Using Amazon Data Analytics to Cut Costs

Discover effective strategies to optimize your Amazon FBA fees and boost your business performance. Unlock the power of Junglytics data analytics to gain actionable insights and take control of your Amazon selling journey.

Isiah Kurz

November 24, 2023

People love selling on Amazon. Fulfillment By Amazon (FBA) provides sellers access to a massive marketplace filled with eager shoppers. Better still, FBA can handle shipping and fulfillment on behalf of sellers, making the process so much easier. This is probably why so many entrepreneurs choose to sell on Amazon, whether it’s a side hustle or full-time business.

While FBA provides real value to sellers, it’s not free. It’s an investment. And when you add up all your other investments—including the cost of goods sold (COGS), advertising expenditures, Amazon referral fees, and, of course, fulfillment fees—it can feel like a lot. Even if you do generate a good deal of revenue, you might not be making the profits you’d hope for.

When calculating profit for a mature and diversified Amazon business, there are many variables and complexities to consider. But at a basic level profit is the total sales, minus Amazon FBA fees, Amazon referral fees, advertising, and COGS.

Profit = (∑ sales) - (∑ ad spend) - (∑ cost of goods sold) - (∑ amazon fees)

Recognizing this, there are two ways to boost profits. The first way is to increase sales. The second way is to reduce costs. Today, we’ll focus on this second way.

Of course, knowing where to trim the fat and where to double down on your investments can be tough. An Amazon data analytics tool can help you make better decisions by giving you the valuable insights you need to succeed.

Reducing Expenditures to Boost Profitability

Take a look at your margin. This is the percentage of your sales that make up your profit after accounting for the total costs incurred in producing, advertising, and selling your products. Here’s the equation: Margin % = (∑ profit ) / (∑ sales).

A data analytics dashboard showing margins for various product variations.

The whole goal here is to increase the profitability of each sale. Here are a few ideas to get you started.

Reduce COGs

To trim costs as an Amazon seller, try negotiating with suppliers for better deals. One of the benefits of building long-term relationships is that you can work with suppliers for better rates. Negotiating for better deals through bulk ordering is a perfect example.

You might even be able to work with them to optimize product design for increased cost efficiency. This could include using different materials or different processes in manufacturing the goods.

Assessing Your Advertising Investments

Advertising commands a portion of any serious Amazon seller’s wallet. But making sure you’re actually getting the value you need back from these ads is of crucial importance.

A Junglytics dashboard showing ad spend by week, intersected by return on advertising spend (ROAS).

Amazon offers three types of advertising: Sponsored Product Ads, Sponsored Brand Ads, and Sponsored Display Ads. All of these offer some value to sellers. But if you notice one ad type dipping in results, it’s wise to shift that spend elsewhere. The same thing can be said for putting ad dollars behind certain products or variations. If the red version of a given product is booming in return on ad spend (ROAS) and the purple version of that same product is slowing you down, then clearly it’s time to reallocate those ad dollars.

A snapshot of popular advertising KPIs.

Unfortunately, Amazon Seller Central doesn’t give you that level of granularity. Which is why some Amazon sellers choose to go with third-party data analytics tools to fill in the gaps and provide deeper insights.

Ad conversion rate by color variants.

Investigate Your FBA Fees

Storage and fulfillment costs a pretty penny, but there are ways to reduce spending.

First is to investigate how much you’re spending on FBA and balance that with its benefits. Customers love shopping on Amazon because they associate the e-commerce platform with fast shipping. But that might not always make sense for you, as the seller. If you have low-conversion products, it might make sense to handle those as fulfillment by merchant (FBM) or through a third-party logistics provider (3PL). This will probably result in slower shipping times, but if you’re not getting the ROI from FBA that you need, it might be worth it.

A Junglytics data analytics dashboard shows total Amazon fees intersected by FBA inventory.

Another tactic to investigate is case packs, inners, and master cartons. Rather than sending individual products to FBA, case packs hold a certain number of products making it easier for you to optimize FBA costs. This makes the most sense for high-conversion products and goods that fly off the proverbial shelves.

Lastly, take advantage of strategic sizing. See if you can meet Amazon specifications for dimensions and weight to reduce the cost to you.

An example of FBA fulfillment fees by dimension and weight.

Amazon Sellers Deserve a Better Approach to Data Analytics

A lot of entrepreneurs choose Amazon FBA for its vast marketplace and helpful tools. But truth be told, it falls down in a few areas. Amazon FBA sellers looking to advance their business should consider adopting third-party data analytics tools like Junglytics.

Junglytics provides unlimited customizable Amazon data analytics dashboards, tracks more than 40 metrics, and makes it easy for sellers to take control of their businesses.

‍See a live demo of Junglytics to learn what this Amazon data analytics platform can do for your business. Or request your own demo today.

ABOUT THE AUTHOR

Isiah Kurz

Isiah is an experienced content writer with more than a decade of experience in journalism, public relations, and marketing.

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