors are priced in Amazon and they get into this race to the bottom.

We take the opposite approach.

We work with brands that have good margin and can defend it.

And if they do not have good margin and are having trouble defending it, then that's one of the things we help them out with.

I'll pull out of the rabbit hole for, for a moment.

I know that's some very specific math right out the gate, but to, to put a bow on it, I want to see your margins.