Dwindling profit since Covid year. Does selling on Amazon still profitable for you guys?

Hi,

Sorry for ranting. It’s getting harder and harder to make a living selling on Amazon. Competition is fierce. I have to keep dropping the prices (because I still have large inventory left) to make sales. Now many of my products are selling at breakeven. After adding PPC costs, I loss money :pensive:. However I still have to continue to sell to get rid of the inventory (that I’m paying rent to the warehouse). I talked to another FBA friend about this. She also has the same experience; dwindling profit. After selling all left over inventory, I would downsize to only selling 10% of SKU of what I’m selling. That 10% aren’t saturated yet because it’s a niche market and only people with patents could compete.

I’m curious whether you guys experience the same downward trend. What are your plan?

Unfortunately yes.

Amazon was responsible for our success and then our downfall.

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Love this phrase :grin: Totally agree.

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Similar but profitable…when the size tier changes and pricing was announced during covid it took us down in profit about 40% - and we had to move a lot of things around to make it at lower margins. Barely. And then it took about a year where I was biiching about it to become profitable again.

It’s not easy. And it’s a path no one understands

It’s a lonely path - just you, yourself and your hand

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Sometimes, when circumstances change, the “win” becomes losing the least amount of money. It takes skill, strategy, and objectivity to minimize losses. And this is true whether a company has 1, 100, or 100,000 employees.

As consumers become more aware of the suppliers of retailers (brick & mortar and ecomm) and are inundated by adverts for cheaper options–and as manufacturers and brands move to cutting costs/maximizing profits by selling direct-to-consumer–some past money-makers are simply no longer viable on Amazon.

You can pivot your products, revise your strategy, pursue new suppliers and ideas, embrace new tech (influencers, social shopping, apps)…or maybe you look at the big picture, liquidate, and walk away.

It really depends on your individual goals, resources, assets, and liabilities. Each business is different.

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yes…

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Thankfully we don’t have this problem yet but our growth rate has plummeted YOY.

First couple of years it was in the triple digits. This year we will be at +35%.

Dirty competitors, falsely advertising their products as something they aren’t, posting fake positive reviews on their listings and fake negative reviews on ours is the cause in this case.

All of this has been proven without a doubt - all the evidence is right there for Amazon to see but they ignore it.

We pay a hefty sum for Amazon’s SAS Core Support program. Our manager sees it, her boss sees it, but reporting and escalating has gotten us nowhere.

We’ve invested an incredible amount of capital this year in preparation to enter real retail next year with our brands through a high-impact broker that deals with all the big B&M retailers.

Our plan at some point (possibly soon), is to take the now 67 pages of evidence / screenshots to our high powered attorneys at Blank Rome to take to their counterparts at the FTC to show them that Amazon is complicit in these scams to make money over the health and safety of the Amazon consumer. The FTC will eat this ■■■■ up like candy.

My business partner also wants to go to the press with it through his media connections.

Bottom line is Amazon is not a real way to be in business if you’re just on Amazon. Amazon is a game and eventually you will lose. There has to be a plan B,C,D,E-Z.

You cannot count on Amazon for anything with things like this, even if you pay a ton of $ for their premium support. It’s literally a joke.

You can read up on our latest issue with Amazon on this thread here

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Thanks for sharing. I guess you changed the package size according to the new size tier, right? How about competition? Haven’t you experience more sellers trying to compete with you?

Except people here? :smiley:

That sum up my Amazon seller carrier in one sentence :expressionless:

I don’t know but dropshipping business model looks more attractive compared to my current one (manufacture and hold inventory). It’s the inventory that gets us stuck when Amazon changes anything.

Wow :open_mouth: How do you immune to this “the win becomes losing the least amount of money”? Do you sell a special kind of product that has minimal competition? Super niche?

That’s natural for most businesses. It’s easy to exponential grow in the beginning. Congrats BTW :slight_smile:

I guess Amazon favors Chinese sellers over us :roll_eyes:

Sounds cool. I hope you make some money from this lawsuit. However Amazon might ban you after the litigation.

Totally agree

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My partner owns a multi-9 digit, 43 year old manufacturing facility that manufacture’s products in our space for some of the biggest brands in the industry. We get direct transfer costs and this stuff costs nothing to make. NOBODY can compete with us on price so we get knocked off regularly but the knockoffs are not what they claim to be. Products listed as Sugar Free but contain Dextrose - That’s sugar BTW.

We specialize in a very specific delivery form (quick dissolve), orally dissolvable tablets (ODT’s), that dissolve in under a min. The knockoffs market chewable tablets as QD’s. They don’t even contain the raw materials that make a QD a QD… They dissolve in about 15 mins. These are just 2 examples of MANY.

I don’t think it’s natural for an Amazon business to go from $40K year 1 to $1.7M in year 4. Very proud of our accomplishments with me being the only person who works the business. My partner is 98% focused on his own operation. I do have 26 years of industry experience so that helps but it is taxing on my physical / mental health.

We all know this but I can’t figure out why. It’s messed up.

