Emanuel Ruiz, who runs multiple Amazon brands including Maverick and NutriLabs, breaks down why scaling with ads fails without fixing costs first. A $100K monthly seller with 55% COGS, 15% Amazon fees, and 15% FBA costs has only 15% profit. Spend 10% on ads and you're down to 5% margin. Optimize expenses before you scale.
Amazon FBA private label brand owners that are looking to scale, listen closely. My name is Emanuel and I go ahead and run multiple brands. I have Maverick, I have Factory Lace, I have NutriLabs. Maverick, for instance, I scaled from $24,000 a month in revenue all the way up to $400,000 just this month alone. So I have a lot of knowledge in this actual space. So I had a mentee that was going ahead and making $10,000 a day in revenue. And he wanted to get to $15,000 to $20,000 using PPC, right? So that's advertising on Amazon. And when you go ahead and look at it, every single business looking to scale is not one size fits all. You have to be able to pull some levers in order to go ahead and go and do that. And sometimes you can't pull the lever of doing Amazon PPC because you'll be unprofitable. So let me give you an example. Let's say this mentee was going ahead and making $100,000 a month in revenue. revenue, right? You have to know every single expense that goes into your business. And when we reviewed this individual's expenses, we saw that 55% of all expenses came through COGS, which is cost of goods sold. This is manufacturing the product and getting it shipped into Amazon. You see, this guy was killing it on Amazon, or is currently killing it on Amazon right now, but by going ahead and competing with pricing, right? Being the cheapest one out there where people gravitate towards your product because it's cheaper than the competition. So let me see this issue as far as why you can't scale with ads if you try and be the best price on Amazon. Because 55% is COGS, cost of goods sold. Another 15% is going to go ahead and be Amazon selling fees just to sell on their platform. So already off the bat, that is 70% of all of your expenses basically just going to COGS and selling on Amazon. Right? So now you have 70%, but then an extra 10% is going ahead and coming from FBA fees. That's shipping this item to a customer. It was actually a little bit more. It was actually closer to 15%. So right there off the bat, the $100,000 a month is only at a 15% profit margin. So let's say you want to scale with ads, right? So what are we going to go ahead and do, right? Let's go ahead and say that we're going to go ahead and use 10% of our budget of all revenue to try and scale with ads. That means that he's only going to have a 5% profit margin, a little bit more because he's obviously going to get more organic sales as well. But you have to look at that like, is that worth it of you going ahead and getting a 5% profit margin based on you selling $100,000 of revenue? Right? So before you can scale with ads, you have to identify everything in your business. So right now we're trying to focus on trying to raise prices, see as far as how we can go ahead and get those COGS down. Then reassess and then run ads because not all is one size fits all.
