Is selling on Amazon worth it? This is a question that is on anyone’s mind, specifically those who are new Amazon sellers wanting to grow their business.
If you are looking for ways to make money online, one of the ideas that you might have encountered is via selling on Amazon. You can build an online store showcasing products from your own brand or through dropshipping some products through the Amazon store. Either way, having an Amazon seller account is one of the best ways to generate passive income online.
But there have been many marketplace and online shopping platforms that have emerged over the past few years, such as Shopify, Etsy, and eBay. eBay is also one of the most trusted platforms outside of the Amazon marketplace. So, what makes selling products on Amazon a more suitable option than the ones mentioned above?
This guide will take you through the process of starting and managing your Amazon business to get more sales for your online store and make passive income as an Amazon seller.
Why Consider Selling on Amazon?
The popularity of online shopping has given rise to the success of the ecommerce industry. The good news about this is that the industry is still growing; therefore, there are more opportunities to make money selling products through your Amazon business. But what is it about the Amazon marketplace that makes it a better choice than other sales channels?
1. You don’t need to own website to sell.
Any ecommerce and online store owners will tell you that building your own website and managing it is cost-demanding. First, you need to pay for the domain of your website. Then, you have to hire someone to build your website design and all other ecommerce functionalities, such as the shopping cart and adding your private label products to your shop.
You also have to think about marketing your website so that you can get enough traffic on your website to generate more sales. If you’re not making enough sales or higher profit margins, you could end up paying for the domain hosting fees and other services to keep your website up from your own pocket – and not from the sales.
On the other hand, selling on Amazon eliminates any of those aforementioned expenses. You won’t have to think about paying for the domain hosting, the web server, and the other maintenance costs of running and promoting a website. You can leverage the Amazon brand to help find customers for your online business. It is hassle-free and you can get started right away once you sign up for an Amazon seller account.
2. You can leverage the huge traffic on Amazon.
As one of the top ecommerce platforms on the internet, you can maximize the amount of traffic that the Amazon website gets on a daily basis. Millions of people shop via Amazon on a daily basis. Therefore, you can utilize that traffic to your advantage so you can sell on Amazon without having to worry about the additional costs of maintaining your own online store website. There is also no need to hire your own marketing team to ensure that you get a large volume of traffic for customers to potentially buy your products.
You can simply pay for the Amazon sellers account and the Amazon product listings. The selling fees on Amazon will vary on the type of account you applied for. However, these fees are nominal compared to the initial cost of setting up your website and the potential to tap into a high amount of traffic.
3. You can maximize the Amazon brand.
Building your own brand is never easy. You have to think about the amount of time, effort, and resources that go into building brand recognition. This process could easily take up months, if not several years.
On the other hand, if you sell on Amazon, you won’t have to think about brand recognition. You can leverage the popularity of Amazon to your advantage because you can set up your Amazon business and make money selling right away. You can utilize the Amazon advertising to attract more customers and make more money from Amazon listings.
4. You can easily scale your online shopping business.
Another advantage to choosing the Amazon marketplace for your own business is that you can easily scale your business. The Amazon team is known for its customer service and the website is capable of handling large volume of orders at any given time. Therefore, you will be able to keep up with a sudden spike in order volume to your Amazon store and maintain a high level of customer satisfaction.
5. You can get fraud protection.
When you start selling on Amazon, you not only leverage the popularity of the brand but also enjoys the excellent fraud protection scheme on the website. You can ensure that you will be protected from fraudsters when selling on Amazon, which means one less thing to worry about. You can also enjoy great customer service as an Amazon seller. They are pretty efficient at handling customer complaints or if you have other concerns.
Different Methods of Selling on Amazon
If you wish to sell products on Amazon, you must note that there are various methods of selling products available. Make sure to consider the different methods to find a business model that fits your goal for selling on Amazon and to find ways to make more money.
Dropshipping
Dropshipping is one of the most popular methods of selling on Amazon. This is one of the most popular methods used by Amazon sellers because of the lack of need for inventory management, which saves Amazon sellers on monthly inventory storage fees.
Dropshipping works by finding products to sell on Amazon. You need a dropshipping supplier who will provide and ship the products on your Amazon listings directly to your customers. You will be able to get a higher profit margin for the top products so make sure you spend time on product research to identify the best products to sell.
It is also important to do extensive research on the best suppliers for your dropshipping Amazon store. Otherwise, you have no control over the product quality, which can make or break your dropshipping business.
Retail Arbitrage
The Amazon retail arbitrage is another method for selling on Amazon. This retail concept involves buying a product and then selling it for a higher price than the purchase price. The price difference when you sell products on Amazon will mark your profit margins. This business model has been around for a long time and is one of the most reliable methods to earning money when you sell products.
Private Label Selling
Another option to selling on Amazon is through selling private label products. You can purchase products at wholesale prices and then selling it for the retail price while adding your private label to it. As a private label seller, it helps you build your own brand name and establish brand recognition. It is a great way to earn distinction and stand out from the competition.
You need to find a good supplier who will agree to allow you to add your private label to the products.
