Revenue isn't the important thing -- it's profitability.
Most sellers understand profitability from a fundamental standpoint. If sales cover your expenses, you are profitable.
Naturally, 'being profitable' tends to be one of the primary goals of any Amazon Seller. However, I will show you why sellers like you and me should look beyond a simple profit amount. The simple profit amount doesn't indicate the why's and how's that make the business profitable.
Analysing key metrics is the pulse of any business. KPIs help determine whether a company is healthy, profitable, and sustainable. By calculating and comparing metrics, sellers can identify the products that are working well and those that need attention and/or improvement.
As an online company, we will be focusing on the product–level profitability.
If you looked at your products right now, would you know which one performs the best and which does the worst?
If you're not paying attention to the costs of selling your product, you're potentially losing money with each sale.
SKU profitability reporting is the answer to this problem. Tracking the KPIs of each product is the key to improving your profits. It can be very challenging to fix if you can't pinpoint which KPI is causing you to lose money.
By tracking profitability at the SKU level, you can make better decisions about what to do with underperforming products, from adjusting your pricing strategy to discontinuing the product entirely without losing money. Without SKU monitoring, you’ll have no idea when poorly selling products are bringing your profits down.
Don’t let poor product management sink your business. In this article, we'll show you how to optimize the profitability of your SKUs and give you the tools to manage your landed product unit costs more effectively.