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Making Better Wholesale Margins from the Get-Go
March 26, 2019

Making Better Wholesale Margins from the Get-Go

Being a vendor (through the Amazon Vendor Central program) has its major advantages. Better rates on advertising and access to giveaway programs like Amazon Vine, Subscribe and Save and other premium services. See more advantages here.

But with often very little contact between you and Amazon, let alone a plan for sales growth, how do you set yourself up for success with better wholesale margins from the start?

Having recently helped a Vendor increase their sales by 50%, here’s what we suggest you do for better margins in your business:


For the purposes of this post, we’re going to talk about the Amazon Marketing Services Dashboard for Vendors. These are your pay-per-click (PPC) options. The three are Sponsored Products, Headline Search Ads, and Product Display Ads.

You’ve probably heard of or tried at least one of these, likely the Sponsored Products page. But did you do a true campaign? If you weren’t measuring the Advertising Cost of Sale, ACoS, then you haven’t measured performance.

This is a great place to start. To calculate your ACoS, figure out what your break-even margin is and your desired margin is (after the cost of advertising) for the cost of each sale. Let’s say, for example, a 23% cost per sale will make you break even but you want 14%. So your target ACoS is 14% – 23% for your Sponsored Products.

One way to make your target ACoS is to avoid bidding on irrelevant keywords. Finding your target keywords has as much to do with keeping track of the keywords aren’t converting. Add these irrelevant keywords to your negative keywords, which will exclude your ads from showing up with these low-converting terms.

Then it’s time to get organized. A few grouping ideas: you can group products by keywords, category or even brand if you have several different brands. Having organized campaigns will make your metrics easier to track!

To potentially reduce your ACoS even further, split your branded campaigns from non-branded campaigns. Branded campaigns can keep your competitors from getting purchases that would have been yours and their purpose is different than your non-branded campaigns. Keeping track of these campaigns separately helps you to keep your focus on the unique goals of each campaign.

While the exact metrics of your campaigns will look a little different based on which PPC you select (or which combination you’re using), being targeted in your approach in this way sets you up for success!


Returns COST. While some are unavoidable, if they’re happening in larger numbers, it likely has to do with a discrepancy in the information buyers are being given.

While some Amazon listing management services can help you to determine which aspect of your listing is causing the most confusion, you can usually find it yourself by doing a few simple things.

For starters, a good product page, description, and other copy should be three things: concise, precise and consistent. Take a look at the negative reviews or returns because a trend gives you the opportunity to see where the problem is and fix it immediately based on customer feedback.

This doesn’t mean that you have to settle for unhelpful reviews. In fact, while Amazon has strict guidelines, when a review is completely out of hand you may be able to get rid of it in certain circumstances. It’s not something to count on, but it is something to consider.


Wholesale the way it used to be doesn’t quite translate into Amazon’s world because Amazon takes 5% -25% off the top for co-op fees. There are a few distinct co-op fees to factor into your price because they are all mandatory. They include Marketing Development Funds (MDF) which supports the visibility of your products, a percentage for freight allowance, and a percentage to cover damages.

Calculate these percentages to the best of your ability and set your wholesale price higher for Amazon than you would for other accounts. Be sure to manage your expectations, though, because Amazon will have a set price already in its mind based on similar items and product category.

Often times this is an area that Amazon management companies can forget to mention when signing you up for an Amazon management service! So when considering Amazon vendor management, you’ll want to be sure that the Amazon experts you’re talking to have successfully helped vendors work Amazon’s fees into their price. Are they true experts?

If you’re preparing your desired wholesale fees yourself, be prepared to negotiate where you can and know when you’ll need to make up your margin elsewhere.

Changing prices to Amazon after they are set is very difficult. Get it right the first time.


Amazon’s negotiations work much differently than brick-and-mortar operations. Amazon is focused on the customer first in that they care about what the customer will buy, not about what you are trying to sell to them.

For this reason alone, do not come to the negotiation planning to work out terms then. Do your research and create a strategy by doing some or all of these things:

  • Look at your competitors and their pricing.
  • Figure out which metrics are important to Amazon in your category.
  • Take into account time of year and recent Amazon news you’ve read.
  • Come to the table with how your company’s plans match Amazon’s priorities.
  • Be prepared to be firm and don’t be afraid to say no in the negotiation process.
  • Know which services you do and don’t need so you don’t get oversold.
  • Have data, studies and anything else that will BACK you up numbers wise.

The more prepared you are, the less you’ll fear the process, and the better the deal will be for you. Knowledge is power.

Don’t accept terms too quickly. Try to negotiate. Sit on it for some time. If you jump on it too soon without thinking it through, you may miss a detail you wish you’d addressed.


Speaking of no fear, don’t be afraid to say no to Amazon more than once. This will not disqualify you from future sales. Sometimes Amazon will ask for a much larger order than usual, at a lower price or different terms. While the cash up front can be tempting, do not ignore your margins.

This can greatly reduce them in a way that likely just won’t make sense for your business. We advise against it every time because to Amazon it can ultimately reduce the value of your product and the terms you’ve already worked out.

