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Maximizing Amazon Vendor Profitability in 2026: From Sales to Sustainable Growth
5 Min Read | October, 2025 | BY Fynn Drees
Despite Record Sales, Profits Are Falling: Why Revenue Growth Isn't Enough
2025 began with record-breaking sales and a significant increase in revenue compared to the previous year. Yet many brands are facing a familiar paradox: revenue is rising, but profit margins are shrinking.
This scenario is all too common in the Amazon ecosystem. While automation drives higher order volumes, rising platform fees, intensified competition, and aggressive pricing strategies are eroding margins and putting pressure on brands to stay profitable.
To navigate this complex environment, vendors must rethink their strategy. A holistic Amazon approach requires more than just maximizing revenue. The focus must shift toward managing profitability.
From Revenue to Profit: Rethinking Vendor Strategy
Many manufacturers interpret every purchase order on Amazon as a success. In principle, this isn’t necessarily wrong. When it comes to visibility and market share, purchase orders are an extremely important KPI. However, confirming every purchase order means handing over control to Amazon and potentially reducing your own margin.
To build a truly profit-oriented strategy, it is essential to distinguish between sell-in and sell-out metrics.
Sell-in
It refers to the volume of goods a manufacturer sells to Amazon, it reflects your actual revenue.
Sell-out
It refers to the volume Amazon sells to the end customer, it's vital for forecasting and demand planning.
Key takeaway: Not every order is a good order. The right data-driven filters determine whether an Amazon PO contributes to long-term profitability.
5 tips to True Profitability on Amazon
Take Control of Purchase Orders and Inventory
Amazon’s ordering system is designed for efficiency, but not necessarily for your profit. Vendors who actively manage or adjust order quantities gain control over weeks of coverage, stock risk, and replenishment timing.
To do this effectively:
- Use forecasting and ERP data to align demand planning
- Set minimum margin thresholds before confirming POs
- Regularly review performance and adjust order frequency
By aligning your order strategy with business priorities, you prevent overstock situations and maintain pricing stability. I use CATAPULT’s Retail Hub to help my clients achieve this level of operational control; a highly effective approach we’ve seen deliver measurable results.
Build a Resilient Pricing Strategy
Amazon automatically matches the lowest online price. This dynamic often drives down margins when retailers discount elsewhere.
To protect profitability:
- Implement Minimum Advertised Price (MAP) agreements, where legally allowed
- Apply Dynamic pricing that responds to seasonality, demand shifts, and competitor actions
- Track and respond to cross-channel price leakage. Tools like CATAPULT enable vendors to analyze profitability per ASIN, monitor price erosion, and simulate margin impact across marketplaces - ensuring you always sell at a sustainable price point
Measure Profitability Beyond Standard KPIs
For example, a reported ROAS of 8 with a return rate of 15 percent results in a true ROAS of 6.8. Many brands rely on ROAS (Return on Advertising Spend) as their main metric, but ROAS alone doesn’t show the full picture.
For example: A campaign showing a ROAS of 8 with a 15% return rate results in a true ROAS of 6.8.
To measure advertising success more accurately:
- Use sales after returns in ROAS calculations
- Measure profitability at the individual product level
- Align performance targets with each product’s stage in its lifecycle, as new and mature products require different benchmarks
Use Granular Product Analysis for Smarter Decisions with AMC
It’s also important for an overall evaluation to measure profitability at the product level rather than using aggregated values. To optimize profitability, the product portfolio should be analyzed as granularly as possible to better identify potential.
For individual product analysis, it makes sense to cluster the target values of the products and adjust them according to the product life cycle. New products, therefore, have different target values at the beginning than products already established on the market.
The most precise attribution insights come from Amazon Marketing Cloud (AMC), which tracks the full customer journey from first interaction to final conversion. Make sure you can consolidate this data to gain insights & identify opportunities to improve profitability across all areas of your Amazon business.
Evaluate Profitability also on ASIN Level
To gain a clear picture of your profitability, you also need to identify where the key profit drivers lie and which teams contribute most to the bottom line. This analysis must happen at the SKU and ASIN level. Only here can you truly see where profits are being made and where money is being lost.
To gain a precise understanding of performance and protect margins:
- Analyze net margin per ASIN, incl. all relevant cost factors such as chargebacks, co-op fees, and marketing development funds
- Monitor conversion rates, Buy Box ownership, and return ratios to identify where profitability is leaking
- Link retail and advertising data to see which campaigns actually drive profitable sell-out instead of pure volume
Additionally, many companies make the mistake of treating marketing and sales as separate entities. This can hurt profitability. Aligning both teams with shared dashboards and unified KPIs such as Total ROAS allows for a more holistic view of performance.
Key Takeaway: Data and execution are the backbone of any strategy.
In 2026, vendors must move beyond revenue-driven thinking and adopt a profitability-first mindset.
The key is control - over purchase orders, pricing, and performance data. Brands that actively manage Amazon’s automated processes with the right analytical tools can protect margins and make smarter, data-driven decisions.
Ultimately, profitability starts at the ASIN level. The brands that succeed in 2026 will be those that understand their true cost drivers, align their teams around shared KPIs, and use connected intelligence like CATAPULT to turn data into lasting profit.
At Front Row, we use CATAPULT to consolidate retail, pricing, and advertising data into intuitive dashboards that help vendors monitor profitability, identify risks, and make informed decisions at the ASIN level. A solution, which I highly recommend!
About the author
Fynn Drees
Senior E-Commerce Consultant at FRONT ROW. He advises international brands on holistic e-commerce strategies that connect digital and offline channels, helping them strengthen their presence and performance across European and U.S. marketplaces.
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