How much amazon sellers make is a very broad question. Some Amazon sellers indeed make multi-million dollars a month, but at the same time, new sellers make equal monthly wages per month selling on amazon.
90% of offline businesses close in the first year, whereas around 10% of amazon businesses close their shop in the first two years. This is better than other e-commerce platforms, where research suggests, that close to only 20% of e-commerce players survive the first 2 years.
We interviewed 121 amazon sellers to find out what and how much they make on amazon. We also compared that data with what model they followed, through the survey. Our data was more segregated based on various amazon business models. Viz: Private Labeling, Dropshipping, Wholesaling, and Arbitrage.
And yes, Amazon is a profitable business model overall. An average new seller can make a minimum of up to $2,000 per month profit in the first year of selling on amazon. But it goes higher as the experience builds up based on our interviews with various sellers.
How Much Does An Amazon Seller Earn?
In our research, we found that, on average, sellers make anywhere from $2,000 per month to $6,000 per month in profits. But this number deviation gets higher when the seller sells on amazon for more than two years.
At the same time, we found that how much do amazon sellers make selling on amazon is also a factor of the business model they use.
The private label sellers aren't profitable in the first year, but the profitability is higher than other business models in the second and consecutive years. At the same time, wholesalers and arbitrage sellers are profitable from day one.
Is selling on Amazon a profitable business model?
Yes, selling on amazon continues to be a profitable business, in our survey we found that more than 90% of sellers were profitable in selling on amazon in the first year itself. Especially for non-private labeling sellers on amazon.
Amazon FBA is the most profitable model when mixed with selling private label products since profit margins in the private label are much higher than wholesaling or arbitrage but it can take upto a year to be profitable in private labeling.
Is selling on Amazon profitable in 2023?
When we asked, the majority of sellers, around 85%, expect amazon to continue to be a profitable business as we advance in 2023.
At the same time, around 35% expected profit margins to shrink by 100 or 200 basis points ie. 1-2%, due to a slowdown in the economy and higher inflationary pressure.
How much money is needed to start selling on amazon?
Most private label sellers started selling on amazon start with around $10,000 to $20,000 of investment.
But around 32% of sellers were doing retail arbitrage and wholesaling, amongst which 24.7% had a starting investment of $1000-$2000.
Going into the second year, around 33% of the sellers had outside funding to expedite sales
How much do new sellers invest in starting selling on amazon?
Most small sellers start by investing $500 and then go to $1500 in a few months. Surprisingly $500 is more than sufficient for someone looking to drop ship or arbitrage on amazon. Though Amazon FBA is more profitable than the dropshipping model but needs more investment.
Why should you start with amazon?
Amazon continues to be a profitable business model, even for someone just starting up. In the world over the competitive landscape and despite economic challenges in other businesses, we found that selling on amazon is the best place to start before going to other platforms.
Many people prefer to launch websites through Shopify, but it involves a huge marketing budget. Still, Amazon is a great place to start and turn it into a million-dollar business for someone on a limited budget.
How many sellers on amazon make more than a million a year?
Surprisingly more than 60,000 sellers make more than a million dollars in sales on amazon. And many have turned millionaires within the first few years of selling on amazon with the right product choice and research.
Also, a sizeable chunk (5%) sold more than a million dollars in monthly sales.
Is Amazon FBA a good side hustle?
Amazon is a great side hustle. But if you want to replace your job income, you need to get full-time into the amazon business, for that matter, any other business.
Most profitable products to sell on amazon?
Every category of products has profitable products to sell on amazon. But some categories are evergreen. And which makes money all around the year. Some of the products in the category of outdoor and school products are considered seasonal products.
Category of products that are considered evergreen are:
- Baby Products
- Home Office (May see drop going forward)
- Home Furnishing
- Beauty and Personal care
- Outdoors (Seasonal)
- Lawn And Garden (Seasonal)
- Supplements & Fitness (Seasonal)
Benefits of Selling on Amazon
1. Amazon has a large customer base, making it easy to test the success of your product as compared to other marketplaces.
2. Scaling Opportunity: Sellers who can learn and with experience are able to scale on amazon much faster than other businesses.
3. Low Entry Barrier: We have seen sellers start an amazon business from as low as $1000 and slowly scale it up. Making entry into amazon easier.
4. Amazon FBA: Amazon offers fulfillment services to sellers which makes inventory management very easy. Most sellers prefer this over self-fulfillment. Even reverse logistics is taken care by amazon.
Mistakes to avoid before you start selling products
What did amazon sellers have to say?
"get a right coach, so that you grow faster and reduce learning time"
"always start with 2-3 skus and then slowly scale up "
Right Amazon Tools
Most sellers agreed that the right amazon seller tools have helped them not only find the right opportunities but also to expand their business with the necessary tools
Amazon FBA Sellers
Most amazon fba sellers opined that using Fulfillment By amazon helped them grow faster and eliminate inventory management concerns.
Efforts Always Pays Off
In our research, more than 2/3rd of the sellers said that amazon isn't a get-rich-quick game; it needs to have sever perseverance and commitment.
The Majority ie. more than 50% of fba sellers, saw opportunities to add new products to their SKUs.
How long it took for most sellers to start on amazon?
- Arbitrage sellers: Less than a month
- Private label sellers: 3-6 months
- Wholesaling: 1-3 Months
- Dropshipping: 2-3 months
When we queried sellers under various business models on amazon, we found that arbitrage sellers started the fastest to sell on amazon. But a the same time it takes a lot of time to scale.
Whereas private labelers are mostly fba sellers who, though they made the highest amount in profit margin, it also took them quite some time to start selling on amazon due to the time needed to do product research and get the product manufactured through Alibaba. And supply chain disturbances cause higher delays.
How long it takes to become profitable on amazon?
- Profits within 3 months: 28%
- Profits within 3-6 months: 22%
- Profits within 6 months-1 year: 26%
- Profits within 1-2 years: 17%
- Profits within more than 2 years: 2%
- Don’t know: 5%
In conclusion running an amazon business needs coaching in order to grow. But it stays overall a profitable business.
Samrudha Salvi ‧ Author
With more than 5 years on selling on amazon, and helping 100s to get started on Amazon.
Between September 2022 to November 2022, we contacted more than 500 sellers on amazon. Out of which, 121 agreed to answer our question in detail through either a telephonic interview or a set of questionnaires emailed, switching to zoom calls or telephonic interviews if needed.
No monetary benefit was offered to answer our questions; all were voluntary responses.
This article covers sellers on a wide spectrum of sales volume, anywhere from USD 1000 to more than a million in sales. But to not skew the data, we haven't included sellers who make more than 2 million dollars a month.
This covers wide sellers in different business models on amazon who are all third-party sellers representing more than 20 countries and selling primarily on amazon US. Age and genders vary and so does the citizenship of the sellers.