As part of a small team of Amazon specialists currently working with many vendors to successfully offer Amazon account management services they trust for results, I can say with authority that it’s never worth it. Just say no.


If you feel like you’ve been given information overload, you are right! Improving your margins (and keeping them that way!) is built on a delicate balance of all of the techniques listed above.

Want to see better wholesale numbers, sooner?

Schedule a free consultation session here so we can get to the bottom of what’s costing you the margins you know you could be making! Our professional Amazon vendor account management team is ready to see you crush your sales and margins goals.

Let’s reach your full potential on Amazon together.

To your success!


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Amazon Managed Services

With over $1B in revenue driven and 60+ employees with specialized knowledge of the Amazon ecosystem, we are the experts in this space.

Peter Sims

Sales Executive & Brand Evangelist

Pete has been on Amazon for 3 years now and is very happy to found a home at Velocity Sellers. In his free time Pete is an avid hiker, runner, and bowler. He also enjoys reading any book he can get his hands on and making some tea to go along with it.

Arlind Hoxha

Creative Manager

As the Creative Manager at Velocity Sellers, Arlind leads with expertise honed over many years in creative agencies. He brings a wealth of experience guiding designers and excelling in ecommerce-focused endeavors. Beyond his professional prowess, Arlind is an avid gamer, seamlessly blending creativity and strategic thinking.

Florence Palahang

Administrative Manager

Holding a BS in Accountancy from Davao City and boasting seven years of experience as a Virtual Assistant, Florence has established herself as a valuable asset. With a background spanning 95 clients worldwide, she has found her niche at Velocity Sellers, focusing on Amazon marketplaces. Beyond work, Florence enjoys reading, crochet, and baking. Her collection of plants adds vibrancy to her mornings, and witnessing her family enjoy the outcomes of her efforts brings contentment to her universe.

Kiley Forche


An MBA graduate specializing in Finance, boasting 11+ years of expertise. Joined Velocity Seller in 2018, contributing to our growth. Outside work, treasures family time, exploring new destinations, and passionately supports Buckeye Football

Miljan Milev

Sr. Project Manager

Seasoned project manager adept in data and e-commerce projects, collaborating globally. Outside work, finds joy in traveling, cherishing moments with family and friends.

Camilla Messmer

Sr. Project Manager

University of Arkansas grad in Supply Chain Management, excelling in eCommerce project management. Enjoys baking, travel, and writing, adding a touch of creativity to every endeavor.

Zach Taylor

Director of Logistics

Zach, a graduate with a Sociology and Environmental Science degree from the University of Montana, has consistently found himself drawn to running businesses and improving business systems, logistics, and operations throughout his professional journey. In his free time, he enjoys cycling, running, and spending quality moments in the mountains with his family.

Chris Prall

Director of Advertising

A former chef turned Geomatics graduate. While studying, he delved into managing PPC campaigns for Amazon agencies and e-commerce clients, uncovering a passion for data-driven strategies. A maestro in crafting successful PPC campaigns, he’s fueled by driving client growth, from startups to 8-figure brands. Beyond work, Chris savors cooking, vinyl collecting, camping, and embracing the great outdoors

Steffanie Morrison

Director of Sales, Sr Marketplace Analyst

Steffanie brings a rich e-commerce background since 2013, selling products and advising brands. An analytical mind with degrees from Northern Illinois University and the University of Hartford, she resides in New Hampshire, relishing family moments, travel, and outdoor adventures like hiking and skiing with her husband and kids.

Eric Peterson

Director of Brand Onboarding

Master’s in marketing, film degree from Minnesota State University-Moorhead. At Velocity Sellers, he crafts brand value, excels in client service, and loves problem-solving. An advocate for animal welfare, he enjoys cooking, classic movies, and time with his dogs.

James Dee

Director of Brand Management

Over 20 years in e-commerce mastery, specializing in Amazon. Proven brand builder and business owner. Outside the office, a proud parent to five, including a Division 1 soccer player. Enjoys family time, the outdoors, and all things soccer.

Lisa Zajdel

Executive Director

Results-Driven Executive Director. With two decades of expertise in merchandising and retail, including a successful tenure as Kohl’s Private Label Buyer & E-commerce Manager, Lisa brings over 14 years of invaluable experience on Amazon. Her dedication to delivering results is unparalleled, ensuring a strategic, seasoned approach to optimizing your business for success.

Andrew Warner


Andrew Warner, Velocity Sellers’ CFO, occupies a central role in our financial triumph. His sharp fiscal oversight guarantees our operational efficiency, ultimately empowering our team to deliver unparalleled services to a global clientele, consistently setting high standards in the industry.

Jake Schwarzbaum​


As the Co-Founder and CEO of Velocity Sellers, Jake Schwarzbaum co-launched the company while supporting his father, Nathan, during leukemia treatments. His dedication to helping brands succeed on Amazon, without relying on automated systems, drives Velocity Sellers’ commitment to excellence.


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