Picture this—you’re an Amazon seller and your business is finally starting to take off. Your products are flying off the shelves, so money must be flying in, right? However, when you take a look at your financials, you’re actually losing money instead. All your costs and expenses seem to add up and you should be coming out ahead, so where are you losing cash? You don’t know how to identify the problem and you’re not sure where to go from here. What do you do next?
This is where Mike Zagare from PPC Entourage comes in. His new product, Entourage Margins, is designed to show you how and where your business is leaking profit, as well as how to stop the loss and prevent it from happening again. With Entourage Margins, you can analyze your products individually and break down the profit or loss coming from each one. You can also monitor your FBA fees to be sure you’re not being overcharged and losing money to Amazon.
We recently asked Mike a few questions about his new product, and this is what he had to say:
What is the goal of Entourage Margins and what problem are you trying to fix by creating this product?
Mike: The goal of Entourage Margins is to help sellers know exactly to the dollar how much money they’re making in their business. We want to help sellers solve that problem so they know one hundred percent where their money is going and where it’s being eaten up alive, and our tool allows you to see that with really good clarity because it dives into the metrics on the individual SKU and then shows you all the different Amazon fees. What we were running into is that a lot of sellers didn’t actually know how much money they were making at the end of the day because of all of the different Amazon fees. We wanted to help solve that problem for Amazon sellers and give them that clarity.
What motivated you to create a product like this?
Mike: Last summer we got hit really hard with FBA fees. Now, Amazon does a world of good with their FBA program and we’re so thankful for it, but it’s a huge operation and there are going to be times when they make some mistakes. In this particular occurrence, they made a mistake with one of our variations. We were selling a product that was the exact same product but in a different color, and for some reason Amazon flagged that product as an oversize. Instead of the FBA fee being five dollars and forty-three cents, it went up to almost twelve dollars; I think it was eleven dollars and ninety-three cents. It was crazy because we were selling hundreds of units of those per week, and by the time three or four weeks had come around, we had actually started noticing the impact of it.
We were wondering how we could stop this from happening in the future, how we could be notified right away, how we could potentially get the money back, why this was happening in the first place. So that’s the very beginning of Entourage Margins, and we had one of our team members come up with a way to fix the issue using spreadsheets. Then we were like, you know what, how can we do this without having spreadsheets, quickly and easily? And then everything was born from there.
We started to ask ourselves, what are the other Amazon fees that are eating away at our margins? There’s PPC, promo fees, all sorts of storage fees, inventory placement fees. The list goes on and on, and all of these things have an impact that we call the margin impact. So it started with that really bad, life-long lesson where we lost probably thousands of dollars, but from my experience, that’s usually a good product for us at Entourage, when we come up with a solution to a problem that a lot of sellers are having, and we had this one ourselves.
Can you talk a little about the advantage of being able to see all those fees and the income on an individual product level?
Mike: The actual biggest advantage is to know whether or not that product is worth your time and energy. What we found was that we had a product that was really, really good a couple of years ago, and then because of increased competition, because of the rise of PPC fees, and we had to reduce or price which means you’re spending more relatively on FBA fees, the percentage went up. All of this stuff started creeping into our profit margins where it became a SKU that we no longer wanted to bring into market; we wanted to discontinue that SKU. So the real benefit is knowing which SKUs are worthy of getting chopped and which ones are worthy of keeping on board.
Now, a lot of this came to fruition too, after reading Cyndi’s book. My partner and I read Profit First for Ecommerce Sellers, in January and then I reread it in March or May. She recommended a 30% profit margin for each product, and that’s a really good indicator of a healthy product. A lot of our SKUs were not hitting that mark. By going into Margins, you can see to the dollar how much money you’re making on that particular SKU, and also where all of your margins are being eaten up alive. Then we check for potential errors. Like I said before, Amazon can make mistakes, or you could be spending too much on PPC fees or promo fees. Then we tell you exactly what’s left over at the end of the day. You can see if that product is worth keeping around or not.
Why should somebody come to Entourage Margins over choosing another software that’s similar to yours?
