What Are the Benefits of Analyzing Amazon’s SKU Economic Report?

August 20, 2024
By The Badger

Imagine this: You’re pouring time and money into your Amazon PPC campaigns, but your profits aren’t where they should be at the end of the month. You’ve got a hunch that some of your SKUs are dragging you down.

That’s where Amazon’s SKU Economics Report comes in, a game-changer for sellers who are tired of guessing. In this article, we’re going to walk you through how this report can transform your approach to selling on Amazon.

Plus, if you want the full scoop straight from the experts, check out the latest episode of the PPC Den Podcast, where Michael sits down with Elizabeth Greene from Junglr. They dig deep into how this tool can help you stop losing money on Amazon PPC and start boosting your bottom line.

The SKU Economics Report: Benefits for Retailers

Picture this: You’re running a thriving Amazon store, but despite your best efforts, some SKUs just aren’t pulling their weight. You’re left scratching your head, wondering where all those dollars are slipping away.

Enter the new SKU Economics Report—a tool that’s about to flip the script on how you manage your business.

For a retailer, that’s like turning on the lights in a dark room. Suddenly, you can see which products are gold mines and which are dead weight.

What really sets this report apart is its SKU-level profitability analysis. You can pinpoint exactly where each SKU stands, right down to the nitty-gritty details like shipping and fees.

But there’s more. The SKU Economics Report goes a step further by factoring in your ad costs. Have you ever wondered if your advertising spend is really paying off? With this report, you don’t have to guess. It calculates the ad cost of total sales (TACoS🌮), giving you a clear picture of how efficiently your ad dollars are working.

In short, the SKU Economics Report is more than just a tool—it’s a retail revolution.

The Introduction to the SKU Economics Report

You’re running a busy retail business, juggling multiple products, and trying to keep everything organized.

Every product, whether a simple t-shirt or a complex gadget, has a unique code—the Stock Keeping Unit (SKU).

But here’s the problem: What happens when the data behind those SKUs isn’t accurate?

Maybe you’ve got duplicate entries, missing details, or sales data that just doesn’t add up.

Suddenly, your once-efficient system starts to crumble. Orders get mixed up, inventory levels are off, and you’re losing time and money trying to fix the mess before you know it.

Now, let’s talk about your solution.

The key to a smooth-running SKU system is accuracy—ensuring that every piece of data is correct and up to date. When you keep your SKUs in check, you’re setting the foundation for a well-oiled business machine.

Every time a customer orders something, you can be confident that you’ll deliver exactly what they want on time, every time.

Ad Badger’s team of marketers and engineers have created the best tool on the market for helping you reach your success.

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What is the SKU Economics Report?

The SKU Economics Report is a robust tool designed to give retailers in-depth visibility into the various costs, fees, sales, and net proceeds associated with their products.

Its primary purpose is to provide detailed insights into the profitability of each SKU, empowering businesses to make well-informed decisions regarding their product lines.

Benefits:

Drawbacks:

When you understand the exact relationship between your sales and profits, you can fine-tune your ad strategies to focus only on what’s working.

For Amazon PPC managers, the SKU Economics Report is a goldmine of actionable data. It pulls together historical sales and cost information, giving you a clear view of how each SKU has performed over time.

Analyzing Sales vs. Profit with the SKU Economics Report

Big sales numbers are nice, but they don’t always mean your business is making money.

The SKU Economics Report cuts through the noise, helping you see which products are truly profitable, not just popular.

By pulling together historical sales and cost data, this report shows you the real story behind your products:

How much they sell?
How much they cost?
How much profit they bring in?

This analysis is crucial because high sales don’t always equal high profits.

The SKU Economics Report lets you compare sales against all related costs, including fees and shipping, giving you a clear picture of each product’s financial performance.

The report also breaks down fees as a percentage of total sales, making it easy to see which costs are eating into your profits.

Customizing the SKU Economics Report

One of the best things about the SKU Economics Report is how customizable it is.

You can tweak the report to focus on the data that matters most to you—like return rates, net proceeds per unit, or any other metric that fits your business goals.

You can also customize the report to look at specific SKUs, product categories, or time periods. This flexibility means you can zero in on exactly what you need, whether that’s a particular product line or a specific sales season.

How Can You Use the Key Metrics in the SKU Economics Report?

The SKU Economics Report is a powerful tool packed with key metrics that provide deep insights into your product’s financial performance.

Total sales can show you how popular a product is, but to really understand if those sales are making you money, you need to look deeper. The SKU Economics Report helps you do that by breaking down important costs like the cost of goods sold (COGS), shipping costs, and Amazon fees (such as referral and fulfillment fees).

Shipping costs, which can quietly eat into your profits, are clearly detailed in the report. This lets you see if certain products are costing too much to ship compared to what they’re worth.

The report includes advertising costs, giving you a clear view of how much you’re spending to promote each product and whether that spending is actually bringing in profit.

Net profit is the final measure of success, and the SKU Economics Report calculates this by considering all costs and fees, showing you which products are making money for your business.

