A good gross profit margin varies depending on the industry, platform, and business model. Generally, for e-commerce and Amazon sellers, a gross profit margin of 40-50% is considered strong, but this is becoming harder to achieve, especially with increased competition from Chinese manufacturers selling directly to consumers.
For Amazon sellers using private label products (like your brand on imported goods), margins tend to be lower due to high fees, advertising costs, and price competition. Many sellers in your position operate within the 20-35% gross margin range, with some going lower for high-volume sales. Direct-to-consumer (DTC) e-commerce sites often allow for higher margins, as you avoid Amazon’s fees, but marketing costs can eat into profits.
I am currently in Taiwan, where there are a lot of Amazon and eBay sellers sourcing goods. In the case of eBay, the manufacturers are approached by eBay itself, which then works through middlemen—independent eBay sellers—to purchase and sell the goods on eBay’s own website. This effectively offloads all the risk onto the eBay seller rather than eBay itself. I am quickly getting the impression that Amazon is following a similar practice. Many white-labellers here in Taiwan and over in Shenzhen seem to be under some level of Amazon control or influence, suggesting a shift in how these platforms operate.
If you are struggling to reach 45%, you are not alone. Many sellers face shrinking margins due to aggressive pricing strategies from manufacturers selling directly on Amazon. The key to improving profitability often lies in refining your product selection, optimising your supply chain, reducing reliance on deep discounting, and increasing average order value through bundles or upsells.
If your margins are being squeezed, there are several strategic approaches you can take to improve profitability and regain control over pricing, especially given how platforms like Amazon and eBay are shifting their approach.
Diversifying away from Amazon and eBay can be a long-term solution. Selling on your own e-commerce site often provides better margins, even though it requires investment in marketing and customer acquisition. Expanding to Shopify, WooCommerce, or other platforms allows you to control branding, customer relationships, and pricing. If you are already selling on your own site, focusing on SEO in particular if your products are niche.
Focusing on differentiation and adding value to your products can help set you apart. If you are selling white-label products, consider modifications, bundling complementary items, or offering premium packaging and support. Competing solely on price is difficult, but increasing perceived value can improve margins.
Leveraging higher-margin sales channels outside of Amazon and eBay, such as business-to-business sales, wholesale partnerships, or subscription models, could provide steadier revenue with better margins. Amazon fees, PPC costs, and price competition make sustaining high profits challenging, so exploring alternative sales models may be beneficial.
Streamlining sourcing and logistics is another key factor. Since you are in Taiwan, you have direct access to manufacturers and suppliers. There may be opportunities to negotiate better pricing, source exclusive products, or bypass middlemen. Some sellers are moving towards regional fulfilment or nearshoring to reduce dependence on suppliers already integrated into Amazon’s network.
Reducing dependence on PPC advertising can also protect your margins. If advertising costs on Amazon are eating into profits, alternative marketing strategies such as social media, email campaigns, and influencer partnerships could help reduce reliance on paid Amazon Ads.
Considering off-Amazon marketing for Amazon sales can be beneficial. Amazon rewards external traffic, so driving sales through external sources such as Facebook, Google Ads, or TikTok may lead to better rankings and conversion rates without engaging in direct price wars on Amazon.
Monitoring competitor activity and pricing trends is essential. If many white-labellers in Taiwan and Shenzhen are under Amazon’s influence, shifting focus to less saturated or higher-end niches where smaller businesses retain control may be a better long-term strategy. Tracking trends in direct-from-manufacturer selling on Amazon can help inform product selection and strategic adjustments.
If Amazon and eBay continue to tighten control over third-party sellers and white-label brands, the key question is whether to adapt to that environment or pivot toward sales channels where pricing and branding remain under your control. Hope that helps.
