I came across a jewelry product (Christmas earrings) that's been sitting at #1 in New Releases for two months.
The original post had a screenshot showing the price, commission, and fees – I've pulled the numbers into text below.
Price: $3.49
Amazon commission: 20% (so ~$0.70)
FBA fulfillment fee: roughly $3.06 (and that's before peak season fees)
After fees, there's basically no margin – they're losing money on each unit.
What's the point of running a loss for that long? I have some guesses, but nothing solid. Anyone seen this before?
Answers (5)
To wrap it up simply:
They’re not losing money — they’re investing it.
They aren’t trying to make money on this $3.49 earring.
They’re buying market position.
Once they own #1, they control the category.
Small sellers look at that price and rank and immediately decide not to compete.
That’s the real win.
One variant is $3.99 now, another is $4.99.
At $4.99, after fees they keep around $0.93.
These tiny earrings cost practically nothing to make and ship, so they’re already profiting a little.
And they’re already doing 1k+ units a month. December could easily 3–5x that.
Also don’t sleep on the new seller incentive — new accounts often get 5–10% referral fee rebates for the first year. That alone can turn a small loss into basically break-even while they build rank.
This is textbook seasonal low-price spiral — let me break down what they’re almost certainly doing:
They’re losing money now to own page-one positions for keywords like “Christmas earrings.” Once real holiday demand explodes, they slowly raise prices. High rank + heavy organic traffic = sales even at higher prices. ACOS drops hard in December too.
Jewelry buyers care a lot about quality. Low price = crazy order volume, which = fast reviews. A few hundred 4.5+ star reviews (plus Vine) removes the new-listing trust barrier completely. When they raise prices, the social proof carries them.
Christmas earrings are super saturated. By holding #1 at a loss for two months, they scare off every small seller who can’t afford to lose money. They soak up almost all organic traffic, and once they control the space, they set the price floor.
This cheap earring brings shoppers to their store, where they cross-sell higher-margin necklaces, bracelets, and sets. The earring loses money — the rest of the store makes it up.
Christmas product dies after Dec 25. Selling at near-cost is way better than paying storage and getting stuck with dead stock. Also frees up cash.
If they’re coming back next season, a ranked, reviewed #1 listing makes next year’s launch dirt cheap. They can just reuse it or spin off variants.