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For Amazon, going down the list of books and media types of items typically are in the 20s. Consumables can actually get even lower. While they may have a much faster inventory turnover, consumable items, office product type items that are on replenishment and whatnot, a lot of those can be in the low 20s, sometimes even in the high teens. Picture anything that a grocery store sells or a drugstore sells, likely it is in the lower margin rate. Likely anything that Costco sells is typically no higher than 20 points as a simple gross margin. The idea is that you're turning over your inventory much faster and generating cash flow that way, whereas the inventory turnover of a consumable item might be as high as 12 to 18 per year. In clothing and footwear, you're lucky if you get three to four. The margins almost are somewhat inversely related to what your expected inventory turnover is.
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On the third-party side, there's two benefits. One is that if it's a low margin business to begin with, you have a guaranteed margin. If you're not doing the shipping, then you're not paying for the shipping anyway. If the seller is taking care of the shipping, then you're not even involved in it. All you're doing is charging 15% as a rent to be on the site. If you are doing the shipping, then you're charging an FBA fee that will cover the cost of that shipping and maybe a slight profit. You still want to encourage people to use FBA, because Amazon would prefer everything to be Prime eligible, but you're going to charge the seller for that service.
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The executive spent over 10 years at AMZN running various categories including mens, children's, footwear, and clothing broadly. Each role had full P&L responsibility.
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