Seller case study

Marketplace Fee Comparison Example

This case study compares a fictional home organization product across TikTok Shop, Amazon FBA and Shopify. The goal is to show why sellers should not assume one price or margin target works equally well on every channel.

Scenario

The product sells between $27.99 and $34.99 depending on the channel. The landed cost is $7.80. Each channel adds different costs: TikTok Shop may require coupons and creator activity, Amazon FBA includes referral and fulfillment fees, and Shopify requires payment processing, shipping decisions and customer acquisition cost.

TikTok Shop view

TikTok Shop may generate demand quickly, but the seller needs room for discounting and variable ad or creator costs. If the product requires a deep coupon to convert viewers, the lower checkout price reduces contribution margin. The product may still work if content drives enough organic orders, but paid orders need a clear maximum cost per purchase.

Amazon FBA view

Amazon gives the seller search intent and fulfillment infrastructure, but referral and FBA fees can be meaningful. The product may need a higher price or better conversion rate to support PPC. A coupon that helps rank can also reduce margin, so the seller should compare temporary launch economics with steady-state economics.

Shopify view

Shopify gives the seller more control over brand, bundle structure and customer relationship, but traffic is not built in. The key question becomes whether the product can afford CAC on the first order or whether the business relies on repeat purchases, upsells or email recovery to make acquisition work.

Decision

The same product may be suitable for all three channels, but not with the same assumptions. The seller should create separate scenarios for each channel and avoid using one blended margin target. A strong channel strategy starts with the cost structure of that channel, then adapts pricing, offer design and advertising limits accordingly.

Decision worksheet

To compare channels, create one row per marketplace instead of forcing every channel into the same model. TikTok Shop should include coupon depth, creator activity and paid order cost. Amazon FBA should include referral fee, fulfillment, storage allowance, returns and PPC. Shopify should include payment fees, shipping, app-related variable costs and CAC. The product is the same, but the profit mechanism is different.

Then decide what each channel is supposed to do. TikTok Shop may be useful for demand discovery and content testing. Amazon may be useful for search-driven conversion. Shopify may be useful for brand control and repeat purchase. A product can be profitable on one channel and still be a poor fit for another if the acquisition cost or fee structure is wrong.

What to monitor after launch

Compare contribution profit per order, return rate, cash conversion cycle and inventory risk by channel. Do not only compare revenue. A channel with lower revenue can be more valuable if it produces stronger contribution profit or better customer data. A channel with high revenue can still be risky if it requires constant discounting or expensive paid traffic.

The final operating rule should define each channel's role, minimum margin, maximum promotion depth and next test. This keeps cross-channel expansion from becoming a confusing set of disconnected experiments.

How to adapt this case to your store

Replace the example numbers with your own records before using the decision. Start with the actual checkout price, then add landed cost, fulfillment, marketplace fees, return allowance, promotion depth and traffic cost. If one of those numbers is unknown, create a conservative estimate and mark it as an assumption. Unknown costs should not be treated as zero simply because they are hard to estimate.

After you run the numbers, write a one-sentence decision rule. Examples include: do not raise paid budget above a specific cost per order, do not run a coupon deeper than a certain amount, do not reorder inventory until refund rate is known, or do not move to another channel until contribution margin is stable. A written rule keeps the case study practical and prevents the seller from relying on vague optimism.

Questions to ask before scaling

Before scaling, ask whether the product still works if ad cost rises, conversion falls, shipping gets more expensive or returns increase. Also ask whether the result depends on a temporary promotion or a small sample of early orders. If the answer is yes, the next move should be a controlled test rather than a full scaling decision.