The Same Product Has Two Different Landed Costs: Amazon FBA vs. Retail
A founder looks at a finished-goods cost of $8 and a $39.99 MSRP and sees plenty of margin. The problem is that COGS is only the beginning of the economics.
Send that unit into Amazon FBA and the product may incur international freight, duty, drayage, prep, labeling, inbound placement or transportation, fulfillment, storage, returns, and marketplace fees. Send the same unit to a national retailer and the cost structure changes: wholesale revenue replaces retail revenue, while routing compliance, case packs, palletization, EDI, allowances, chargebacks, returns, markdown exposure, and retailer payment terms can appear.
Neither channel is inherently better. They are simply different businesses built around the same SKU.
That is why Channel Checkride prefers contribution margin by channel over one company-wide gross-margin percentage. A product can be highly attractive on Amazon and marginal at wholesale, or the reverse.
Before accepting a retail PO, rebuild the economics from the factory forward. Follow one unit through production, international transportation, U.S. receiving, storage, channel preparation, fulfillment, deductions, and returns. Then compare the cash received against every variable cost required to earn it.
The question is not, “What is our gross margin?”
It is, “What does this unit contribute when sold through this specific channel?”
Pressure-test it before the buyer does. A Channel Checkride Retail Readiness Review looks at your economics, assortment, and launch plan through the buyer's chair and the operator's chair. Request a Retail Readiness Review.
Related: Your Product Is Competing With the Item Already on the Shelf