What is a good ROI for Amazon wholesale?

Every wholesale seller needs a number to say yes or no to a product, and ROI is the usual one. But there is no single good ROI for Amazon wholesale: a lower return on a product that sells in two weeks can beat a high one that takes six months. Here is what most sellers aim for, and how to set a target that fits your business.

First, measure ROI the same way every time

ROI is profit divided by what you paid. For it to mean anything, both numbers must be complete:

• Profit after the referral fee, the FBA fee and every per-unit cost.
• What you paid: the landed cost, not just the supplier's price.

An ROI on the supplier price alone can look 20 points better than the real one. Compare products only on landed ROI.

Typical targets

• Below about 15%: very thin. One price drop or a few returns and the product loses money.
• 20 to 30%: workable for fast sellers with stable prices and little competition.
• 30% and above: the target many wholesale sellers use for most products. It leaves room for a price drop.
• 50% and above: rare on established wholesale listings. Double-check the match, the pack size and the fees before you believe it.

Why turnover matters as much as ROI

ROI tells you what one round of buying earns. How often you can repeat it decides what your money earns in a year. Take $1,000 and two products:

	Product A	Product B
ROI per round	25%	50%
Time to sell out	1 month	4 months
Rounds per year	12	3
Profit in a year	$3,000	$1,500

Product A earns twice as much from the same money, even with half the ROI, and even before reinvesting the profit. Slow stock also pays storage for longer. So a fast seller can justify a lower ROI target, and a slow one needs a higher one.

Add a minimum profit per unit

ROI alone can mislead on cheap products. A $2 product with 50% ROI earns $1 a unit, and one return or a small fee change wipes out several sales. Set a minimum profit per unit as well, for example $3 to $4, so every product is worth the work of buying, prepping and shipping it.

Leave a margin of safety

Your ROI is calculated at today's price, and prices move. If the listing has many sellers or a falling price, ask what the ROI would be 10 percent lower. See how low the price can go and how to avoid price wars. Products that still meet your target after a drop are the safe ones.

How to set your target

1. Start at 30% ROI on landed cost and a minimum profit of $3 to $4 per unit.
2. Lower the ROI target for fast sellers with stable prices; raise it for slow sellers, crowded listings and products with a volatile price.
3. Review it after a few months of real sales: if your products sell slower or cheaper than planned, raise it.

Targets that do the work for you

In Wholesale Analyzer you set your target ROI, minimum profit and desired margin once in the wholesale settings; the defaults are a 30% ROI and $4 profit per unit. Every product is then checked against them on its landed cost, the score weighs ROI together with sales velocity and competition, and the max buy cost tells you the highest price at which a product still meets every target. For a single product, try the free profit and ROI calculator.