Paper Rich, Cash Poor: The FBA Profit Trap Buyers Miss
Key takeaway: SDE can look great on paper, but only true net cash pays you—FBA buyers must audit the “fee stack” that silently eats profit.
You’re looking: at a listing. The Seller Discretionary Earnings (SDE) shows $100,000. It looks like a dream.
You buy it.
Then the month ends: and your bank account only grows by $40,000.
Where did the other $60k go?
It went into “add-backs” that weren’t really optional and hidden fees that were “left out” of the neat broker spreadsheet.
Here’s the hard lesson: You can’t pay your mortgage with SDE. You can only pay it with net cash.
The Silent Killers of Amazon FBA Margins
Verdict: FBA businesses don’t die from one big mistake—they bleed out from recurring fees that sellers under-report or “normalize away.”
1) Long-Term Storage Fees (The “One-Time Expense” Lie)
Key takeaway: Storage isn’t a one-off—it’s recurring. Underwrite using Jan–Dec averages, not the cheap months.
Brokers sometimes: exclude Q4 storage spikes like they’re a one-off. They’re not. Storage is a recurring cost of doing business—especially if the brand carries slow movers.
If you’re buying FBA: you must look at Jan–Dec averages, not just the cheap months.
2) Returns That Turn Into Dead Inventory
Verdict: Refunds are visible. Unsellable returns + removal fees are the hidden profit killer.
Many listings: subtract refunds but ignore the part that hurts the most: unsellable returns + disposal/removal fees.
This is especially deadly in high-return categories. For example, footwear can have massive demand, but it can also come with 20%+ return rates that must be baked into net margin:
The Billion Dollar Footwear Opportunity (Without the Usual Headaches)
3) PPC Inflation (TACoS) — The Quiet Time Bomb
Key takeaway: ACOS can be manipulated; TACoS reveals how dependent revenue is on ads to stay alive.
Some sellers: reduce PPC for 2–3 months before selling to “boost profit.” Then you take over, keep PPC low… and the business falls off a cliff.
The metric you must audit: TACoS (Total Advertising Cost of Sales), not just ACOS on a few campaigns. TACoS tells you how dependent the business is on ads to hold revenue.
Visualize the Fee Stack (Because This Is Where Buyers Get Fooled)
Verdict: FBA profit isn’t one number—it’s a waterfall of costs. If you can’t map the waterfall, you can’t trust the “profit.”
FBA profit: isn’t one number. It’s a stack of costs that eats revenue step-by-step.
High-impact visual: a waterfall chart like this:
Revenue ($100) → -COGS ($30) → -FBA fees ($25) → -Storage ($5) → -PPC ($15) → -Returns ($5) = True Net ($20)
It’s the easiest way to show how a “big revenue” business can still be thin, stressful, and cash-poor.
Why Affiliate Economics Feel “Cleaner”
Key takeaway: FBA ties cash into inventory and fees; affiliate models often behave like cleaner cashflow with fewer “surprise” expenses.
In FBA: your money is tied up in inventory, storage, and fees. In affiliate models, margins are closer to pure cash because there’s no stock.
If paying storage fees keeps you up at night, compare this model to something like an organic beauty Amazon affiliate store, where you can earn commissions without paying a cent to a warehouse:
How to Build Passive Income with an Organic Beauty Amazon Affiliate Store in 2026
How to Calculate TRUE Net Profit (The Buyer Stress Test)
Verdict: Take SDE and subtract what’s “missing” in listings—if net margin collapses, the deal was never real.
Take the advertised SDE: and subtract the costs that “mysteriously” disappear in listings:
- Manager salary: Even if you plan to run it yourself, price it like you won’t. Otherwise you’re buying a job.
- True storage average (Jan–Dec): Not just the cheap months. Not “excluding Q4.”
- Return processing + removal/disposal: Inspection, relabeling, disposal fees, and unsellable write-offs.
- Realistic PPC (based on stable TACoS): Use the normal level needed to hold rank—not the “pre-sale dressing up” numbers.
Decision rule:
- If true net margin is still 15%+, it’s likely a solid deal.
- If it collapses toward 0%, walk away.
Not sure if FBA fits your risk tolerance? Compare with affiliate acquisitions here:
Amazon Affiliate Website for Sale: How to Buy & Grow an Amazon Associates Site in 2026
Margin Is Sanity. Revenue Is Vanity.
Key takeaway: A low-margin FBA brand can become a stressful liability—even with “big” revenue.
A $1M revenue business: at 2% margin is a liability.
A $200k business: at 25% margin is an asset.
That’s the difference between “paper rich” and real cash.
At Ecom Chief, we push for a true net view—so buyers aren’t blindsided by the Amazon fee stack after takeover.
Video: True Amazon FBA Profit (Hidden Fees Revealed)
Verdict: Watch this before you trust any “SDE” claim—fees and returns are where the money disappears.
Final Note
Key takeaway: Don’t buy a job disguised as a business—buy verified net cash after the full fee stack.
Don’t buy a job: disguised as a business. We audit the fee stack of every listing so the net profit is real.
Browse vetted FBA listings here:
https://ecomchief.com/collections/amazon-fba-business-for-sale
Excerpt (Homepage-ready)
Verdict: If SDE looks amazing but net cash is weak, you’re staring at the FBA profit trap.
SDE can look amazing: while your bank balance barely moves. This guide exposes the “paper rich, cash poor” trap in Amazon FBA—storage spikes, unsellable returns, and PPC (TACoS)—and shows how to calculate true net profit before you buy.
