How to Build a Profitable Amazon Business | Why Most Amazon Sellers Fail
While many sellers focus on revenue, the most important metric is profit. Revenue might look impressive, but profit is what actually pays thebills and allows you to grow your business sustainably.
Key Takeaways
- Profitability, not just revenue, is the true measure of success on Amazon.
- Understanding the difference between cash and accrual accounting is crucial for financial clarity.
- Managing Total Advertising Cost of Sale (TACoS) is key to ensuring your ad spend is profitable.
- Hidden Amazon fees can destroy your margins if you don't track them carefully.
- Choosing higher-priced, oversized products can lead to faster and more scalable profitability.
- Don't be afraid to cut underperforming products to improve your overall account health.
Key Takeaway 1
Profitability, not just revenue, is the true measure of success on Amazon.
Key Takeaway 2
Understanding the difference between cash and accrual accounting is crucial for financial clarity.
Key Takeaway 3
Managing Total Advertising Cost of Sale (TACoS) is key to ensuring your ad spend is profitable.
Key Takeaway 4
Hidden Amazon fees can destroy your margins if you don't track them carefully.
Key Takeaway 5
Choosing higher-priced, oversized products can lead to faster and more scalable profitability.
Key Takeaway 6
Don't be afraid to cut underperforming products to improve your overall account health.
So many Amazon sellers I talk to are obsessed with one thing: revenue.
So many Amazon sellers I talk to are obsessed with one thing: revenue. They flash big, impressive numbers, but when you dig a little deeper, you find out there’s not much left over. That’s because revenue doesn’t pay the bills. Profit does. If you’re serious about building a real, sustainable e-commerce business, you have to shift your focus. It’s not about how much you sell, but how much you keep. In this episode, I sit down with David Schomer from the Firing the Man podcast to talk about how to build a truly profitable Amazon business.
One of the biggest mistakes I see new sellers make is not understanding their numbers.
One of the biggest mistakes I see new sellers make is not understanding their numbers. They often use cash-based accounting, which can be misleading. David and I talk about the importance of accrual-based accounting to get a true picture of your business's financial health. It’s the difference between a hobby and a real business. Your financials are your report card, and you need to treat them as such.
We also dive deep into the world of Amazon advertising.
We also dive deep into the world of Amazon advertising. Forget about ACOS, we're talking about TACoS, or Total Advertising Cost of Sale. This is the metric that really tells you if your ad spend is profitable. It’s a simple but powerful shift in perspective that can make all the difference. With Amazon becoming more of a media company, you have to be smart about your advertising. It's not just about getting clicks, it's about getting profitable sales.
Another key to building a profitable Amazon business is product selection.
Another key to building a profitable Amazon business is product selection. David shares his strategy for choosing higher-priced and oversized items. These products often have better margins and less competition. It might seem counterintuitive to go for heavier, more difficult-to-ship items, but that’s where the hidden gems are. We also discuss the importance of cutting underperforming products. It can be tough to let go of a SKU, but sometimes it’s the best thing you can do for your account’s health and your bottom line.
At the end of the day, building a profitable Amazon business is about treating it like a r
At the end of the day, building a profitable Amazon business is about treating it like a real business. It’s about understanding your numbers, being smart with your advertising, and making strategic product choices. It’s not easy, but it’s worth it. If you’re ready to stop trading time for money and build a real asset, this episode is for you. And if you want to take it a step further, check out what we’re doing at Voltage Business Builders. We help people just like you build their own e-commerce empires and buy back their freedom.
Episode Summary
So many Amazon sellers I talk to are obsessed with one thing: revenue. They flash big, impressive numbers, but when you dig a little deeper, you find out there’s not much left over. That’s because revenue doesn’t pay the bills. Profit does. If you’re serious about building a real, sustainable e-commerce business, you have to shift your focus. It’s not about how much you sell, but how much you keep. In this episode, I sit down with David Schomer from the Firing the Man podcast to talk about how to build a truly profitable Amazon business.
One of the biggest mistakes I see new sellers make is not understanding their numbers. They often use cash-based accounting, which can be misleading. David and I talk about the importance of accrual-based accounting to get a true picture of your business's financial health. It’s the difference between a hobby and a real business. Your financials are your report card, and you need to treat them as such.
We also dive deep into the world of Amazon advertising. Forget about ACOS, we're talking about TACoS, or Total Advertising Cost of Sale. This is the metric that really tells you if your ad spend is profitable. It’s a simple but powerful shift in perspective that can make all the difference. With Amazon becoming more of a media company, you have to be smart about your advertising. It's not just about getting clicks, it's about getting profitable sales.
Another key to building a profitable Amazon business is product selection. David shares his strategy for choosing higher-priced and oversized items. These products often have better margins and less competition. It might seem counterintuitive to go for heavier, more difficult-to-ship items, but that’s where the hidden gems are. We also discuss the importance of cutting underperforming products. It can be tough to let go of a SKU, but sometimes it’s the best thing you can do for your account’s health and your bottom line.
At the end of the day, building a profitable Amazon business is about treating it like a real business. It’s about understanding your numbers, being smart with your advertising, and making strategic product choices. It’s not easy, but it’s worth it. If you’re ready to stop trading time for money and build a real asset, this episode is for you. And if you want to take it a step further, check out what we’re doing at Voltage Business Builders. We help people just like you build their own e-commerce empires and buy back their freedom.
