Stop giving a percentage off in your sales. Instead give people something "free." This offer could have been get 50% off any 4 pack. Instead by 2 get 2 free makes the buyer feel like they are getting WAY more free stuff. Hormozi talks about this in 100M offers.

@jeffbezos famously said “Your Margin is My Opportunity”. He meant it, and he seized it. We have done ~$45 million in sales over the past 4 years on Amazon. We are about to drop below the $0 in earnings threshold for 4 years of work. In that time, we have paid Amazon $24,000,000. On this journey, I have made countless mistakes and take responsibility for that. The biggest mistake was ordering too much inventory based on pandemic demand. I thought demand would continue, it didn’t. It crushed us in warehousing costs, interest expense and the surge in container prices massacred our COGS. That is on me, expensive lesson. However, during the past two years, Amazons take rate on our sales went from 46% to 55%. Without that delta we would still be a (barely) profitable company. With that delta we are now a wildly unprofitable company. We are very lucky to have done really well for years and could absorb the losses. We are like a boxer who has taken a few right hooks to the face; wobbly kneed but still standing. I have no idea how new Amazon companies are surviving without the backstop of past earnings. As our Amazon advertising expense grows to over 11% we approach a 60% take rate from Amazon. At 30% COGS, that leaves 10% for everything else. - Warehousing - Payroll - Debt expense - Software - Any mistakes We have adjusted quickly: - We cut our catalog by 75% - We laid off the majority of the team - We paid off as many loans as possible - Renegotiated all software contracts - Negotiated all unit costs down We will see if this is enough to survive. What happens next? The trajectory for the next three years seems pretty clear to me: Amazons march towards closing the gap between them and Chinese factories will continue. Amazon's strategy appears to be streamlining the supply chain to a point where it's just Chinese factory -> Amazon -> end consumer – with no room for anyone else in between. American designers and companies cannot survive at 10% margins, they will self select out. New product designs will come from people that grew up in Fuzhou not Chicago. Quality standards will degrade. Remarkably, 44% of Amazon's sales are now driven by new brands. This isn't just a statistic; it's a strategy. Amazon continues to attract new factories, using its audience size as the trap. Each year, these new brands rise, fueled by thoughts of large revenues, only to find themselves caught in a cycle of hope, despair, and eventual replacement. Financially, the breakdown becomes more apparent: 70% of your Amazon spend will funnel directly to Amazon, while 30% will flow overseas to China. Years will go by and those %s will continue to shift in Amazons favor. Was this inevitable? Is this what @jeffbezos meant from his quote? Follow & bookmark to see Part 2