Is it worth selling on Amazon? Here's how to know (2023)

Amazon and other online marketplaces seem mutually beneficial at first glance. Ecommerce store owners get exposure and marketplaces get more products without adding inventory.

Upon closer inspection, the mutual benefits still hold true, but the reality is a little different. Limited branding opportunities, no customer data and additional fees are disadvantages whenselling on amazon.

Should you expand your presence beyond your online store and start selling your products on Amazon?

Answer: It depends. A go-to-market strategy can be beneficial for some retailers and others. The type of product you sell, competition in your category, and any restrictions are things to consider.

However, there are some pros and cons that apply to everyone. Let's look at the pros and cons of selling on Amazon, so you can decide if it's worth it.

How much do Amazon sellers earn?

data fromjungle explorershows that half (50%) of Amazon sellers earn at least $1,000 a month in sales. Some super salespeople make over $100,000 a month. Only 3% of sellers were unaware of their monthly sales.

An entrepreneur's earnings from any online business depends on many variables such as how much time they spend on their business, how they market their products on social media, average profit margins, etc.

When selling on Amazon, you should also consider your fulfillment methods.jungle explorerreports that 89% of third-party sellers on Amazon use Fulfillment by Amazon. These salespeople earn anywhere from a few hundred dollars a month to over six figures.

Is it really profitable to sell on Amazon?

Generating revenue is great, but it's your profit margins that count.sixty five percentof Amazon small and medium sellers (SMB) have profit margins of 10% or more. 32% of SMB sellers have a profit margin of 20% or more.

Your profit margins will largely depend on the products you decide to sell and how you source them. If you're a first-time seller on Amazon, research the most profitable products to sell on Amazon and which wholesalers/manufacturers will work best for you.

According to the 2022 Jungle Scout report, the five product categories with the highest profit margins are:

Also, when choosing to sell a new product on Amazon, consider some of the factors that could affect your profit margins.

• initial costs: You need an Individual plan, which costs 99 cents per unit sold, or a Professional plan, which costs $39.99 per month.
• reference rate: Amazon takes a percentage of every sale to use its marketplace. The percentage withdrawn depends on the category of your product, but is generally between8% and 15% ofPrice of the product.
• FBA fees or fulfillment fees: How much Amazon charges to handle the product you sell, based on the size and weight of the product.Amazon Seller Centerquotes fulfillment costs starting at $4.75 per unit.
• Amazon Ads: This helps sellers see their products while customers browse Amazon. If you have a product with a lot of competition, advertising on Amazon can cost a lot of money.

Using Amazon marketplace to sell your products will earn you money. However, depending on the type of e-commerce business you own (or want to start), you may findAmazon's competitors, such as eBay or Etsy, are more profitable for you.

The Pros and Cons of Selling on Amazon

benefits

1. Increase sales from a high-traffic channel

The main attraction of selling on marketplaces like Amazon is the scale of your online presence. Amazon attracts almost2.4 billionCombined desktop and mobile visits per month, that's a lot of eyeballs! And those eyes can translate into higher sales volumes.

2. Conquer new customers

Nobody visits Amazon looking for your store. But they may be researching and discovering your products, products they may not have otherwise discovered or may have purchased from a competitor.

Once you have a customer in the door, even through a marketplace, you have the opportunity to earn repeat business through excellent service and care. This is especially the case if you're selling products in a category that encourages frequent, repeat purchases, like hobby supplies or fishing gear.

3. Many people prefer to buy in markets

Markets are all about strength in numbers. This is as true for online markets as it is for real-world examples like farmers' markets, malls, and food trailer parks.

The market's variety and all-in-one look can attract many customers who prefer this type of shopping experience. Online marketplaces also provide the added layer of single-stream checkout and fulfillment support to create a seamless shopping experience.

Contras

While there are some significant advantages to selling in markets, there are also some disadvantages to consider.

1. Market rates

Opening a store on a marketplace can boost your sales, but it also exposes you to another cost center: marketplace fees.

Most market fees are deducted as a percentage of each sale and can vary from site to site and even category to category.