Mike: The biggest difference between us and other softwares is the breakdown of all the different fees and the impact that those fees have on a SKU-by-SKU level. When you first log in to Margins, you’re going to see the parent and child variations. We’ll show you how that higher parent is doing, and then we’ll break it down to its child variations and tell you how that child variation is doing, very simply and easily. It’s very easy to visually see that all the metrics have a system. Then each of what we call the margin eaters has its own dashboard. You can log in there, see how much this particular margin eater is impacting your bottom line, but then drill down SKU by SKU to see which ones are out of line with your goals and your targets. So, it’s really cool to see in detail where your SKUs and your profitability are being eaten alive. The way we use this every single day is we go in and check to see if there are any issues or errors. Are our SKUs good, and as a whole, is our margin percentage good? If not, where are we bleeding money? So, I believe the answer to your question is the breakdown and also the clarity that our system gives.
This is a fairly new product, so what are you looking to improve, if anything, about this software?
Mike: So excited about some of the improvements that are coming. The one thing we want to work on right now is making sure that every single type of Amazon fee is accounted for. So we’re working on AMS ads. If somebody has an AMS account, we want to make sure that’s accounted for; that should be released soon. We also want to make sure that our numbers are as precise as possible, so we’re working on a new cost of goods entry feature which basically will allow users to enter in a new cost of goods based on inventory that shows up in Amazon. So you’ll see a little pop-up that will say “Hey, we just noticed a hundred new units. Are the cost of goods the same for this hundred new units or is it different?” Because as you know, there are fluctuations in unit costs, in tariffs and all these different things, and we want to make sure that our system takes into account the exact cost of good for that product in Amazon. Apart from that, we have a cash flow tool coming out and we have improved reporting. We actually have a list of nineteen pages worth of improvements. Every day I have to fight to see which ones I think are the most important tools for Amazon sellers, for Margins, but there’s going to be so many improvements coming out in the next year or two.
How can this product possibly help with reimbursement from Amazon if someone is overspending on these fees?
Mike: That is a big one. Amazon probably overcharged us about $50,000 in the last year or two, in the last eighteen months, I’d say. The thing with Entourage Margins is you can log into the FBA fee section, and you go in there and you can see all of your SKUs broken down by parent and child, and you can start to see some of the fluctuations where Amazon overcharged you. Then you can start to see where they fixed the error, and we have a system that we set up inside of Margins where you basically first identify the error, then we have a tool that allows you to quickly and easily fix the error by sending Amazon a message. What that does is it allows you to tell Amazon your correct dimensions. This way Amazon can update the dimensions in their system, fixing the error as soon as possible so you stop the bleeding. Our software can pull all of the orders, enter in the correct FBA fee that was supposed to be there in the first place, and then you can submit that to Amazon for possible reimbursement. I just want to mention that really the best way to go about this is prevention. By monitoring this every day, checking for errors right away, and making sure you don’t let any errors slip, preventing is the best way to make sure Amazon doesn’t take excessive fees from you in terms of FBA fees because getting money back from Amazon is a challenge.
What advice would you give to someone who is just starting out in an ecommerce world about managing what they’re investing in?
Mike: That’s a really good question and what first comes to my mind is mindset. One thing that’s really under-served in this community is working on mindset. I know there are a couple of influencers out there that work on this angle to help Amazon sellers overcome some of the mental obstacles they may have while working on their business. So I think truly working on mindset, you know things like exercise, meditation, eating right, all that stuff that helps someone’s mindset out can really pay a lot of dividends in the future. I actually use this, and this is how I came into working on Amazon. I was working heavily on my mindset and then all of a sudden these great ideas started to pop into my mind, and I got the great idea to start an ecommerce business, and I knew nothing about ecommerce. But I had the mental mindset to overcome some of the obstacles and just make it happen, so I would say that is a really, really important thing. Also, if you have some product ideas, finding a coach or a mentor, somebody to run those ideas past would be a great idea, especially early on if you don’t know the life cycle of selling on Amazon—What it’s actually going to take, how much money it’s going to take to launch a product, all sorts of things. So asking someone that has that experience would be invaluable when you’re choosing your product.
Mike had some great answers and provided helpful insight into the new Entourage Margins product and what it can do for your business. Whether you’re looking to stop profit loss or simply wanting to be in the know about your products, check out Entourage Margins. It can shed insight into the expense side of the equation and help keep your business on the right track!