5 things for profitable Amazon growth

My youngest told me last year that school was “boring.”
For a moment, I felt a jolt of pride: maybe this means he belongs in the Gifted and Talented program!

But after asking a few more questions, I realized what he meant. School wasn’t easy. The “boring” part was repeating the basics: multiplication tables, spelling, practicing the difference between eight and ate. Not glamorous, but necessary. The foundation.

As we head into the holiday season, a busy and high-stakes time for many brands, it’s worth to revisit the basics. But the basics that make money.

After years of working with CPG brands at different stages, I’ve come to think of Amazon profitability in terms of five building blocks. Call them the 5 Profit Pillars. They’re not tactics, but foundations—if one cracks, the rest of the structure strains.

Here’s how I think about them:

Product Offer

When CPG leaders think about their product portfolio, the focus is usually on retail shelves: pack size, price point, and category positioning. On Amazon, those same fundamentals apply, but math, how customers buy, and recive your products shifts.

Replicating your retail, wholesale, or even Shopify catalog can be a mistake. Here are some main considerations:

 Ecommerce suitability - Can the product ship reliably through FBA or FBM, in all conditions and seasons? Is the packaging durable and also visually effective when displayed online?

Unit economics - transactional fees (Amazon referral fee + FBA if using, or your shipping if FBM) are key here. Marketing/advertising cost is often a big one here because it plays into contribution margin. But if core, non-budgeable fees don’t work, no maneuvering other expenses won’t work either. You can’t market your way into better unit economics. 20% margin after transactional fees in my opinion are an absolute minimum to consider investing into marketing.

Pricing - your price must both compete in the category on Amazon. No matter how unique, premium, etc. your products are, a category of one just doesn’t exist on amazon. If your pricing isn’t competitive the offer needs to be rethought - through pack sizes, bundles, stronger off-Amazon brand equity

Brand control edge - issues with resellers? Having a product offer unique to Amazon, whether through a tailored bundle, a multipack, or channel-exclusive packaging, it creates friction for resellers.

Presence

If Amazon were the only place where customers could discover and buy your products, how would you feel?  

Considering that about half of searches online start at Amazon, for many customers Amazon may be the only place your brand has a chance to get in front of them.

Your product page, storefront, and reviews are your digital shelf space.

Strong presence means:

• Main images that win clicks, and shows your up to date packaging

• Content that communicates benefits in seconds - visuals especially

• Reviews that validate trust

• Control over branding and resellers

• Compliant with Amazon catalog and content requirements - most recent addition as Amazon has tightened

  Brand Presence is about how you communicate, differentiate, and defend your brand identity on Amazon

Promote

The adage “you must spend to grow” has seldom felt as poignant-or as precarious-as it does today for CPG brands on Amazon. The platform increasingly demands advertising, yet that very need can erode margins until the cycle turns vicious. The real question isn’t whether to advertise, but how to do it in a way that builds sustainable growth.

The ultimate measuring stick for Amazon PPC managers used to be ACOS. Then it shifted to TACOS. TACOS is a much better measure of performance than ACOS because it captures interdependence of organic and paid traffic, but it’s also important to view TACOS as a reflection of brand maturity and marketing intent, not just tactical efficiency.

Another question to ask is: what’s the real purpose of marketing and PPC within the funnel? The cleanest way to measure performance is click-to-purchase. It protects margins, keeps reporting simple, satisfies P&L guardrails.

But Amazon is rarely the entire funnel. It’s part of a broader customer journey: a shopper might see your ad on Instagram, compare on Google, and eventually buy on Amazon—or even offline. Limiting success to last-click conversions hides the role Amazon plays in discovery, trust, and credibility across channels.

It’s about brand building (share of category searches, Subscribe & Save growth, branded search growth, new-to-brand %) just as much as it is about performance marketing (impressions, clicks, conversions, ROAS).

The challenge is that brand building through Amazon advertising has gotten very expensive. According to SmartScout’s 2024 report, smaller 3P brands spend up to 127% more on Sponsored Products (the bread and butter of Amazon PPC) and 146% more on Sponsored Video compared to larger peers. This doesn’t necessarily reflect inefficiency-it’s the cost of building presence from scratch. Using Amazon PPC as the only business and brand building lever is just not suistainable.

So what’s the path to sustainable marketing for growth? Yes, it’s part performance (bids, keywords, targeting). But more importantly, it’s about defining purpose. Some spend is meant to convert, some to recruit, and some to reinforce.

Perform

This is the ongoing, often unglamorous, oversight the Amazon channel requires. I think of it in two buckets:

The first is performance in the analytical sense: looking at data, assessing “how are we doing on Amazon?” across the right metrics. It’s the cognitive cycle of assess → decide → execute → reassess.

The second is processes, systems, and behaviors. And you’d be surprised how many issues on Amazon -lost sales, lost profit-stem not from strategy, but from lapses in basic behaviors: checking account health, reviewing notifications, consistent replenishment, or even internal communication.

Both buckets work with each other, or can work against each other. If there is consistent process on checking on account health, notifications, inventory levels, and acting on them - numbers will improve. Performance and success is built on behaviors.

Sometimes I see the performance and analytical expertise overshadowing simpler, yet critical elements of processes and behaviors of those that are involved in a) ‘manning’ the channel b) making decisions about the channel

People

Your Amazon store won’t run itself. It’s also hard to keep in maintenance mode because Amazon changes require oversight, passive approach often leads to issues.

Even in a very automated marketplace in the world, it’s still humans who decide whether Amazon becomes a profitable growth driver or a costly distraction.

There are 3 general models of managing Amazon:

a) Core strategy and oversight sit with a senior leader or fractional advisor, while agencies and/or contractors handle execution. Most flexible for various levels of Amazon sales

b) internal ownership and execution - enterprise level fit, but makes sense only if Amazon is a mission-critical part of the business

c) fractional leadership - advisor level Amazon expertise guidance, with internal teams or contractors handle day-to-day. This model has become more prominent within last couple years, as it balances cost efficiency with expertise.

With AI some functions are in the process of transitioning from humans to AI. We are not quite at the point of 100% content or visual automation, and some functions, like PPC management will always need a human for data interpretation.

Current sustainable model is somewhat hybrid: let AI, contractors, agencies handle production, execution, day-today, and ensure there is ownership and leadership in a ‘orchestrator’ role (internal or external) that keeps the strategic wheel in hand.

saludos,

Irina