Numbers may not add up in highly traded, low-margin categories.

Before selling your wares on a marketplace, you should make sure you have a good sense of your margins and a good understanding of the marketplace's fee structure.

2. Limited control

While market infrastructure has many advantages, it's important to remember that it can work both ways. Markets do not exist to help you, but to help themselves.

They want the focus to be on the products, not the salespeople. And that means they can restrict the degree to which you can make your presence felt, communicate with customers, dictate what items you can and cannot sell, and so on.

Furthermore, nothing prevents marketplace owners, in the case of Amazon, Sears, etc., from avoiding third-party sellers, identifying popular products and stocking them.

3. Keep inventory in sync

A marketplace is a second point of sale. And one that sometimes can't be configured to talk to your shopping cart. In fact, they both use the same stock, but they're not in sync with each other, making it difficult to understand stock levels without a lot of manual reconciliation.

What You Can Sell On Amazon FBA

If you have an Amazon FBA, FMB or SFP business, certain restrictions and requirements must be met in order to list your merchandise as Amazon products.

For examples that need approval, for example, include:

• collectible coins
• Fine Arts
• music and dvd
• clocks
• mobility electrical devices

Some products that do not need approval include:

• books
• Beauty products
• Musical instruments
• outdoor equipment
• video games

For a detailed explanation of Amazon's selling guidelines, seeAmazon Seller Center.

Learn to sell on Amazon

Jumping on sale on Amazon can seem daunting.Thirty-five percent of current Amazon sellersadmitted they need more training and 24% are confused about how Amazon's sales platform works.

Here are some tips for selling on Amazon:

Find out what you want to sell

Researching product demand is one of the first steps in deciding what you should sell. To get a better idea of ​​current trends and what is needed in the market, do the following:

• Check out the Amazon bestseller list.
• Use a keyword research tool to find product search volumes.
• Read Amazon reviews.

It's also important to decide which business model you want to use. Here is a list of the most common business models used when selling on Amazon.

• Retail Arbitration:When you buy something for less than it's worth (usually that means wholesale), you sell it for more and profit from the difference.
• White label sale:When buying generic products (like water bottles or coffee mugs), put your brand, logo or design on them and sell them at a premium price.
• Private label sale:when you use a third-party manufacturer to create branded products. Grocery stores do this a lot. For example, Kroger has its own private label products (Simple Truth), Walmart has Great Value, and Costco has Kirkland.
• affiliate marketing:when you make money by promoting products to your audience (usually on social media). You don't create anything or have inventory, you just help promote other companies' products and earn a percentage of sales made due to your promotional efforts.
• Direct delivery:when you're a middleman Don't keep inventory on hand; instead, he buys inventory as needed from a third-party manufacturer or wholesaler to fulfill orders.
• Sell ​​your own products:sell products you create.

Know the costs of selling on Amazon

Get access to Amazon300 million active customer accountsIt's not free. Various fees and costs are associated with selling your products using the Amazon marketplace.

Be sure to familiarize yourself with the referral, closing, FBA, and storage fees for the products you want to sell. There are also two different seller plans on Amazon. Make sure you know which one will best suit your business needs.

• Individual: Prepaid plan. He only earns money from each sale made. Best for small businesses that sell less than 40 items a month.
• Professional: Has a subscription cost of $39.99 per month. Ideal for companies that sell more than 40 items per month.

Once you've chosen the plan that's right for you, create your Amazon seller account by following the instructions and wait for your account to be approved.

Learn to use Amazon Seller Central

Amazon Seller Centeris the interface you will use to sell your products on Amazon. Familiarize yourself with how it works and take advantage of the features included in the interface, such as theSales Partner Blogyseller's university.

Understand your compliance options

Amazon has three fulfillment options: FBA, FBM, and SFP. Each has its own pros and cons when it comes to selling on Amazon.