Frequently Asked Questions
What is the most important metric for an Amazon business?
While many sellers focus on revenue, the most important metric is profit. Revenue might look impressive, but profit is what actually pays thebills and allows you to grow your business sustainably.
What is TACoS and why is it important?
TACoS stands for Total Advertising Cost of Sale. It measures your advertising spend against your total sales, not just the sales generated from ads. This gives you a much clearer picture of whether your advertising is truly profitable for your business as a whole.
What kind of products are best for a profitable Amazon business?
Higher-priced items, typically in the $50 to $200 range, and oversized products can be very profitable. These items often have better margins and face less competition than smaller, cheaper products.
Full Transcript
Most Amazon sellers brag about revenue. But revenue doesn’t pay the bills… profit does. David Schomer, co-host of the Firing the Man podcast, breaks down what it really takes to build a sustainable Amazon business. From managing TACoS and uncovering hidden Amazon fees to choosing the right products and using accrual-based accounting, he shares hard-earned lessons from his own journey. David explains why most sellers misunderstand profit, the overlooked costs that cut into margins, and the product strategies that actually work in 2025. In this episode, we cover: ✅Why profitability (not revenue) is the real measure of success ✅The difference between cash vs accrual accounting for Amazon sellers ✅How to calculate and manage TACoS (Total Advertising Cost of Sale) ✅The hidden Amazon fees (AFCoS) that erode margins and how to track them ✅Product strategies for choosing higher-ticket and oversized items that scale profitably 🚀Chapters [00:00] Profitability Over Revenue. Why Amazon is getting harder and how to stay profitable. [02:17] Cash vs. Accrual Explained: How inventory hits P&L versus the balance sheet. [05:00] Your Financials Are a Report Card. Why treating Amazon like a real business matters. [06:03] Using 4x landed cost and 30% margins to set yourself up right. [06:58] TACoS Over ACOS: The ad metric that reveals if your sales are truly profitable. [10:18] Amazon as a Media Company: Why PPC is now required to compete. [11:10] Higher-Priced Products Win: How $50–$200 items create faster profitability. [12:09] Oversized Products Pay Off: Why heavy, difficult-to-ship items are hidden gems. [17:39] Cut the Duds: How dropping underperforming SKUs can boost account health. [20:29] Customer expectations have changed. [26:15] Launch, Then Refine: Use customer feedback to improve on the second order. [29:18] AFCoS Uncovered: The hidden Amazon fees most sellers overlook. [33:08] Benchmarks That Matter: What healthy AFCoS percentages look like. [36:13] Final Advice: Just get started and stay committed to the process. 🚀 Guest: David Schomer Website: firingtheman.com Podcast: Firing the Man (available on all major platforms) Follow Neil: 🔗 LinkedIn: https://www.linkedin.com/in/neiltwa/ 📸 Instagram: https://www.instagram.com/neiltwa/ 📘 Facebook: https://www.facebook.com/neiltwa/ 🐦 X/Twitter: https://twitter.com/voltagefba 🎵 TikTok: https://www.tiktok.com/@fbabusinessbuilders 🎧 Like This Episode? ✅ Subscribe for weekly conversations with real founders ✅ Share this with a brand owner or marketer in your network ✅ Drop a review to help others discover the show Ready to stop trading time for money and build almost automated income with FBA? Visit https://voltagedm.com to learn how you can buy back you freedom by building your very own ecommerce empire!
So many Amazon sellers I talk to are obsessed with one thing: revenue. They flash big, impressive numbers, but when you dig a little deeper, you find out there’s not much left over. That’s because revenue doesn’t pay the bills. Profit does. If you’re serious about building a real, sustainable e-commerce business, you have to shift your focus. It’s not about how much you sell, but how much you keep. In this episode, I sit down with David Schomer from the Firing the Man podcast to talk about how to build a truly profitable Amazon business. One of the biggest mistakes I see new sellers make is not understanding their numbers. They often use cash-based accounting, which can be misleading. David and I talk about the importance of accrual-based accounting to get a true picture of your business's financial health. It’s the difference between a hobby and a real business. Your financials are your report card, and you need to treat them as such. We also dive deep into the world of Amazon advertising. Forget about ACOS, we're talking about TACoS, or Total Advertising Cost of Sale. This is the metric that really tells you if your ad spend is profitable. It’s a simple but powerful shift in perspective that can make all the difference. With Amazon becoming more of a media company, you have to be smart about your advertising. It's not just about getting clicks, it's about getting profitable sales. Another key to building a profitable Amazon business is product selection. David shares his strategy for choosing higher-priced and oversized items. These products often have better margins and less competition. It might seem counterintuitive to go for heavier, more difficult-to-ship items, but that’s where the hidden gems are. We also discuss the importance of cutting underperforming products. It can be tough to let go of a SKU, but sometimes it’s the best thing you can do for your account’s health and your bottom line. At the end of the day, building a profitable Amazon business is about treating it like a real business. It’s about understanding your numbers, being smart with your advertising, and making strategic product choices. It’s not easy, but it’s worth it. If you’re ready to stop trading time for money and build a real asset, this episode is for you. And if you want to take it a step further, check out what we’re doing at Voltage Business Builders. We help people just like you build their own e-commerce empires and buy back their freedom.