At MarketLeap, we’ve spoken with thousands of brands, from emerging D2C brands to large, established ones. Across the board, one theme consistently stands out:

Over 80% of brands selling on Amazon cannot accurately calculate their net profitability.

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The majority of brands have little to no visibility into what they're actually earning once Amazon’s layers of fees, deductions, and logistical complexities are factored in. The reality is that true profitability on Amazon is often obscured. Many of the biggest cost drivers are either hidden, miscalculated, or completely overlooked.

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The Complexity Behind Profitability on Amazon

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Selling on Amazon isn’t just about product-market fit or advertising performance. It's about understanding the full picture, where your money is going, what’s being recovered, and what’s silently being lost.

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After working with thousands of sellers, we've identified three categories of overlooked costs that directly impact profitability.

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1. Hidden Costs That Require Time, Expertise, and Technology

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Some costs on Amazon are not visible in standard seller dashboards and reports. Identifying and understanding them requires deep domain knowledge and data analysis capabilities that most brands don’t have in-house. These include:

- Lost inbound shipments that were never checked into fulfillment centers

- Misplaced inventory sitting in unknown FCs or aged stock accumulating fees

- Overcharged fulfillment or weight-based fees that go unnoticed for months

- Customer returns that were never reimbursed or improperly classified

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Each of these has a direct impact on net margin, and they add up fast!

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2. Fees Most Sellers Aren’t Aware Of

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Even experienced sellers are often surprised to discover fees that don’t show up clearly in settlement reports, and sometimes don’t show up at all unless specifically audited. Some of the most common include:

- Excess Returns Rate Fee: Applied when your return rate exceeds the category benchmark

- Digital Services Fee (DSF): Applied in international Amazon marketplaces, particularly in Europe

- Returns-Related Fees: Often hidden or miscategorized, these can significantly affect profitability if not monitored

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Because these fees often appear only in back-end accounting exports or require manual reconciliation, they’re frequently left out of profitability calculations.

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3. Unsellable Returns That Can Be Recovered or Monetized

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Most brands accept Amazon’s classification of “unsellable” inventory at face value, but the truth is more nuanced. A significant portion of returns marked as unsellable can actually be verified and relisted for sale. Others, if truly unsellable, don’t need to be disposed of. Liquidation partners can recover a portion of the product value, whereas Amazon’s default disposal comes with added fees and zero return.

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Yet, without a structured review process and logistics partnerships in place, most brands either lose margin unnecessarily or incur additional storage and disposal costs.

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4. Financial & Tax Reporting Gaps That Lead to Risk

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While most brands focus on operational or fee-based margin erosion, a growing number face compliance and reporting issues that directly affect both profitability and financial credibility. Some of the most overlooked areas include:

1. Misreporting Amazon 1099-K (U.S.) or VAT Sales (EU): Many brands rely on Amazon’s default financial reports when filing taxes, without properly adjusting for refunds, reimbursements, or fee deductions. As a result, income is often overstated—leading to friction with accountants, incorrect filings, or tax authority disputes.

2. Ignoring VAT Compliance (EU, UK, and Other Regions): Brands using Pan-EU FBA or EFN frequently fail to register, collect, or remit VAT in countries where it’s legally required. This can result in significant penalties, often between 10% and 100% of the unpaid VAT, and can impact a brand’s ability to continue selling in certain markets.

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Understanding and managing tax exposure is not just a compliance issue, it’s a profitability issue. Many of these problems only surface after tax filings or audits, creating unnecessary costs and liabilities for the brand.

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The Cost of Invisibility

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When these factors are ignored, or simply unknown, brands are left operating in the dark. Optimizing ad campaigns and listings may increase top-line revenue, but without knowing your true margins, you may be scaling an unprofitable channel.

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That’s why profitability can’t be an afterthought. It needs to be a foundational part of your Amazon strategy from day one.

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What MarketLeap Delivers

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At MarketLeap, we help brands understand and improve their true Amazon profitability through a fully integrated platform and 100% outsourced operations.

- We provide clear, transparent net margin reporting, at both SKU and channel level.

- We recover funds lost to overcharges, missing returns, lost shipments, and other operational errors.

- We manage returns classification, relisting, and liquidation so you can minimize unnecessary losses and recover inventory value.

- We act as the seller of record, taking on the operational and accounting risk so you can expand compliantly, without the backend complexity.

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In short, we make sure your Amazon channel is not just growing, but profitable.

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Conclusion

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The secret to brand profitability on Amazon isn’t better ads or more aggressive discounts. It’s visibility. It’s operational rigor. And increasingly, it’s having the right technology and expertise in place. Most brands don’t have the time or resources to uncover these issues on their own.

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At MarketLeap, we take care of it all, so you can focus on growing your brand while we make sure you keep more of what you earn.

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Want to see your true net margin? Talk to our team today.

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