It is well known that to sell a business for getting a healthy figure, make money as an Amazon Seller that is the first necessary to have a decent and handsome profit margin. But then how do we decide what is a healthy profit margin? So a simple answer to this question could be “it depends.” But it is always known by the good profit margin how well the business is going. Still, it is important not to obsess over it because when you start obsessing over it, you start forgetting other important stuff.
So before heading about a good profit margin for an Amazon FBA business, let’s have a look at those “Other important stuff.”
Is Your FBA Business Sustainable?
Suppose you are selling a product that doesn’t have any versatility, which can be sold by your competitor easily. It makes your store hardly sustainable. Even if you have a profit margin of 70%, it doesn’t matter if your rival can come and steal your market share, involving you in a price war.
What’s Your Value Proposition?
If it is about targetting the profit margin, you can be happy while being a bit lower only if you are selling quite a unique product that you have developed yourself. This is because it is not very important to worry about someone else who will come along and take it away from you. But if you are selling a specifically commoditized product, you need to have a much higher profit margin. This is just in case someone jumps into the scenario and starts selling alongside you.
Are Your Products Scalable?
And lastly, it is crucial to have all the knowledge about how scalable your products are. If you are selling any unique product, you will need the profit margins to be touching heights. So this makes your products and the store considerably in a high-risk zone.
But if, on the other hand, they come in a scalable category, this means you can take all your time and build your FBA businesses around them. And which subsequently means that you don’t need to obsess over your profit margins anymore.
A Good Profit Margin For Your FBA Business
So here we can conclude that globally there exists nothing like a sound profit margin for an FBA Business. This is because it depends on where your business lies and the types of products being sold.
So if we take an instance that you are selling products that tick the correct boxes, then you should be looking for a profit margin of 10%. But if you are busy selling some products that have no sustainability, then a 70% profit margin won’t save your business.
Therefore, it would be highly recommendable to hit a gross margin ballpark of around 25 to 35%. This will lead you to save cash which will be helpful for marketing and ads, and you will also be able to hold your firm against any price war.