Lastly, the report tracks return rates, helping you spot products that might be causing issues so you can fix problems before they hurt your profitability.

Don’t worry, I get it—this can be overwhelming. But let me walk you through each group of metrics, one step at a time, and you’ll feel in control again. Trust me, it’s not as scary as it looks!

How Can You Master Fulfillment and Storage Costs with the SKU Economics Report?

Fulfillment and storage costs can quickly eat into your profits. The SKU Economics Report breaks down these costs per SKU, helping you easily identify high-cost items. By showing fees as a percentage of your revenues, the report makes it clear how these expenses affect your bottom line.

It also includes tricky costs like low inventory fees, ensuring you get a full understanding of your expenses.

How Does the SKU Economics Report Help You Manage Sponsored Product Ad Costs?

Sponsored product ad costs are a key factor in determining how profitable your products really are.

The SKU Economics Report now includes these costs, giving you a clear view of how much you’re spending on ads for each product and how that affects your overall profits.

By tracking these ad costs, you can calculate the total ad cost of sales (TACoS) for each SKU. This number tells you how much of your revenue is being eaten up by advertising.

For example, if a product is bringing in sales but the TACoS is too high, it means your ad spend might be cutting too deeply into your profits.

Struggling to get the most out of your Amazon PPC campaigns? High ad costs can drain your profits and leave you frustrated.

What if you had a clear, actionable plan to optimize ad spend and boost your bottom line? You need more resources to master Amazon PPC—our free checklist will be your go-to guide.

How Can the SKU Economics Report Help You Identify and Fix Negative Profit Margins?

Negative profit margins can seriously harm your business, so spotting them early is important.

The SKU Economics Report helps you do this by breaking down each product’s costs and showing you exactly where you might be losing money.

The report gives you a detailed look at all costs, including fulfillment fees, shipping, Amazon fees, and advertising costs. If a product has high costs in any of these areas, it might be losing money 💸, even if it seems to be selling well.

Your steps to fix negative margins:

If a product isn’t making money, consider raising the price to improve your margins.
If you’re spending too much on ads, it could be eating into your profits. The report helps you see if you need to cut back.
Look for ways to reduce fulfillment, shipping, or supplier costs. Even small savings can make a big difference.

Practical Applications of the SKU Economics Report

Have you ever felt overwhelmed by managing your inventory or unsure if your marketing efforts are really paying off? The SKU Economics Report might be just what you need to take control of these challenges.

Let’s break down how this report can help you make smarter decisions across your business.

🏆Winning Strategy Number 1: Discover How to Optimize Inventory

Do you sometimes struggle with having too much or too little stock?

Start by using the SKU Economics Report to analyze your inventory data. Look at sales trends and identify which products are consistently selling and which are not.

If you see that certain items are moving slowly, consider reducing their stock or discontinuing them. This helps free up cash and warehouse space for more profitable items.

Next, focus on seasonal trends. If the report shows that certain products sell better at specific times of the year, you can plan your inventory levels accordingly. This prevents overstocking and stockouts, ensuring that you always have the right products available when customers want them.

🏆Winning Strategy Number 2: Enhancing Marketing Strategies

The SKU Economics Report provides insights into how your advertising spend is affecting your profitability.

Start by looking at the Total Ad Cost of Sales (TACoS) for each SKU. If you notice that a product has a high TACoS but low profitability, it’s time to rethink your ad strategy.

You might need to reduce your ad spend on that product or optimize your campaigns to target a more profitable audience.

Additionally, the report helps you identify which products are your top performers. Focus your marketing efforts on these high-margin items to maximize your return on investment.

🏆Winning Strategy Number 3: Supply Chain Operations for Better Profitability

Do you sometimes wonder if you’re getting the best deals from your suppliers? The SKU Economics Report can help here too.

Use the SKU Economics Report to analyze your supply chain costs. Look at the breakdown of fees and other expenses associated with each SKU.

If you find that certain products have high fulfillment or storage costs, consider negotiating better terms with your suppliers or finding ways to reduce these costs.

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How to Access and Utilize the SKU Economics Report?

Accessing the SKU Economics Report is simple and can be incredibly valuable for your Amazon business.

Here’s how to get started and make the most of it:

Start by logging into your Amazon Seller Central account.
Once logged in, go to your dashboard’s “Reports” section.
Find the SKU Economics Report and download it.

The report is designed to be user-friendly, with data presented in a straightforward manner.

Customizing the SKU Economics Report is all about tailoring the data to what truly matters for your business. Start by picking the data columns that align with your goals—maybe you’re focused on sales data, fulfillment costs, or ad spend.

Next, think about the time periods that will give you the most insight.

Finally, if certain product categories are key to your strategy, narrow the report to focus on them.

Once you’ve got your customized report, the real work begins. Make it a habit to check in regularly.

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Summary

In short, the SKU Economics Report helps retailers better understand their product performance and profitability.

The option to customize the report to focus on specific metrics and timeframes makes it even more valuable.

This report allows businesses to make smarter decisions that boost profitability, manage inventory better, improve marketing, and streamline supply chain operations.