Is it possible to make a fortune by selling on Amazon?
Do you want to know how much you can earn by simply listing your products on Amazon?
The answer may surprise you given how fierce the competition in the Amazon business is.
Amazon remains the most valuable e-commerce brand in the world, with a market capitalization of $896.32 billion.
Day by day, the marketplace processes more than 66 thousand orders per hour and ships around 1.6 million items daily, totaling an average of $385 million average annual sales.
Moreover, with a user base of 310 million and 2.7 billion visits from throughout the world in June 2021, the Amazon online marketplace has evolved into the main source of income for many vendors today.
Without a doubt, it’s a perfect platform for anyone willing to start an online business and start selling.
While there might be differences in product prices and varying factors that determine your profits as an Amazon seller, knowing how much sellers make will help you manage your risks and opportunities and ultimately ensure that you are getting profitable outcomes from the online marketplace.
Why Should You Sell On Amazon?
While recent reports estimated that 1 of 5 small businesses fail within their first year of operation, there were 4.5 million new online businesses that emerged in the US as of 2020, driving global economic growth.
Moreso, 36% of businesses now offer to start selling online which is a great benefit, especially for business owners hoping to expand their operations by opening an Amazon account.
According to recent statistics, 89% of consumers concur that they are more inclined to buy products from Amazon than from other eCommerce marketplaces.
So you are confident that you are setting your business on the right track. Throughout the global pandemic, Amazon experienced over 200% rise in profits, raising over $6 billion.
And every day you count, around 3,700 new vendors are joining Amazon, giving the company a total of 6.3 million sellers and 1.5 million active sellers worldwide—those who have a product currently listed for sale.
Recent reports also show that nearly 42% of Amazon’s existing sellers joined the eCommerce platform to achieve financial independence.
Within one year of setting up an online store on Amazon, 67% of sellers generated a good profit maemargin at their store, and 80% of sellers have invested between $500 and $10,000 in a successful Amazon business.
With its numerous offers, bids, incredible discounts, simple delivery to over 100 foreign locations, and customer-friendly policies, Amazon continues to be the top option for both buyers and sellers to list their items for sale.
Amazon FBA Sellers also employ Fulfillment by Amazon, popularly known as FBA. Once you store your products in an Amazon fulfillment center, Amazon will handle every other thing from storage and packing to shipping and returns.
Amazon Average Revenue
Year after year, Amazon generates nearly $470 billion. From 2020 to 2021, Amazon’s revenue was $469.822B, a 21.7% increase. However, at ending September 30, 2022, Amazon’s revenue was estimated at $502.191B, an increase of 9.66% from 2021.
Amazon has expanded rapidly during the past few years and has simply created new ways to generate more money, bringing in an estimated $1.29 billion per day.
Amazon started as a company that sold books but has now expanded into electronic readers, and streaming services, and in 2015, launched Amazon Homemade for Artisians to sell their handcrafted products.
There are already 150 million mobile Amazon users each month, which contributes to the company’s growth, and its users are nearly twice as other e-commerce platforms.
Though it’s free for anyone to register on Amazon, there are premium subscriptions available for users. 150 million people subscribe to Amazon Prime, which costs $14.99 a month after a free trial.
And within 15 minutes, Amazon Prime members will always purchase an item in the marketplace.
In addition, Amazon attracts millions of unique visitors, transacts more than $1.6 million worth of products daily, and processes an average of 19 orders each second.
Additionally, Amazon levies particular fees on its sellers, namely fulfillment costs and monthly inventory storage costs. The fulfillment fees cover the price of packaging, shipping, and customer service.
And the monthly inventory storage fees pay for the expense of keeping things in Amazon’s warehouses, referred to as fulfillment centers.
How Much Do Amazon Sellers Make?
Whatever may be your reason for selling on Amazon, you can achieve maximum profits, even if you are new to selling online. It’s possible to hit your first 5 figures, 6 figures, 7 figures, and even 8 figures by selling on Amazon.
On average, new Amazon sellers make close to $30,000 in annual profits, with about 50% of Amazon sellers making between $1,000 and $25,000. An average profitable amazon seller produce greater monthly sales of $25,000 to $250,000, or between $300,000 and $3,000,000 annually.
About 22% of sellers make less than $500 in sales and only a little percent don’t know their average monthly sales.
The majority of Amazon sellers reported that their first few years of business brought in a sizable profit and according to recent statistics, 32% of sellers see profit margins of over 10% and 65% generated profit margins higher than 20%.
Moreover, 63% of Amazon sellers become profitable within a year of launching their businesses on Amazon, and in a lifetime sales, 2 of 5 Amazon sellers have generated over $100,000.
The same amount of $100,000 was estimated in sales by nearly 225,000 Amazon sellers in 2019, which was an increase from 200,000 sellers in 2018.
