Margins Are the New Black: 5 Places You’re Probably Losing Money (and How to Fix Them)
- Color More Lines
- Aug 16
- 3 min read
Profitability is the new growth frontier.
Driving top-line revenue matters—but if your margins are leaking through hidden Amazon inefficiencies, you’re scaling your mistakes—fast. That’s exactly why our Margins Rx™ program is more than timing—it’s mission-critical.
Hidden Margin Leaks to Stop Today
1. Missed FBA Reimbursements & Lost Inventory
Amazon mishandles inventory. Reports show sellers lose 1–3% of inventory annually due to lost units, damaged items, or warehouse misplacement. Without proactive claims, you’re simply letting money walk away.
Fix It Fast:
Monitor Amazon's reimbursement deadlines—like 60 or 90 days depending on category
Audit inbound shipments, returns, or fee corrections every 30 days
Use automation tools or a partner to flag and submit claims before deadlines expire
2. Fee Creep: The Slow Drain Nobody Notices
“Fee creep” refers to quietly rising FBA fees, referral surcharges, aged inventory penalties, and CPC inflation. Many brands don’t even realize margins are shrinking until it’s too late.
Regain Control:
Run monthly audits of Amazon fee reports—include storage, referral, fulfillment, and inventory age fees
Stay alert to new low-inventory or category-specific surcharges
Adjust pricing or reduce stock proactively to avoid surprises
3. Accrual & Chargeback Overcharges (Vendors Only)
If you’re a 1P vendor, Amazon deducts for MDF, freight, co-op, and damage allowances—but mistakes are common. Vendors have recovered millions by disputing improper accruals.
Rebalance Your Ledger:
Review Vendor Central accrual reports line by line
Dispute any unapproved or duplicate charges
Implement a reconciliation cadence aligned with your co-op agreements
4. Inventory & Return Discrepancies
From miscounted shipments to unsellable returns, sellers often face internal “mystery loss” of stock that translates into real cost. Inadequate listings lead to higher returns—sometimes incurring return processing fees up to 17%.
Plug the Holes:
Use regular cycle counting to reconcile internal vs. Amazon-reported counts
Improve listing accuracy with high-res images, descriptions, and clear sizing
Track return reasons and correct root causes (e.g., misrepresentation, quality control)
5. COGS Bloat & Unnecessary Operating Costs
It’s not just Amazon where profits leak—unoptimized supply chain costs, over-packaging, or poor logistics planning inflate Cost of Goods Sold (COGS) unnecessarily.
Slash Waste, Boost Margin:
Benchmark supplier pricing and renegotiate for volume discounts
Optimize packaging weights and dimensions to avoid over-fees
Align inbound shipment strategy with FBA inbound placement rules to avoid service fees
Why Margins Rx™ Works
We identify and tackle the invisible line items that chip away at profitability:
Use weekly dashboards to highlight unusual deductions or pattern shifts
Automate Amazon invoice reconciliation and claim generation
Embed margin reviews before every new SKU launch or promotional push
Give CFOs, founders, and operations visibility into margins at every level
Final Takeaways: How to Recover Margin Now
Audit & Automate: Missing reimbursements and accruals aren’t one-offs—they compound. Automate claim tracking and review monthly.
Track Fee Trends: Fee creep doesn’t announce itself. Keep an eye on fee categories and inventory performance metrics.
Fix Listings & Inventory Hygiene: Clarity reduces returns; consistency cuts inventory loss.
Align COGS With Operational Reality: Every cost saved on sourcing or packaging adds directly to your bottom line.
Make Margin Visibility Your North Star: True growth comes from profitable scale, not just top-line acceleration.
Ready to Keep More of What You Earn?
Color More Lines’ Margins Rx™ program is built to help high-growth brands reclaim lost revenue and make profitability a habit—not an accident.
Whether you're a founder, CFO, or supply chain lead ready to stop leaving money on the table, we’d love to help. Let’s talk.
Comments