Introduction: The Illusion of Profit

You found a popular product.
You secured a wholesale supplier.
You placed your first bulk order feeling confident…

But weeks later, your Amazon FBA dashboard shows a painful reality:

• No profits

• Slow sales

• Rising storage fees

• And margins that barely cover your costs

What went wrong?

This is the “Amazon Wholesale Profit Trap”—and too many new sellers fall right into it.

Mistake 1: Ignoring Total Landed Cost

Many wholesale sellers look at one thing: the product’s unit price from their supplier.

But here’s the truth:

Your real cost per unit includes:

✅ Wholesale product price
✅ Inbound shipping to your 3PL or Amazon warehouse
✅ 3PL handling / prep fees
✅ Amazon FBA fees (fulfillment + storage)
✅ Amazon referral fee (usually 15%)

Example:
You buy an item for $8 per unit.
Add $1 shipping, $0.75 prep, and $4.50 in Amazon fees…

Your real cost = $14.25 per unit.

If you’re selling it for $15…
You’re losing money—fast.

Mistake 2:Chasing “Best Sellers” Without Margin Research

Just because a product sells in high volume…
Doesn’t mean you’ll make money selling it.

Popular products often attract dozens of sellers.
Which creates a race-to-the-bottom on pricing.

If 10 other sellers are competing for the Buy Box…
Expect prices to drop.
Fast.

Smart sellers:
Focus on products with less competition, healthier margins, and consistent demand—not just what looks hot today.

Mistake 3: Ignoring Amazon Fees and 3PL Costs

Amazon fees aren’t just about fulfillment.

You’ll also pay:

✔ Referral fees (a percentage of your sale price)
✔ Monthly storage fees (especially dangerous for slow movers)
✔ Long-term storage fees (after 365+ days)
✔ Return processing fees (if customers return products)

If you use a 3PL (Third Party Logistics Provider) like Coastal Distribution, add:

✔ Receiving fees
✔ Labeling / prepping charges
✔ Outbound shipping to Amazon

These costs are small individually…
But together, they can wipe out your margins if you don’t plan.

Mistake 4: Buying Dead Stock Because “The Price Looked Good”

Discounted inventory is tempting…

But if there’s no consistent demand for the product on Amazon…
You’re just buying dead stock.

Before placing any order:

✅ Check Amazon sales rank history
✅ Use tools like Keepa to review price trends
✅ Check the number of competing sellers
✅ Calculate estimated monthly sales

If it doesn’t move…
It costs you money every month in storage fees.

How to Avoid the Wholesale Profit Trap

Here’s a basic formula before you buy any wholesale inventory:

(Estimated Selling Price – Amazon Fees – Prep Fees – Shipping – Product Cost) = Your Net Profit

If your net profit per unit isn’t at least 15-20% margin after all costs,
It’s a red flag.

Also, factor in:

✔ Expected sell-through rate
✔ Price fluctuations
✔ Return rate for that product category

How Coastal Distribution Helps Wholesale Sellers Stay Profitable

At Coastal Distribution, we don’t just sell wholesale products.
We help Amazon sellers succeed by offering:

✅ Access to brand-authorized products at competitive wholesale pricing
✅ Amazon-compliant invoices for hassle-free approvals
✅ Expert advice on MOQ (minimum order quantities)
✅ Fast and affordable 3PL prep and shipping services

Before you buy, we’ll help you analyze margins
And make sure you’re investing in products that give you a real chance at profit.

Final Word:

In wholesale, the right product at the right price isn’t just important…
It’s everything.

Stop guessing.
Start sourcing smart.

👉 Ready to work with a wholesale partner who understands Amazon sellers?
Contact Coastal Distribution today.