The brief
The brand had a strong heritage namkeen and snacking portfolio, with Rs. 6 crore in monthly Amazon GMV. The catch: by the time platform fees, returns, ad spend, and cost of goods were accounted for, the brand was running a -4% net margin on the channel. The CFO had told the founder to either fix it in a quarter or pull out of Amazon entirely.
The founders called us in expecting an ad-spend conversation. We had a different one.
What we found in the audit
The Datum cut on the brand's Amazon P&L exposed three things that nobody on the brand team had tied together. First, 47 of 142 active SKUs were running structurally negative contribution margin because COGS plus Amazon fees exceeded the floor price. Second, 60% of paid budget was running on the brand's own SKU keywords (a.k.a. cannibalising organic traffic). Third, the highest-ad-spend SKUs were the lowest-margin ones (loss-leaders running at scale).
The brand was not losing money on Amazon because Amazon was the wrong channel. It was losing money because the operating model assumed the channel would behave like offline, where bulk volume and category breadth drive distributor margins. On Amazon, every SKU has to earn its placement.
What we built
SKU rationalisation: kill the bottom 47
We pulled the 47 negative-contribution SKUs out of active listing on day 14. Most were small-pack variants that existed because offline retail demanded them, not because Amazon shoppers wanted them. The brand panicked for two weeks; GMV held steady.
Pack-mix and pricing reset
The remaining 95 SKUs were repriced into three clean tiers (entry, core, premium) with deliberate Rs.10-Rs.30 gaps. Loss-leader pricing was eliminated entirely. Average selling price across the portfolio rose 14%.
Ad-mix reset for margin, not GMV
We cut paid spend by 35% in week 4 and reallocated. Brand-keyword bidding dropped to defensive only. The freed budget went to category and competitor keywords where the brand had real conversion advantage. ROAS climbed from 1.8x to 3.1x within 30 days.
Listing optimisation on the survivors
Every one of the remaining 95 SKUs got a listing rebuild. New A+ content, better images, cleaner bullets. Conversion lifted 22%, which combined with the higher ASP delivered 18% GMV per SKU.
The 90-day timeline
What changed in the numbers
The headline number is the 38-point net-margin swing in 90 days, on flat top-line. Most agencies would have tried to grow GMV first and improve margin later. The data said the opposite move was correct: shrink the SKU count, raise prices, cut paid waste. Top-line stayed flat at Rs. 6 crore, but the brand was now profitable on every order.
The second-order effect mattered as much. With margin restored, the founder reinvested into category-share campaigns and adjacent SKU launches in Q2. Net GMV moved from Rs. 6 crore to Rs. 9 crore in the following two quarters, all of it profitable from day one.
We were ready to pull out of Amazon. Three months later, it's our most profitable channel.
CFO, Heritage Snacking Brand
The takeaway for other brands
Heritage FMCG portfolios are designed for distributor margins, not direct-to-consumer economics. When you put them on Amazon unchanged, the loss-leader SKUs (small packs, sample sizes, single-flavour variants) absorb ad spend and platform fees that the offline distributor structure used to cover. The fix is rarely "spend more on ads." The fix is to rationalise the portfolio for the channel's real economics. Most brands skip this because it feels like a step backward. The numbers say it is the most profitable thing you can do.
Brand: Confidential. Category: Heritage Snacking on Amazon India. Source: Amazon platform data, Datum Analysis. Brand identity withheld at client request.