I have personally seen my revenue growth year on year selling products on amazon, though the growth slowed down post covid but it stays stronger than retail.
The net revenue of Amazon FBA has been on an upward trend, especially after 2020, which saw a significant boost in the e-commerce market.
Is it a good choice to start your Amazon FBA business in 2023?
The economy is terrible, and the sales volume can decrease this year, but it might benefit you. Low sales volume gives you a better chance at standing against your competitors. It would also mean you spend less on advertising since there is fewer sales velocity and inventory.
Would low volumes affect you? A low sales volume or a decrease in sales volume isn’t always bad. If you have enough sales volume with decent profit margins, selling on Amazon will be worth it.
Another reason the fear of recession and a bad economy can work for you is that the competition could decrease, and your business will be easier to establish in the market.
Is It Too Late To Sell On Amazon?
Amazon dominates the global market when it comes to e-commerce. So, even if you don’t make profits in the initial months, selling on Amazon will give you good returns in the long run.
Is it too late to sell on Amazon? The internet is filled with people advertising ‘quick-money by Amazon’ and making it look like selling on Amazon is easy, and profits are enormous. If you go into the FBA with this mindset, you will fail. Being a seller on Amazon takes a lot of effort, patience, and time.
If you think there is already fierce competition on Amazon and that will have no space, then you might be wrong. You can make good profits even in the most competitive markets with a good strategy and consistent hard work.
What Is Amazon FBA?
Amazon FBA, or Fulfilled by Amazon, is a program where Amazon handles a seller's packing, shipping, and other logistics operations.
Under the FBA program, the seller sends his product to Amazon fulfillment centers. When an order is placed, Amazon packs and ships the product to the customer.
Along with this, Amazon handles customer returns and other customer services through its fulfillment centers.
For Sellers who find it hard to handle the logistical operations of e-commerce, the FBA program is a great relief. Storing, shipping, and customer services can be very challenging for many sellers, and this program solves a big problem for many sellers.
Another good thing about Amazon FBA is that sellers can offer a Prime Shipping option for their products. This means free and fast shipping on the products that can attract more customers.
How Much Time Does It Take To Become Profitable On Amazon?
Most amazon sellers start making profits within the first year of their launch. But, it depends on the seller-to-seller and their niche.
Amazon business is not a quick-money program, but it requires a lot of effort.
The better efforts you put forward, the more and faster returns you will receive.
Most sellers on Amazon get about $100,000 in sales annually after the first year of their launch. However, the sales figure does not depict the revenue or profits of the seller's business.
Profit margins play an important role in sales. More than 50% of amazon sellers have more than 10% profit margins. It is safe to say that even in the most competitive markets, it can succeed as a new seller.
Above statistics are from the survey on amazon sellers, which I had conducted in the beginning of the year.
From the above image you can make out that selling on amazon is also about coaching and experience of selling, as you get better so does your margin. I would say a good amazon coach can help you in grow faster.
Is Amazon FBA Worth It?
Yes I would say, it is. But you need to be careful before putting all your resources into it. Amazon FBA is worth it, but it requires you to invest a lot of money, time, and effort into it. If you are willing to do that, then there is no way you can’t make a six or 7-figure income from Amazon.
How Much Money Does It Take To Be An Amazon FBA seller?
The initial investment you need to start will depend on your product and the business.
Most sellers start with an initial investment of $5000, which covers the inventory cost, Amazon subscription fees, overhead expenses, and other costs. But depending on your product, you can start with something as low as $500.
For example, if you are a Private Label Seller, it will cost you more money; however, retail arbitrage and wholesale can be cheaper and more budget-friendly options.
How Much Time Does It Take To Be Profitable On Amazon FBA?
There is no one answer to this question. Some sellers start making profits within the first three months of their product launch, while some take a year.
The important thing to consider here is that you must take your time. From the initial idea of selling on Amazon to getting your first sale, take as much time as you need.
The initial time is crucial. During this time, you can research and analyze the market to find a good product to sell on Amazon. Take your time with the product research phase. The more time you spend on your product research, the easier things will get in the later stages. You need to learn about every market insight before diving into it.
Use different methods, tools, and websites to strengthen the product research. Once you know the market and your target audience, you can plan how to promote and sell your product on Amazon. The product research will help you devise strategies to make you profitable faster.
Does Amazon FBA Get You More Sales?
Amazon FBA is a program where Amazon takes care of your inventory, packing, shipping, and other logistical processes. Your sales do not depend on this. Millions of sellers on Amazon do not opt for the Amazon FBA program and earn significant profits.
However, the Amazon FBA plan does affect your business and sales. In the initial period, you are more focused on Product Research and planning, but this changes once you launch your product.
Most amazon fba sellers agree that working with beneficial than selling via Shopify, in my personal experience one should start with amazon fba and then diversify on one's own website.
You must divide your time now to manage your everyday business operations and promote your product.
If you opt for the FBM plan and take care of the inventory and logistics on your own, it will mean that you can spend less or a limited time promoting your product and optimizing the listings. Less time in promotions and optimization can impact your sales.
