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Executive takeaway
- Amazon’s growth flywheel optimizes for platform revenue, not brand profitability.
- Advertising, pricing, Buy Box, and inventory form a single interdependent system.
- ROAS often hides margin erosion and demand cannibalization.
- Many brands unintentionally train Amazon’s algorithm in ways that increase long-term cost.
The illusion of a virtuous flywheel
Amazon’s flywheel is often described as virtuous: more traffic leads to more sales, which improves ranking, which drives more traffic.
For Amazon, this logic holds.
For brands, it is incomplete.
What is rarely discussed is that the flywheel optimizes for Amazon’s objectives: customer experience, price competitiveness, and platform monetization.
Brand profitability is a secondary outcome at best.
When brands adopt the flywheel logic without constraints, growth feels inevitable—but margins quietly deteriorate.
One system, not four levers
Many organizations still manage Amazon through separate functions:
marketing owns ads, ecommerce owns listings, supply chain owns inventory, finance reviews margins after the fact.
On Amazon, this separation is artificial.
Advertising intensity affects conversion and ranking.
Ranking affects organic volume.
Organic volume affects inventory turns.
Inventory health affects Buy Box eligibility.
Buy Box eligibility feeds back into advertising efficiency.
These are not independent levers.
They form a closed system.
Optimizing one in isolation destabilizes the rest.
Why ROAS is a misleading success metric
ROAS answers a narrow question: how much attributed revenue did this ad generate?
It does not answer the question CMOs actually care about: did this spend create profitable, incremental growth?
On Amazon, high ROAS often coincides with three hidden effects:
- substitution of organic sales into paid placements
- defensive bidding on branded or high-intent keywords
- price pressure that offsets media efficiency
Because attribution is internal to the platform, ROAS systematically overstates value when ads accelerate existing demand rather than create new demand.
This is how brands “win” campaigns while losing margin.
The Buy Box as a cost amplifier
The Buy Box is frequently treated as a technical or pricing issue.
In reality, it is a central component of Amazon’s profit extraction mechanism.
Price competitiveness, fulfillment method, availability, seller performance, and advertising all influence Buy Box access.
Losing it forces brands to spend more to maintain volume.
Regaining it often requires price concessions that permanently reset the margin baseline.
Once a brand enters this loop, each optimization increases dependency on the system that created the pressure.
How brands train the algorithm against themselves
Amazon’s algorithm learns from behavior.
When brands aggressively support every SKU, keyword, and promotion with ads, they send a clear signal: this volume requires paid support.
Over time, organic visibility erodes.
Advertising becomes a requirement rather than a lever.
What started as acceleration becomes maintenance.
This is not an accident.
It is the predictable outcome of unmanaged participation in a system designed to maximize monetization.
The margin paradox
Many brands experience the same pattern:
- Top-line growth remains strong
- Media efficiency appears stable
- Operational complexity increases
- Contribution margin declines
The paradox exists because Amazon reports performance at the level of activity, not profitability.
Without explicit guardrails, the flywheel converts growth ambition into margin leakage.
The strategic implication for CMOs
The Amazon flywheel is not something to escape.
It is something to constrain.
CMOs should not ask, “How do we grow faster on Amazon?”
They should ask, “Under what conditions does growth remain acceptable?”
This requires reframing Amazon from a growth engine to a governed profit system.
In the next article, we will examine how CMOs should redesign ownership, budgets, and decision rights to regain control.