I think it’s the other way around. I have, in writing, emails from Amazon “executives”, their clear agreeance that what we are talking about is fraud, along with their disgust that Amazon is failing to act on the obvious fraud. Let them retaliate, we would never lose a lawsuit against Amazon. The govt does not like Amazon. Judges do not like Amazon. The facts are the facts, and they are fact.

We are RUNNING away from Amazon as fast as we can and I suggest everyone do the same if this is your day job.

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That was just one issue, the other was the manufacturer graping us on price and giving us inferior product - the issue was that all of this occurred at nearly the same breaking point. So it took a great amount of cash influx - effectively making me broke for the 4th time in my life - the stressors of which I don’t wish upon anyone.

The people here may or may not understand - we have a vast cadre of sellers here with a vast array of business models - it’s a wonderful sounding board that is subjectively objective - in other words, no one here is trying to sell you anything so what they say bears a sliver of truth, however subjective that may be, it is still objective in the grand scheme of things - and the technical expertise is the best bar none.

I mean just look at @papy 's response above. So succinct and accurate.

All the best,
T_T

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Just something to consider here. I think the real problem is the lack of laws protecting American consumers and businesses. If a US business does something wrong against a foreign company, they can sue the US business in a US court and collect a judgement on it. If a foreign company does wrong, they can just no-show to court and collecting a judgement is nearly impossible.

Amazon’s duty is to it’s shareholders, not to consumers or sellers. Their job is to do the minimum required by law to avoid liability (or in some cases, break the law when the eventual fines are < the cost of complying) while maximizing returns for shareholders. Since there’s no laws requiring foreign companies to have some kind of enhanced compliance, why would Amazon go out of their way to care?

If you want to go the lobbying/PR/media route, consider setting your sights even higher and pushing for actual legal protections for US businesses/consumers from abusive foreigners. And this isn’t specific to Amazon or chinese sellers on Amazon. There should be broad protections by LAW protecting americans from problematic foreign businesses. The US legal system should be putting it’s own citizens first. How this would be implemented I do not know.

The majority of ecommerce problems/scams/etc come from overseas companies who don’t fear legal action being taken against them. There needs to be restrictions by law on how those companies can operate and/or additional measures platforms need to take to ensure those companies aren’t doing something bad. If a seller is in the US, then the platform can be more hands off about things, because if there’s an issue it can be resolved through the court system.

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Yea, I’ll go call my representative here - George Santos :laughing: He’s probably finishing up on Only Fans right about now or maybe getting back from his Botox “On The House” appointment…

In all seriousness I agree with you completely.

Yes, sales down about 40% from the “covid years”. I see it as a convergence of many factors. More competition, more in store shopping and as things opened up after covid, what people are buying has shifted too.

My thoughts for the future are that I’m really about the same as I was before the covid boom. It hurts to see things go down but I banked a lot of the profits when times were good expecting them to end. What I see happening is that a lot of sellers aren’t going to survive. That doesn’t make me happy to see people losing their businesses but it’s going to happen. Those that can hold out will have a better future with reduced competition.

Diversify your supply chains or at least start making contacts outside your current suppliers. As it is, I would double my costs to move and I’m not sure customers could accept the price increase. At some point there won’t be a choice but at least I have something lined up when it happens.

Just my opinion.

Good Luck,

TJB

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It’s like everything else. If things are good, eventually competition crowds in and the race to the bottom starts.

Gig economy jobs were good at the beginning too, because companies like uber, postmates, etc were eating a lot of costs to get the service to be popular, and then they started cutting wages and providing crappier customer service once they hit a critical mass.

I think right now is one of the toughest times to be a seller, we just came off good times, so there’s a ton of losing companies burning excess cash to bid up PPC costs and to sell volume for the sake of selling volume. Once the unsustainable businesses go bankrupt it should improve a little bit, but I wouldn’t expect much because competition will remain fierce. There’ll always be just above breakeven businesses that are sustainable that will keep prices low and PPC costs high.

That’s super cool!

Amazon wants to make sure that the influx of cheap Chinese goods keep coming in. Chinese sellers are willing to take small profit than US sellers because cost of living in China is lower. Also most Chinese would work for nothing. That’s why all Chinese restaurants sell cheap food.

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15 posts were merged into an existing topic: :lock_with_ink_pen: The Junk Drawer

That is a bit offensive. The Chinese working in Chinese restaurants in the USA are not willing to work for nothing. They are working for whatever the going wages are in the area, or they are family owned and live off the profit like 3P sellers do. I believe their food is cheap simply because they do not properly calculate the costs (as they are often family owned and don’t go in with MBAs or anything, just the cooking skills from the mother country). Many of them go out of business quickly.

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:grin: hehe How dare you offend the Chinese that they don’t know math to calculate the costs :grin: hehe Trust me, they do. They just try to compete with each other the best way they know; by cutting the cost.

Restaurant business is tough. I think statistics show that 9 out of 10 go out of business in the first 3 to 5 years. So, it’s not just Chinese restaurants. Any restaurants.

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