You have two options when you offer products on Amazon. You can either list them as Fulfilled by Merchant (FBM) or Fulfilled by Amazon (FBA).
67% of Amazon sellers use the Amazon FBA though it costs more money. It is a private sale and a less complicated option than keeping and transporting goods on your own.
No doubt, Amazon FBA is the best way for sellers to generate more profit. The size, category, and weight of the items you list determine the FBA fees—a fee per unit Amazon charge sellers to locate, label, and ship product to buyers.
Smaller, lighter items often have lower fees.
Furthermore, there are nearly 2 million small and medium-sized businesses (SMB) on Amazon, which generate monthly sales of $11,671 on average. 1 in 5 SMB merchants is reported to have generated lifetime profits of over $50,000 and about 14% of SMB sellers had estimated $50,000 in lifetime profits. Small businesses have 100 or fewer employees while Medium sized businesses employ 100 to 999 people, and are both selling in all 50 states across U.S. and more than 130 countries across the world.
What Determines Your Profit As An Amazon Seller
The amount that Amazon sellers earn is very much dependent on different factors.
You should consider the products you sell and their popularity, your listing and how you optimize it for search results, your pricing point, seller’s fees, and sales volume.
While also listing your products, you need to create an excellent item description and title that includes the right keywords your potential buyers will likely search for to gain the top spot in their search results.
In essence, selling popular items on your amazon seller account essentially boosts your revenues, and using the proper keywords while listing your goods makes it easier for customers to find your listings more quickly.
Best Selling Products On Amazon
Selling well-liked products on Amazon is a terrific method to increase your profit margin. Generally, the best-selling products are those items that customers are currently searching for on Amazon.
If you want to increase your profit as an Amazon seller, make sure you go for a popular product to sell.
Whether you are a beginner or an experienced seller who is probably looking for hot products, here are some profitable categories you may want to explore.
The top selling categories on Amazon are electronics and video games, books, clothing, shoes, homemade, jewelry, beauty, personal care products, pet products, and many others.
Getting the top-ranking products on Amazon also varies with seasons, that’s why you can make use of Amazon product research and market research tools that’ll help you to precisely determine the right products to offer.
The majority of expensive products are not in high demand, therefore even though you may sell them and make more money, you may not have consistent sales.
On the other hand, you might want to sell products in heavy demand at a low price to beat your competitors, which results in a lower profit per item but ultimately more sales.
In addition, Amazon maintains an hourly updated section on its website specifically for best-selling products. There, you’ll find products that are recently purchased and are still in demand, along with their ranks.
The Best Sellers Rank (BSR) which is a metric Amazon employs for each product, is a major component of the Amazon Best Seller list, mostly based on current sales and sales rates.
However, the trending products you see could be quickly replaced by another product so you have to keep on keen eye on different product categories that have risen in popularity.
While certain products are known to consistently generate significant sales, others follow seasonal trends and may only be popular during the winter or summer.
Any seller can stock up on their preferred product categories, such as electronics, books, clothing, and a wide range of others, and start selling.
It’s might not be easy when trying to figure out the best products you can sell on Amazon, but it’s quite the effort.
Products in high demand and of low competition that will bring a sustainable profit margin are a good start, especially for new sellers.
How Much Does It Cost To Launch Your Business On Amazon?
The amount it can cost you to start selling on Amazon may not be as much as you think.
You’ll only need to consider the products you wish to list, your selling strategy, fulfillment strategy, and any other necessary fees Amazon charges sellers.
Amazon fees are flexible and depending on your budget, you can choose the perfect combo that works best for your business. You can start your business on Amazon with $500 or less and go up to roughly $5,000 or $10,000.
You can begin at an ideal price of $3,000 on average.
While the amount of money you invest to launch your business on Amazon is important, it may not matter so much in being a successful seller.
Whether you invest a huge or little sum of money, you need to come up with a marketing strategy and choose the best-selling products to list for constant sales and maximum profits.
There are different opportunities you gain by just selling on Amazon, especially for its millions of user base and diverse niches.
And a viable key to making good profits on Amazon is to provide valuable products buyers are looking for—don’t just list any product to sell but products that capture the interest of the market.
82% of Amazon sellers have affirmed that starting your business on Amazon is a reliable way of generating more money online even in the nearest future.
Interestingly, 80% of Amazon sellers wish they had started selling sooner based on a recent JungleScout survey. Only 8% of SMB sellers are not yet profitable and are most likely investing more money to also become profitable.
It only takes the first year for most Amazon sellers to begin making commendable profits, and in 3-6 months, 24% of sellers reported that they were already taking profits from their Amazon sales.
By just signing up as an Amazon seller and following the proper procedures to sell more effectively, you may typically earn between $1,000 and $25,000 per month as a side business or a full-time business owner.
Averagely, you can make over $13,000 per month and between $12,000 and $300,000 or more than $150,000 per year as an Amazon seller.