Why Most Amazon Sellers Fail (The Product Strategy That Works in 2025)
If you’re selling on Amazon and not tracking profitability correctly… You’re already losing money.
If you’re selling on Amazon and not tracking profitability correctly… You’re already losing money.
Revenue screenshots might look impressive, but revenue doesn’t pay the bills. Profit does.
Profitability requires discipline: Knowing your numbers, pricing correctly, and managing hidden costs that most sellers ignore.
Here’s how to build an Amazon business that lasts:
Profitability Over Revenue
The 1# mistake Amazon sellers make is confuse sales volume with success.
Revenue is a vanity metric.
Anyone can pump money into ads and drive sales. The question is whether those sales are profitable.
Think in simple terms:
Revenue – Expenses = Income.
If your expenses eat up most of your revenue, you don’t have a business; you have an expensive hobby. Sellers who survive are the ones who obsess over net profit, not just gross sales.
Cash vs. Accrual Accounting
How you track money matters.
Cash-basis accounting records sales and expenses when money moves in or out of your bank account. It’s simple, but it often paints the wrong picture.
Accrual accounting matches sales with inventory and costs at the right time. It shows the real profitability of each product and gives you decision-making clarity.
For Amazon sellers, accrual-based, reconciled financials are non-negotiable. Treat them like your monthly “report card.” They tell you what’s really happening inside your business.
Pricing for Profit
If your margins aren’t strong on day one, no amount of optimization will save you.
Follow this rule of thumb:
4x Landed Cost Rule: If your landed cost is $10, your minimum selling price should be $40.
Target 30% Margin Before Ads: This ensures room to cover fees, PPC, and overhead.
And when tracking performance, stop focusing only on ACOS. Instead, monitor TACoS (Total Advertising Cost of Sale), which looks at ad spend in relation to total sales. TACoS reveals whether your ads are actually driving profitable growth.
Product Strategy That Works in 2025
The sub-$20 product game is overcrowded. Competing in that space is a race to the bottom.
Smarter product strategies include:
Higher-ticket items ($50–$200): Stronger unit economics, more room for ads, and higher take-home profit.
Oversized or heavy products: Harder to copy, fewer competitors, and stronger moats.
End-goal focus: Define how much take-home pay you need, then work backward to identify products capable of reaching it.
By shifting focus to products with real margins, you can avoid being stuck in Amazon’s low-price “mosh pit.”
Optimize Ruthlessly
Not every product will succeed. In fact, most won’t.
Data shows that:
Only about 10–15% of products become top performers.
Another 30% are average performers.
The rest are duds.
The key is to cut losers quickly. Weak SKUs drag down account health, hurt rankings, and waste resources.
Adopt this process:
Launch quickly instead of waiting for perfection.
Gather reviews and feedback.
Refine in the second and third production runs.
Fail fast, adjust, and double down on the winners.
Don’t Ignore Hidden Costs
Amazon is full of invisible expenses that eat into margins. Sellers often overlook them because the charges never hit their credit card—they’re deducted from payouts.
That’s why you need to track AFCoS (Amazon Fee Cost of Sale).
AFCoS includes things like:
Long-term storage fees
Overages
Penalties on high return rates
Pull the DRSR report to see exactly what Amazon is charging. Most sellers discover they’re losing more than they realized.
Unmanaged AFCoS: 12–15% of sales
Managed AFCoS: 5–8% of sales
That difference could mean the gap between surviving and shutting down.
TLDR:
Building a profitable Amazon business isn’t about luck. It’s about discipline.
Track your numbers with accrual-based accounting.
Price products using the 4x rule and aim for 30% margins.
Focus on higher-ticket, defensible products.
Cut weak SKUs quickly and reinvest in winners.
Monitor hidden costs like AFCoS.
Revenue doesn’t make you successful… profit does. Listen to the full episode of High Voltage Business Builders to hear the complete breakdown of these strategies.
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