The 1P Profit Formula

In this live session, held on October 30, 2025, Hilary Smith from Jungle Scout joined Greg Alexandrian of AMZ PhD, Bobby Peloquin from ChannelEngine, and host Matt Tomaszewski to unpack the real levers 1P brands use to grow profit on Amazon.

The panel covered where to find category white space, how to convert visibility into efficient revenue, and how to recover dollars you have already earned but have not received.

🎥 Missed the live session?

Here's the recording:

Best Practices and Key Learnings

1. Innovation that follows real demand

• Validate demand, then build: Use category indexing to see if your revenue and unit growth are moving with or ahead of the category.
• Price with intent: Monitor ASP trends to gauge pricing power for new launches. Enter segments where you can sustain margin, not just velocity.
• Spot white space: Track new ASIN entrants and adjacent category growth.

"Innovation isn’t guesswork, it’s finding the white space your data already shows you. When you understand where your category is growing, how pricing power shifts, and which subcategories are emerging, you can launch products that win faster and protect more margin.

Take the protein category, for example - what used to be all powders and shakes has now expanded into nuts, jerky, granola, premade drinks, and even candy. That’s the kind of data-backed innovation that wins.”

Hilary Smith
VP of Marketing

Checklist:

• Compare your 12-month revenue and unit growth to your top 3 subcategories.
• List the 5 fastest-growing adjacent sub-subcategories and their ASP ranges.
• Prioritize 2 launch candidates where demand, ASP, and brand fit align.
  
  
  

2. Visibility that turns into margin, not just clicks

• Content first: Strong titles, bullets, and A+ content make ads cheaper and convert better. SEO inputs feed ad efficiency.
• Right ad mix: Sponsored Products is the workhorse, with Sponsored Brands and Display for coverage. Balance manual and auto.
• Manage like a portfolio: Promote high net-PPM ASINs to lift your aggregate margin metrics. Also, use targeted ads to cure unhealthy inventory before Amazon markdowns kick in.
  
  

"Advertising done right changes the curve. A mature shoe brand had 55,000 auto-generated ads from a previous agency and flat growth. After a surgical rebuild combining SEO alignment, efficient budgets, and smarter targeting, sales from ads climbed from about $175 000 to over $500 000 per month, while ACoS fell from 20 percent to 12 percent. Year-over-year growth hit 40 percent on a mature 1P business."

Greg Alexandrian
President & CEO

What “good” looks like

• Tight negative keyword lists and regular pruning.
• Clear separation between growth campaigns, margin-builder campaigns, and inventory-health campaigns.
• Budgets aligned to efficiency. When ACoS is on target, scale. When budgets are fixed, day part to avoid spending during weak hours.
  
  
  

3. Recovery management that protects profit you already earned

• Know the buckets: Shortages (units received vs shipped), chargebacks, co-op fees, price discrepancies.
• Expect effort: Disputes often require multiple submissions. Partial repayments are common, so keep going until fully resolved.
• Mind the clock: Lookback windows exist. For shortages, the historical window can be several years, but policies evolve, so act now rather than wait.
  
  

Real-world results mentioned

• A mid-market gaming brand doing roughly 30 to 35 million on Amazon uncovered about 2.7 million dollars in shortages and recovered 2.4 million.
• A smaller brand, around 1.2 million in sales, recovered roughly 100,000 dollars, which they reinvested into growth.
  
  

"Profit recovery isn’t just about getting money back; it’s about freeing your team to focus on growth."
Most vendors don’t realize how much is left unclaimed in shortages and chargebacks, or how much time it takes to chase it. Automating that recovery turns lost revenue into fuel for innovation and advertising.

Bobby Peloquin
Vendor Lead - North America

Recovery playbook

• Run a retro audit across all recoverable categories.
• Standardize evidence gathering for POs, ASNs, and invoices.
• Calendar follow-ups. If denied or partially paid, resubmit within the allowed limit.
• Track recovered funds as a budget line to fuel innovation or advertising.
  
  
  

4. Negotiation leverage through data and ads

• Lift net PPM deliberately: Drive incremental traffic to high net-PPM ASINs to raise the blended margin metric you bring into line reviews.
• Fix unhealthy inventory: Use targeted ads to create sell-through and remove the “profit drag” talking point in negotiations.

Final Thoughts

Winning 1P profit on Amazon is not about one silver bullet. It is about three compounders working together: Innovate where the demand is growing, get found efficiently, and keep every earned dollar. Do these consistently and negotiations get easier, budgets go further, and growth becomes repeatable.