However, this is not always the case. If you have enough resources to make it both work, even an FBM plan gives you many sales. It is also worth noting that just because a seller spends more time promoting does not mean they will have more sales.
Many sellers know how to reach their audience, and they consistently promote their products that way without spending hours on advertisements. So, you can pick whichever plan suits your business and helps you stay on the right track.
Is Amazon Oversaturated For New Sellers?
There is fierce competition on Amazon. It has over 9.5 Million Sellers worldwide and approximately 4,000 new sellers that enter this platform daily.
Even with this level of competition, Amazon sales are bigger than ever. E-commerce is booming, and Amazon is the dominant player in the market. The majority of the sales from Amazon are from third-party sellers. Approximately 50% of Amazon sellers make over $100,000 from Amazon every year.
You can find a low-competition niche with decent search volumes if you research the market well and analyze the trends. There are a lot of tools, like Helium 10, Jungle Scout, etc., that can help you in finding the right niche.
So, even though Amazon has fierce competition, the opportunities are growing too, and that means you can still make a ton of profits by selling on Amazon.
Amazon Is filled With Chinese Sellers. Is It Still Worth Selling On Amazon?
Yes, Amazon has a ton of Chinese sellers that take up a significant market share.
The difference lies between the labeling and promotion of products. Chinese sellers are mostly selling Private Label products that do not have any significant brand value. You can use this to your advantage.
If you sell your product on Amazon, you must ensure it showcases your brand name and value. Also, if you build a solid social media presence for your product, you can compete well with Chinese Sellers.
If you manufacture your product or have some sort of intellectual ownership over it, you can go ahead and get it patented. Getting a patent will give you legal protection from getting copied by Chinese Sellers.
Amazon FBA Fees
Many sellers are discouraged by the different fees that Amazon takes from a seller. From monthly FBA fees to referral and closing fees, selling on Amazon can be expensive. But is it worth it?
The “Fulfilled by Amazon” plan can charge you a decent amount every month, depending on your product, size, and location. However, if you look at it from a broader perspective, the FBA program is saving a lot of your money and workforce. You will have to focus less on everyday logistical operations and customer service. You can use this time for your product research and optimization, which will drive more sales.
The initial investment to launch on Amazon as a seller can be heavy on your pocket. However, before you jump into Amazon, you should consider all the different Amazon costs and expenses, then adjust your profit margins according to them.
Once you start getting sales and earning profits, the FBA fees won’t seem too much. Since Amazon FBA also covers the shipping cost to customers.
While there may be a lot of different fees that Amazon takes from Sellers, Amazon provides you the exposure to a vast customer base. In the long run, the Amazon fees won’t hurt your profits, and investing in them will seem worthwhile.
Benefits of Amazon FBA in 2023
Exposure To Vast Customer Base
No matter how much we debate whether Amazon FBA is worth it or not, one thing is a fact: Amazon is one of the biggest e-commerce platforms in the world right now. This means that if you sell on Amazon, you reach out to one of the biggest global customer bases. If you have the FBA service, you can offer other benefits like free and fast shipping, easy returns, etc., to your customer, which can increase your sales.FBA Storage Space and Fulfillment Services
Another great benefit of Amazon FBA is the fulfillment centers. You can store your products in the Amazon Fulfillments centers, which Amazon will ship directly from the customers. Amazon handles the storage costs and logistical operations. It takes a significant burden off the sellers' heads. If you run these tasks yourself, the storage and logistical costs can be a lot, along with handling the operations daily.Great Passive Income
If you are opting for FBA services, a lot of your work is done by Amazon. So, even if you are doing Amazon as a side hustle or part-time business, handling the operations will be much easier. You can also use Amazon Seller tools and software to automate many processes. This way, you don’t have to focus your energy on the Amazon FBA business. Additionally, you can work from anywhere and anytime.Easy Customer Returns and Service
Along with logistics and storage, Amazon FBA handles Customer service and returns. This solves another big problem for sellers. Generally, e-commerce sales expect a 30% return rate. If you are handling these returns independently, it can pile up a lot of work. Amazon FBA takes care of these returns, and you can offer ‘Easy Returns’ for your product that appeals to more customers. Apart from this, Amazon FBA also provides customer service and handles your refunds easily.
What’s Next?
You can always start with setting up an amazon seller account. You can also visit on how to setup and amazon seller account. Also decide on you amazon business model if you are planning to sell via private label or amazon wholesaling or amazon arbitrage to start with.
It is 2023, and the competition is increasing rapidly. More and more sellers are joining Amazon, and the market seems oversaturated. Does this mean Amazon is not worth it?
I hope this article helped you find the answer to this question. It is not too late to jump into the e-commerce market, and what is a better place to start than the biggest player in the market?
Amazon FBA may not be for everyone, but you should get your facts right before you make a solid decision. I hope this article helped you with it. For more helpful content, stay tuned!
Samrudha Salvi ‧ Author
With more than 5 years on selling on amazon, and helping 100s to get started on Amazon.