When Growth Turns Against You: Lessons from a Seller Who Watched His Amazon Business Collapse

At the Innovate Seller Summit, a veteran eCommerce entrepreneur offered something the audience didn’t expect – a story of failure. After more than a decade of selling on Amazon, his once-profitable business was unraveling. The causes were not dramatic missteps but a slow accumulation of operational pressure, margin erosion, and changing platform economics. His presentation became a case study in what happens when small inefficiencies turn structural.

The slow decline behind the numbers

Brandon Fuhrmann began by acknowledging that his company’s growth had masked its weaknesses. Kitchenware had been a stable niche for years, but customer habits were shifting. Few shoppers bought the same product twice, leaving the brand constantly chasing new audiences. On top of that, rising logistics costs and tariff workarounds had tipped the balance toward overseas competitors, squeezing domestic sellers further.

The category’s average price point told part of the story. Most products sold for ten dollars or less, and the economics simply stopped working at that level.

The margin math no one talks about

He shared a simple calculation that resonated with the room. At a $9.99 price point, Amazon’s fulfillment fee was about $2.66. Move the price to $10.00, and the fee jumped to $3.43. A one-dollar increase yielded just nine cents in added profit. Margins only started to improve once prices reached the $12–$13 range, but customers at that level expected more premium packaging and faster delivery, both expensive to provide.

The problem wasn’t just the fees. Amazon’s cost structure rewards higher-ticket products, while small-item sellers shoulder a disproportionate share of logistics and storage expenses. A $5 removal fee barely registers on a $500 item, but it can wipe out the margin on a $10 one. Over time, hidden or “junk” fees – often 25 cents per unit – became enough to erode entire product lines.

That realization forced him to rethink his strategy. He began prioritizing products priced above $40, cutting low-margin SKUs and auditing fees quarterly to track where costs quietly accumulated.

When advertising and cash flow drift apart

As margins tightened, advertising efficiency began to deteriorate. Ad costs rose steadily while the return per unit dropped. The brand tried incremental fixes – small price increases, bundling, minor optimizations – but none addressed the structural gap between cost and return.

Brandon noted that while bundling did slightly raise average order value, the gain was marginal. “You might get an extra sale a day, maybe two,” he told the audience. “It doesn’t change the core economics if your single unit is unprofitable.” The insight underscored a wider truth about marketplace dynamics: minor adjustments cannot offset a model built on thin margins.

The hidden impact of fulfillment geography

In 2023, Amazon reorganized its U.S. fulfillment network into eight regional zones. For many sellers, the change went unnoticed, until sales began to fall. Brandon’s team discovered that while their top product showed 4,500 units in stock, nearly 3,000 were stored within three hours of the Northeast, 1,000 were in Florida, and just 25 units were west of the Mississippi.

That imbalance meant many shoppers saw a six-day delivery promise instead of the Prime badge. Search rankings dropped, conversions slowed, and visibility declined even though stock appeared healthy on paper.

His advice was straightforward but often overlooked: regularly check how listings display in different ZIP codes. A simple test – entering 90210 or 30301 on the product page – can reveal whether Prime delivery still appears nationwide. Without that visibility, regional stock imbalances can quietly undercut national sales.

To correct the issue, he eventually used Amazon Warehousing and Distribution, which redistributed inventory more evenly across fulfillment centers. Within days, Prime delivery resumed across most regions, and conversion rates began to recover.

Cleaning up the catalog

Brandon also urged sellers to request Amazon’s updated IDQ report, a data file that scores listing quality and flags structural errors. He noted that the newer version surfaces more detailed issues, such as missing attributes or inconsistent titles, often detected through AI-based analysis.

In one example, a capitalization error in a product title was enough to lower visibility in certain search results. By fixing small inconsistencies across hundreds of listings, sellers can improve relevance and discoverability without increasing spend. It is a tedious but measurable way to regain lost ground.

What resilience looks like now

Asked what he would do differently, Brandon offered pragmatic guidance.

• Focus on products with pricing power
• Audit fulfillment data monthly to identify regional stock gaps before they affect ranking
• Review all per-unit fees quarterly
• Approach listing optimization as an ongoing process rather than an occasional clean-up

None of this sounded glamorous, but that was the point. Sustained success on Amazon no longer depends on explosive growth or constant expansion. It depends on consistent, verified accuracy across pricing, stock, and data – the unglamorous mechanics that keep a business stable when the market shifts.

He closed with a reminder: “Every seller hits a wall eventually. What matters is whether you notice the cracks early enough to repair them.”