Amazon FBA Business
The Amazon FBA program allows you to set up your own online business and send products to the Amazon fulfillment centers. The Amazon staff will be responsible for the inventory management so you won’t have to do the hard work of finding the products, packaging it, and then shipping it to your customers. It also saves you a ton of money on monthly inventory storage fees. Instead, you will be paying the Amazon FBA fees and the fulfillment fees.
The main advantage of the Amazon FBA business model is that you can enjoy the Amazon branding and packaging. You can also leverage the great customer service from Amazon as their staff will be handling any customer complaints or queries about the order so you don’t have to manage it yourself.
Why Do Many Amazon Seller Accounts Fail?
If you wish to succeed with Amazon selling, you should also identify the most common pitfalls that make your Amazon store fail.
- You focus solely on sales and not your profit margins. It is good that you are able to generate a high sales volume. However, the real measure of your success in the Amazon online business is the profit that you make. Make sure to focus on selling products that give you a high profit margin and high volume of sales.
- Choosing the wrong online selling business model. There are various methods for selling on Amazon. Make sure you choose the right model to fit your business goals and the amount of commitment you can give to your store.
- Overselling can negatively affect your seller rank. If you get too many orders on Amazon and you are unable to keep up with the orders, you can get penalized for it and you can see your seller ranking drop.
- Competing with products sold by Amazon. Make sure to be smart about choosing the products to sell. You don’t want to go directly against Amazon because you will most likely lose.
- Not investing on marketing your Amazon store and products. You need to market your products within and outside of the Amazon platform to get more customers and generate more money selling on Amazon.
Is There Too Much Competition on Amazon?
A lot of sellers are thinking twice about setting up an Amazon business because of the high level of competition. Yes, it’s true that there is massive increase on the number of sellers on the Amazon marketplace. However, there is also a rapid rise in ecommerce buyers choosing Amazon.
Competition will always be present in any type of business, whether you start selling from your own website or you are selling on Amazon. According to Amazon, there are up to 600,000 new sellers in 2021. This is a challenge for you to focus on finding the right products to sell on Amazon with higher profit margins and finding the best suppliers. However, you can’t let it stop from you starting and growing your Amazon business.
Conclusion: Is Selling on Amazon Worth It?
Is selling on Amazon worth in 2022? The answer is yes. Many Amazon sellers have made selling on Amazon a legitimate and primary source of living.
Therefore, it is a potentially reliable online business as long as you choose the right business model for selling products, you can locate the best products to sell, and you market your products well. If you want to succeed with selling on Amazon, you must treat it as a real business and not a get-rich-quick scheme. And just like any real business, you have to spend time to make it grow and to keep your customers happy.
FAQs on Selling on Amazon
Is it still profitable to sell on Amazon?
Yes. The Amazon marketplace enjoys a yearly increase in sales of up to $100 Billion. This number indicates that the platform is still doing very well despite the high level of competition from other ecommerce platforms. Therefore, you can still make money selling from Amazon in 2022 and beyond.
Is selling on Amazon a lot of work?
There is a learning curve involved when selling on Amazon and you need to do a lot of work in the beginning. However, once you set up your Amazon seller account and Amazon store, the rest should be easy. It is also important to develop an efficient system. If you do that, the entire process of selling products on Amazon is pretty straightforward.
Why do sellers leave Amazon?
While there is a huge potential to earn passive income when you start an online business and sell on Amazon, there are no guarantees. You need to invest on product research to identify the most in demand products to sell. It is also important that you come up with a good pricing strategy, especially when dropshipping, due to the high volume of competition.
Amazon sellers who fail to do this experience a low profit margin (sometimes even no sales), which is why they leave the Amazon platform.
How much does the average Amazon seller make?
It depends on the niche and the type of products you sell. Some of the successful and established Amazon seller accounts can earn anywhere from $1,000 to $2,500 a month. There are even sellers who earn up to $45,000 a year selling on Amazon. New sellers should keep their expectations low and realistic because there is a high level of competition and you cannot make money overnight.
What can I not sell on Amazon?
There are many products that Amazon has specified as not eligible for selling through their platform, such as dangerous goods, prohibited substances, pesticides, gift cards, commemorative medals, etc. Make sure to check the Amazon website directly to learn more about what products you are not allowed to sell, especially if you are one of the new sellers on the platform.
Which products are best to sell on Amazon?
Some of the top product categories for selling on Amazon are clothing, beauty products, books, electronics, fitness products, and more. It is important to do some research before deciding on what products to sell on Amazon to maximize your profit margin and make more sales.
What percentage does Amazon take from sellers?
The percentage that Amazon takes from Amazon listings vary from 6% to as much as 45% on certain product categories. On average, the selling fees on Amazon can be up to 15%. The cost will vary on the type of product and fulfillment method.
What is the success rate of Amazon FBA?
According to Amazon, the success rate of Amazon FBA business program is 25%. Amazon FBA sellers who are successful with selling on Amazon through program report a monthly profit of $1,250 and as much as $6,000. This makes the Amazon FBA program one of the most profitable methods for selling on Amazon.
