Navigating Amazon’s Hidden Costs to Protect Your Profit Margins

Amazon's profitability is a lot like mountain biking.

Revenue? That’s the fast, thrilling downhill, and it looks great on Strava. But margin? That’s the steady climb, the part that takes real effort, strategic pacing, and awareness of every hidden root and rock that could throw you off course. 

When brands talk about success on Amazon, the first thing they mention is revenue. “We’re up 30% year-over-year!” Sounds great until you dig into the P&L.

The reality? Some of the top-selling ASINs in a catalog can be the least profitable once you factor in the full cost of doing business on Amazon. And those costs? They quietly pile up. We like to call these "hidden margin killers."

Hidden Margin Killers (and What to Do About Them)

Returns:

Returns typically spike after major promotional events, such as Prime Day, especially for products with higher average selling prices. We’ve seen “hero” ASINs that initially appeared successful on the surface unravel once return rates surged after the promo.

Solution: Open your SKU Economics report and review the return-related columns, including return rate and return fees. If those fees are significantly impacting profit margin, it may be worth re-evaluating whether that ASIN should be included in your next deal lineup.

Long-Term Storage & Inventory Mismanagement:

Excess inventory sitting in FBA is a silent margin killer. One client came to us worried about slow sell-through; what they really had was overstocked, low-converting SKUs. Nearly half of their units were sitting in aged inventory status, triggering avoidable long-term storage surcharges.

Solution: Combine sell-through rate data with Amazon’s restock recommendations and your FBA aging report. A good rule of thumb is to maintain 6–8 weeks of inventory coverage. If stock hits 180+ days, it’s time to consider a promotion, removal order, or price adjustment to avoid unnecessary storage fees and get cash flowing again.

Inefficient Media Spend:

Not all ad dollars are created equal. If you’re running media against SKUs with poor contribution profit, you’re essentially paying to lose money faster.

Solution: Use SKU-level contribution margin to inform your ad targeting. At Podean, we align media with margin-positive ASINs that can support spending.

Over-discounting:

Stacking PEDs, coupons, and external promos can feel like a win at the moment, but it can gut your margin.

Solution: Before you submit your Prime Day deals, check the “Net PPM” or “Contribution Profit” column in the SKU Economics report. If it's already thin, discounting won’t help.

As an Account Manager, I help clients zoom out from vanity metrics and focus on the economics that matter. We work cross-functionally across content, media, and retail to flag margin issues before they snowball, and to build strategies grounded in what’s profitable.

Because Amazon doesn’t reward profitability by default. You have to hunt for it, prioritize it, and sometimes say no to what looks good on paper.

At Podean, we help brands take control of their P&L with full-funnel strategy, data-backed decision-making, and clear planning—especially during moments like Prime Day when urgency can cloud judgment.

Because just like mountain biking, it’s not about how fast you go.

It’s about knowing the trail, anticipating the bumps, and finishing strong.