Margin checkpoint

Channel Margin

Product margin minus Amazon fees: what the product earns after Amazon takes its share for the channel.

Formula

Amazon fees include the referral fee, FBA fulfilment fees, monthly and long-term storage, inbound placement, refund administration, subscription and the long tail of surcharges. Together they are the price of using Amazon as a distribution channel.

The gap between product margin and channel margin, in points, is exactly what Amazon costs you. It is worth watching quarter over quarter because fee changes are frequent and rarely announced loudly.

Channel margin is often mistaken for net margin. It is not: advertising and your own overheads have not been taken out yet.

Where it sits in the waterfall

  1. 1Gross Ordered Revenue
  2. 2Gross Shipped Revenue
  3. 3Net Product Revenue
  4. 4Net Revenuecheckpoint
  5. 5Product Margincheckpoint
  6. 6Channel Margincheckpoint
  7. 7Growth Margincheckpoint
  8. 8Net Operating Profitcheckpoint

Related terms

See the whole waterfall worked through.

Our guide walks all eight steps with real numbers: How to calculate Amazon net margin.

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