Want to escape margin compensation requests of your Vendor Manager and the dreaded CRAP list?
Then you need to stop worrying about your profit margins.
Instead, make sure you identify »mutually« accretive product listings.
Here’s how:
- Define listings that return you high profit margins
- Define listings that return you low profit margins
- Define listings with an accretive Net PPM for Amazon
- Define listings with a dilutive Net PPM for Amazon
The resulting product list allows you to allocate ASINs in the four quadrants of the below matrix.
You can then categorise the focus of your advertising and promotional spending as follows:
- Remove the focus from products that are dilutive for both parties.
- Reduce the focus on products highly profitable for Amazon but dilutive for your business.
- Maintain the focus on items with high profit margins but low Net PPM for Amazon.
- Increase the focus on items with mutually accretive margins.
Bonus:
Calculate the percentage share of your Shipped Revenue with Amazon for each defined quadrant. This will likely uncover some low-hanging fruits to improve your portfolio margin mix.
For further insight and support, contact Martin Heubel, Founder and Director of Consulterce, a strategy consultancy for B2C Household & CPG brands (Email: [email protected])
