How Do I Know If I Am Actually Making a Profit on Amazon FBA in Canada?
You're actually making a profit on Amazon FBA in Canada only when your net payout — after Amazon's referral fees, FBA fulfillment fees, storage fees, advertising spend, COGS, and Canadian tax obligations — exceeds what it cost you to source and deliver that product. Most FBA sellers are surprised to find their real margin is 10–20 percentage points lower than their "gut feel" number.
The Core Problem: Amazon Deposits Don't Equal Profit
Amazon sends you a payout every two weeks. That number hits your bank account and it feels like revenue. It isn't. It's revenue minus a stack of fees Amazon has already quietly subtracted — and it has nothing to do with what you actually spent to land that product on a shelf in an Amazon fulfillment centre.
True profit only exists after you've accounted for every layer between your supplier's invoice and that deposit.
The Full Cost Stack You Need to Subtract
Here's what actually eats into your FBA margin in Canada:
Cost of Goods (COGS) - Product cost from your supplier - Inbound shipping to Amazon's Canadian or U.S. fulfillment centres - Import duties and customs brokerage fees (significant if you're sourcing internationally) - Prep and labelling costs
Amazon Platform Fees - Referral fee: Typically 8–15% of the sale price, depending on category - FBA fulfillment fee: Charged per unit shipped; varies by size and weight tier - Monthly storage fee: Billed per cubic foot — spikes sharply in October–December - Long-term storage fees: Triggered at the 181-day and 365-day marks; these can silently drain margin on slow-moving SKUs - Returns processing fees: Amazon charges you when customers return items in certain categories
Advertising & Marketing - Amazon PPC (Sponsored Products, Sponsored Brands) - External traffic costs (Meta ads, influencers driving to your listing)
Canadian Tax Costs - GST/HST collected by Amazon on your behalf under the marketplace facilitator rules — but your own GST/HST registration, filing obligations, and input tax credits (ITCs) still need to be managed correctly - Income tax on net profit (federal + provincial) - If you're importing, GST paid at the border (recoverable as an ITC — but only if you're tracking it)
How to Actually Calculate Your FBA Profit
For each SKU, run this calculation:
Net Profit = Sale Price − Referral Fee − FBA Fee − Storage Fee − COGS − Ad Spend − Returns Allowance − Overhead Allocation
Then divide by your sale price to get your net margin percentage.
A healthy FBA margin for most physical product categories in Canada sits somewhere between 15–30% net, depending on the product. If you're under 10%, you're likely working very hard for very little — or losing money once you factor in your own time.
The Warning Signs You're Not Actually Profitable
- Your bank account grows slowly despite strong sales volume
- You keep running out of cash around restocking time
- Your ad spend is climbing but revenue isn't keeping pace
- You're holding a lot of slow-moving inventory (storage fees are compounding)
- You've never mapped your costs at the SKU level — only looked at total payouts
Any one of these is a signal worth investigating. All of them together means you have a margin problem, not a sales problem.
Why This Is Harder for Hybrid Sellers
If you sell on both your own Shopify store and Amazon FBA, the picture gets murkier fast. Amazon's payout reports don't map cleanly to standard bookkeeping. Your Shopify revenue sits in a completely different system, with different fee structures and different cash timing.
Most generalist bookkeepers reconcile the deposit and call it done. That tells you nothing about which channel is actually making you money. The better question — the one worth paying for an answer to — is: "Am I more profitable on Amazon or on my own storefront, and why?"
That kind of multi-platform margin analysis is exactly what SGML Accounting does for Canadian e-commerce businesses. It's not glamorous, but knowing which channel deserves your next dollar of inventory investment is one of the highest-leverage decisions you can make.
The Bottom Line
Don't confuse Amazon payouts with profit. Run the full cost stack at the SKU level, track your storage fees monthly, and separate your channel performance if you sell on multiple platforms. That's when the real picture — and the real opportunities — show up.
Frequently asked questions
What is a good profit margin for Amazon FBA in Canada?
A sustainable net margin for Amazon FBA in Canada is generally 15–30%, depending on your product category and sourcing costs. Below 10% net, you're likely vulnerable to any fee increase, ad cost spike, or slow inventory period wiping out your gains entirely.
Does Amazon collect and remit GST/HST on my behalf in Canada?
Yes — under Canada's marketplace facilitator rules, Amazon collects and remits GST/HST on sales made through its platform to Canadian buyers. However, you still need to manage your own GST/HST registration, file your returns, and claim input tax credits (ITCs) on your business expenses and imports. Amazon handling the collection doesn't remove your compliance obligations.
What Amazon FBA fees do Canadian sellers most often forget to account for?
The most commonly overlooked fees are long-term storage fees (which kick in after 181 days and compound on slow-moving inventory), returns processing fees in certain categories, and inbound shipping and import duty costs when sending products into Amazon's fulfillment network from outside Canada.
How do I track FBA profitability if I also sell on Shopify?
You need to separate your revenue, fees, COGS, and ad spend by channel — not lump everything together. Amazon's payout reports and Shopify's payouts land in different formats with different timing, so reconciling them correctly requires either a purpose-built tool (like A2X) or an accountant experienced in multi-platform e-commerce. Only once they're separated can you compare true channel-level margins.
Can I deduct Amazon FBA fees on my Canadian business taxes?
Yes. Amazon referral fees, FBA fulfillment fees, storage fees, and advertising costs are all legitimate business expenses deductible against your income for Canadian tax purposes. Keeping clean, categorized records of these — separate from your other business expenses — makes the deduction straightforward and defensible if CRA ever asks.
Every business is different — margins, fee structures, and tax obligations vary by category, business structure, and how your operations are set up. The numbers here are general reference points, not a benchmark for your business. Talk to your accountant about your specific situation.