ROI (Return On Investment) measures what each euro invested in a product brings back. It is the key metric of Amazon arbitrage and wholesale.
The formula
ROI = (Net profit ÷ Total cost invested) × 100.
Net profit = Selling price − (purchase cost + Amazon referral fee + FBA fees + VAT + estimated returns). Cost invested = purchase cost + inbound shipping costs.
Worked example
- Selling price: €30
- Purchase cost: €10
- Amazon referral fee (15%): €4.50
- FBA fees: €4
- Estimated net VAT: €2
- Net profit ≈ €9.50
- ROI = 9.50 ÷ 10 = 95%
Net margin ≠ ROI
Net margin relates profit to the selling price (here 9.50 ÷ 30 ≈ 32%), while ROI relates it to the investment. Two products with the same margin can have very different ROIs depending on the purchase price.
What ROI should you aim for?
In arbitrage/online arbitrage, many resellers aim for at least 30% ROI to absorb the unexpected (returns, price drops, storage fees). Below that, the slightest change wipes out the profit.
The forgotten-fees trap
An ROI calculated without long-term storage fees, returns or the actual VAT is misleading. Analyzer+ includes these costs to give you an ROI close to reality, not a theoretical one.