What ROI % should you be making selling on Amazon?

What is up everyone, Cliff here from The Selling Family, and today I wanted to briefly talk shop with you guys about a topic that we get asked about a lot and it gets me really excited. People always ask what profit or ROI I should be looking for in my Amazon business. Okay, those of you that know my story know that I come from a business background, I spent eight years managing stores and looking at numbers and profit and end of the year returns and one of the things that I can tell you about running an Amazon business is that everyone’s going to do it differently okay? You have to decide what type of seller and how you want to run your business, and what type of profit you’re looking for.

There are some sellers that are okay making 20% on an item or a couple bucks, and then there’s other sellers that are just really, really picky and they want the high returns and the high profit numbers, so you have to decide what it is you’re wanting to do and accomplish in your business. Here at The Selling Family, we have two kind of rules that we stick to. We try and go for a minimum 50% return on investment or $5 minimum profit on something and that $5 number is something that we are really, really picky about because that’s bare minimum for us, that’s, you know, we’re trying to, we go to a store and maybe we strike out and we don’t find items and we’re just looking for something to maybe pay for our gas or whatever.

You know, we don’t want to leave empty-handed so if we can find something for you know, turn $5 on it, we’re going to do it. But you know what? There’s a lot of sellers that come through that are okay taking, you know, 20% or 10% returns, you know you’d be surprised how many people have, we’ve taught through the Amazon Boot Camp where they come from an investment background, Wall Street or something like that, and they’re okay with 20% returns on their money. They’re like, dude if I can get, invest $100 and pull $20 in profit back fairly quickly I’m going to do that all day long.

But that is something for you to decide in your business, okay? No right or wrong answers, we see all the spectrum of sellers, you know, in our group every day, are people that either wanna take low margins or they wanna go high and be very picky. We prefer here at The Selling Family to get 100% ROI’s and if you’re not understanding what I’m saying, so if I buy an item for $10, and then once I sell it on Amazon after owing my fees everything that goes into it, costs of goods, I winna profit $10, so I winna get my $10 back that I paid for the product, plus $10 profit left over which would leave me with 100% ROI Return On Investment.

So hopefully that makes sense, I wanted to show you guys a couple quick examples in our business of things that we’ve sold where you know, sometimes taking a 50% margin for us, was good, and then sometimes taking above 100% maybe wasn’t that good.

Something that you’re going to have to do, is when you see a product and you scan it, and you’re looking at the profit, you’re going to have to decide, what do I have to do to get this to Amazon. Do I have to poly bag it, do I have to put a bunch of labels on it, or can I just put a label right on the box and ship it right to Amazon? These are things that you should factor in, and first item I wanna show you is something, a toy that we sold a little while back and it’s actually a Zoomer, a Zoomer dog. And for those of you that know what that is, it’s a little smart toy dog for kids and you guys can see this is my inventory lab report, and what I did was, is I brought up, you know, this Zoomer for you guys to see.

And you can see we had 38 orders and we did have a couple of refunds on it, but that’s to be expected and then we, our cost on it was $81.38 and we ended up selling ’em for $153 a piece which earned us $5,828 in revenue, and so after our cost of goods and all of our Amazon fees and shipping we had a profit of $1,807 which is a ROI return of 56%. So, the reason, this is a good example of a 50% margin that I would totally go for every day, okay. It’s a high dollar amount, but it turned fairly quickly, and you can see the profit was just there and so it was something that was totally worth it and again, we analyzed the box, we said OKAY, this box is good to go.

There are no bags, no nothing that needs to go on it, we just stick a label on it and ship it. So that’s a good example right there of when I would take a 50% margin, okay? Let me show you a different one. Okay, so the next one we’re going to look at is Chex Mix. This is something that we’ve sold a lot here at The Selling Family and I wanted to show you guys this example because we sold it and, on the left, you can see packs of ten and we also sold it in packs of 12. Now our buy cost was ten cents a little packet and we put ’em into those packages, okay.

So, our cost for the ten pack was $1 and then our cost for the 12 pack was $1.20, all right? Now, you can see, right here, our total revenue between both the ten and the 12 packs was a little over $300, okay? And then so after our costs of goods, all of our Amazon fees and shipping, we profited between both of those, about, a little over $160 give or take a few cents there. So, between both of those items we profited $160 and we had such a low buy cost that it made our ROI Return On Investment, look very high. So, you can see on the ten packs we’re making 761%.

And then on the 12 packs, we were making 580%. Now, that sounds fantastic, right? Like who wouldn’t want, you know, 700% returns on your investment, you know. But to be honest, if I had to do this over again, this might be the last batch that I do because when I start to look at it and this is one of those things where you’re going to have to evaluate each product, okay? I had to go buy about 300 packets of this stuff for us to make that type of return, okay? Now that’s a lot of packets, 300 and then so not only did I have to buy the 300 packets, put ’em in my cart at our local grocery store.

I then had to pack ’em up, and put ’em in bags, put expiration dates, put all the labels, and to be honest the return, it’s just the total profit for us, because, again, we’re being picky, we’re one of those picky sellers, you know to make $160 after all of that, I think that we can do better than that here at The Selling Family, so. But, again, there’s no right or wrong answer, so some people would say, man, I would do that all day long, and that’s totally your prerogative but these are the type of decisions you’re going to have to make when you see items and you decide, is this worth it for me to put time, to put effort into sending this product to Amazon. Is this worth it for my business? And last thing I wanted to talk about was the dangers of taking a low ROI or Return On Investment for your purchase. Now I see tons of people on YouTube teaching people retail arbitrage and saying make ten% on a $3 item and you can do the math, it’s 30 cents okay.

Now, this is one the reasons why we are very, very picky when we purchase products here at The Selling Family. We do not want to get caught in that race to the bottom, okay? So if you only have 30 cents to work with, or even a dollar of profit, the odds are the way Amazon fluctuates in pricing and stuff, and other sellers coming in, you’re not gonna have much wriggle room to make money. If someone comes in and drops the price you’re toast and you’re losing money. So that’s why we say, you know, $5, that’s the bare minimum we’re going to do for profit. But, you know, if you’re working in dollars and $1.50 profit per item, it could be changing in a heartbeat and all of a sudden, you’re caught with this inventory and you’re losing money, we see it all day long. So keep that in mind as you’re deciding what’s good for my business here if you’re gonna play the Amazon game and go low margins, that’s totally up to you.

You just gotta be aware that sometimes you are gonna lose and that race to the bottoms gonna happen and you’re gonna be left out but, you know what, if you are the type of seller that wants to be a little more picky, you’ll have a little bit more wriggle room. So if you send something in and you’re making 100% and all of a sudden the price drops a coupla dollars, you’re not caught in the dark. You’re set up, you got a little bit of wriggle room and you can make some good money. So, hopefully that was helpful for you guys to see that break down. Do what you feel comfortable with, it’s your decision and it’s your business and we’re all here to make a copula bucks no matter if it’s at 20 % or 100%.

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Thanks for hanging out with me today.

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