Cracking the Amazon Code: Know Your Secret Numbers

I love simplicity. It wins every time. But in the Amazon jungle of numbers, there’re two numbers that barely anyone is talking about. And they are the numbers you must know. Do you know what they are? (Nope, it’s not “revenues” or “profit margin”).

You see. Everyone is too busy following the herd in the wrong direction. They keep talking revenues. Or sometimes, they talk “profit margin”. But you know better because you listen to me.

Make this one of the few must-read articles as you step into the arena. Trust me, it’ll explode your wallet faster than you can say “profit.” You can thank me later with a big, fat check.

Listen. I write this up for you because I think too many folks get this wrong: Big sales numbers (revenues) might sound sexy, but they don’t always spell success. It’s like bragging about catching a huge fish without mentioning it jumped back into the ocean. It’s profit that tells the real tale of triumph, not revenue. And how do you maximize your profit number? I’ll tell you too.

Let’s first talk about the elephant in the room. You’ve heard it everywhere: “7-figure sellers” or “8-figure sellers”. They’re talking revenues.They are not that big a deal on their own. It’s not that you don’t want those numbers. It’s what INSIDE those numbers that you should care about. You’ll see big differences among those with similar revenues. I’ll show you details in a breakdown.

Sure, these revenue numbers are big enough to turn heads, but if their pockets are empty at the end of the day, what’s the point? Revenue is just the gross amount rolling in—it doesn’t factor in the hefty slice taken out for expenses. What’s left?

Remember, throwing cash in to get back these big revenues requires capital investment. Investment is always a gamble, and not every bet pays off.

From day one, I focus on the bottom line—actual profit. It’s not about how much you sell; it’s about how much you keep. So, ditch the revenue race. Aim for the profits and play to win. Real success is about getting rich, not just looking rich.

And how do you maximize profit? I, of course, am talking about ROI (Return on Investment). It’s the real MVP that tells you if you’re actually making bank or just playing pretend.

Forget Revenue and Margins – Return-on-Investment (ROI) is King
High revenue? Fat margins? Please. Those numbers can be as deceiving as an illusion. ROI cuts through the fluff, showing you the cold, hard cash you’re actually pocketing from every dollar you put out.

Focusing on it is like having financial X-ray vision in a world full of smoke and mirrors.

A Closer Examination of ROI Through Practical Scenarios
To underscore the importance of ROI, consider the comparative analysis of two hypothetical sellers, both with revenues about $240,000.

Seller A with Product A
Product Details:
Weight: 1 pound
Cost of Goods Sold (COGS): $1 per unit
Import Fees: $0.25 per unit (sea shipment plus import tax)
Total Upfront Cost Per Unit: $1.25
Upfront Cash Needed: 24,000 units x $1.25 = $30K
Selling Price Per Unit: $10
Revenue: 24,000 units × $10 = $240,000

Complete Financial Performance

Pack-n-ship per unit at 1 pound: $3.60 (This is the rate today)
Referral fee: $10 x 15% = $1.50
Profit Per Unit: $10 – $1.25 – $3.60 – $1.50 = $3.65.
Total Profit: 24,000 units × $3.65 = $87,600
Profit Margin: ($3.65 / $10) × 100% = 36.5%
ROI: ($87,600 / $30,000) × 100% ≈ 292%

Seller B with Product B
Product Details:
Weight: 5 pounds
COGS: $8 per unit
Import Fees: $4.25 per unit (sea shipment plus import tax)
Total Upfront Cost Per Unit: $12.25
Upfront Cash Needed: 6,857 units x $12.25 = $83,998
Selling Price Per Unit: $35
Revenue: 6,857 units x $35 = $240,000

Complete Financial Performance:

Pack-n-ship for 3 pounds: $7.56
Referral fee: $35 x 15% = $5.25
Profit Per Unit: $35 – $12.25 – $7.56 – $5.25 = $9.94
Total Profit: $9.94 x 6,857 = $68,158.58
Revenue: $35 x 6,857 = ~ $240,000
Profit Margin: ($9.94 / $35) × 100% ≈ 28.4%
ROI: ($68,159 / $83,998) x 100% = 81.14%

Summary:
Seller A turns a $30,000 investment into $240,000 in revenue, pocketing an impressive $87,600 in profit.

Seller B, despite laying out much heftier $84,000 upfront to have same in revenue, he pockets only $68,158.

Now, if Seller A had put that same $84,000 as Seller B to use, he wouldn’t have just made $68,158 — he’d have raked in a whopping $245,274. That’s the power of stretching your dollar farther with a beter ROI.

Conclusion:
Keep your eyes on the ROI—it’s the number that tells the real story. It shows how effectively your money’s working for you, and in this game, that’s the number you must pay attention to.

Additional Notes:
With these examples above, I left out storage fees, placement fees, etc. None of which plays in favor of the bigger item. When all said and done, it’s practical to have a 200% ROI. In other words, you can double your money. The faster you sell, the faster you can double and the compounding effect will do the magic.

“Profit margin” tells a better story than “revenues,” but it’s not that important either. Profit margin refers to profit as a percentage of the selling price. Let me briefly explain. Say you buy an item for $0.50 and make a $1 profit on each sale at $10. It’s a bit heavy and costs more to fulfill, so out of the $10 selling price, you’re only left with a $1 profit or a 10% profit margin. Is that bad? Of course not. That’s a 200% ROI, and I am happy to double my money all day long. Amazon FBA allows extreme efficiency, and when you sell lots and lots of these, you can double your money (at scale) at an amazing speed. I have. In fact, it’s practical to have 300% ROI before factoring in some overheads, and you end up with over 200% ROI after all is said and done. 

Practical Advice:

  • Go with small and light products. Your pack, ship, and storage fees will be much lower.
  • Go with cheap products. (This is an opposite take from the ‘gurus’ out there but work much better in my personal experience). Trust me, I’ve tried various price ranges, numerous times. It’s better to get a higher ROI with cheaper products. Just make sure you can have a good USP to a good niche.
  • Do the basic math focusing on ROI. Lots of products under $2 that yield amazing ROI, making you $4 or so per sale, and you need much less capital.