Starting budget on Ozon
How much money do you need to start selling on Ozon? There is no single number, because the figure shifts every year with competition and the growth of the platform. Some sellers enter with about $1,700 and grow turnover to $17K-$33K within a year. Others enter with $17K and burn the budget in two months.
So start from this: budget alone does not decide success. It is the combination of factors - product choice, how well the product card is built, store promotion, use of marketplace campaigns and so on.
Why roughly $1,700 as a minimum? The logic is simple.
To test a product you need at least 50 units. Say you order 50 units at about $8 each - that is around $400 for the first purchase. Then you test: can you actually sell this product? After that you order the same amount again, and for that period you need working capital. That is how the minimum for a test comes out at around $1,700. The number is subjective, because many indicators affect the starting sum.
Why cost per unit matters
The most important indicator is the cost of the product. Cost per unit is the sum of all expenses you carry to produce, promote and sell one unit.
This indicator is critical for sizing your starting budget on Ozon. Moreover, without a correct cost calculation there is no point in entering Ozon at all.
Case: an interior tableware seller
A seller of interior tableware came to us - vases, jugs and similar items. We ran an audit: the product cards were well built, which is actually rare, and promotion was running.
Everything looked fine. He came to us after a year of selling, saying he wanted to scale but did not understand what to scale on. After a deep review of the store, I calculated the unit economics to see how far we could scale advertising for his store.
We found that this seller had been trading at zero for a whole year. How is that even possible?
The calculation error
The main mistake we found was that this seller had never calculated unit economics. Let me unpack the tool a little. His cost with all deliveries and fulfillment storage was about $5.
With those numbers nothing is left for the seller. These are the real figures and real indicators we got for his store. What surprises me is how a business owner fails to notice such an obvious fact as the absence of profit, especially over a full year.
What unit economics is
I keep saying that analytics, numbers and calculations are the key to successful selling. And there are still people who do not get it. Let us go back to business basics and break down what unit economics is and how to calculate cost.
Unit economics is built around the concept of a unit. A unit is one item of a product or service a company sells.
For example, it can be vases and jugs, as in our seller's case. It can be vanilla ice cream, a math course or an hour of tutoring. Depending on the business, a unit can be any product the company sells.
For a product business on Ozon, the unit is the specific product the company sells. As a whole, unit economics shows the profitability of one unit - how much the business earns or loses on the sale of one product. In plain words, unit economics is the calculation of the difference or ratio between revenue and expenses per single product the seller trades.
How unit economics drives decisions
Correctly calculated unit economics can show at the planning stage that entering a particular product makes no sense. To earn anything on such a product you would have to work around the clock, and in the end you get a couple hundred thousand dollars... or nothing at all. Of course, earning $3,300-$5,000 net while selling on Ozon is a great result in many markets and even a goal for many.
But there is one caveat. With the same effort you could be earning not $3,300-$5,000 but $17K-$33K - simply by choosing the right product and calculating the financial model correctly. Which key indicators should unit economics include?
Key unit economics indicators
First, purchase or production costs, if you make the product you sell. Second, logistics costs. And on the output you should get the net profit percentage that remains after all expenses are deducted from selling your product.
In reality, unit economics only looks difficult. The mind jumps to huge spreadsheets, complex calculations and formulas. In fact you can work with unit economics far more simply: list all the expenses and all the income from selling the product, then find the difference between the two numbers.
For example, if all income from selling one bedding set is about $83 and expenses are about $50, the seller is ahead by about $33 on every unit sold. Here you can say the unit economics of this product is positive. Of course this is a very rough, undetailed calculation, but even such a calculation is better than selling on Ozon with no calculations at all.
Keep this nuance in mind when you run your numbers.
Takeaway
A correct calculation of cost and unit economics will show whether it is worth entering Ozon with a specific product. Without it you can trade at zero, as in the tableware case. Analytics and numbers are the key to success.
What changed since the original recording
The original example used a marketplace commission of about $1.70, advertising of about $1.25 and tax of about $0.60 on a price of about $8. Commission tables on Ozon have since been revised, and under the FBO scheme for products priced above about $5 the commission rose for most product types, by roughly 7.4 percentage points on average across FBO. Recalculate your unit economics against the current commission table before you commit to a product.