• FBA (Amazon Fulfillment):Amazon is responsible for storing, shipping, or even managing customer service for its products. With FBA, all of your inventory is stored in Amazon warehouses, and Amazon fulfillment centers process, pack, and ship your orders.
• FBM (Compliance by Merchant):You handle your own inventory, warehousing, order fulfillment, and shipping. This fulfillment option is best if you have a small amount of inventory, can provide customer service in-house, and have smooth logistics operations.
• SFP (Supplier Managed First):SFP allows suppliers to fulfill their own orders using their own or subcontracted resources. You must apply to become a top seller.

Learn How to Write Compelling Amazon Listings

Understand the basics of listing a product on Amazon. The product detail page is where you showcase your product. The information it includes encourages shoppers to make a purchase.

At a minimum, you will need:

• A specific product title
• Delete product images
• concise bullet points
• Attractive product descriptions

6 tips to help you sell your products

1. Validate demand with a product search tool.Amazon seller software like Jungle Scout can help you understand if there is demand for your products.
2. Encourage customers to write product reviews.In a consumer trends report for 2022,61% of consumersreport being influenced by products with the best ratings and reviews.
3. Make lightning deals.Lightning Deals are flash sales on Amazon's Deals page, which is one of their most popular pages. With Lightning Deals, you can sell more units at a faster rate, which means more reviews.
4. Cross-sell your products on Shopify.Shopify's Amazon sales channel allows you to list your products on the world's largest marketplace. With Shopify, merchants can create Amazon product listings directly, sync inventory across both sales channels, fulfill orders from Amazon, and track sales across both channels.
5. Win the Buy Box for your product list.Considering that Amazon is an online marketplace, you might have to compete with other third-party sellers for the top spot. The Buy Box, or Amazon Featured Offer, gives new products additional visibility on search results pages.
6. Get your price right.Depending on your price, Amazon can push you further down the results if your prices are too high. Try to maintain healthy profit margins while pricing your products competitively.

What do you need to sell on the Amazon marketplace?

Money

The type of business model you choose and the types of products you want to sell will determine how much money you will need to start your Amazon business. But don't be intimidated, most Amazon sellers don't take out loans and start with relatively small budgets.

According to the 2022 Jungle Scout report,69% of Amazon sellers start with around $5,000or less in your pocket. If you are working on a very limited budget, consider using a retail arbitrage business model or starting a wholesale business.

Tempo

Decide how much time you want to dedicate to your business. Is it a full-time business or just something you'll dabble in part-time for extra income?

For example, if you don't want your business to take up all your time, use the FBA fulfillment method. Since FBA handles all your customer service and logistical concerns, you may only have to spend around 10 hours a week running your business. Forty-three percent of current sellers use the FBA method on Amazon.

Also, know how long you will keep working on your business without making a profit. Do your research and set a realistic schedule that works for your finances. The good news is that 63% of sellers reported a profit within a year of launching their business on Amazon and 20% said it took less than three months to turn a profit.

To use:If you're trying to start your own brand, it tends to take a little longer to make a profit. Twenty-two percent of Amazon sellers said it took three to six months, and 10% said it took one to two years.

Necessary documents

Before signing a seller plan, make sure you have all the necessary documents in hand.

Youre gonna need it:

• Bank account number and routing number of a bank located in a country supported byAmazon Currency Converter. Amazon cannot transfer funds to a credit card or online payment system such as PayPal.
• Business direction. This is the address your business is registered with and will appear on your seller profile page.
• International credit card on which fees will be charged by Amazon. Accepted credit cards are: American Express, Diner's Club, Discover, JCB, Mastercard and Visa.
• National identification issued by the government.
• Tax information.
• Phone number.

Analysis

You won't always get it right. A key component of running a successful business is knowing when and how to adjust your strategies. To do this, you'll need an analytics tool that provides the metrics that will help you achieve your business goals.

Here are four to get you started:

• helium 10
• data hawk
• manage by statistics
• AMZ tracker

Make sure you review your sales analytics metrics regularly. Many products have seasonal ups and downs, sometimes changing product images or descriptions can affect sales, and even world events can affect product trends.

Create your own online store and sell on Amazon today

In 2021, Amazon reported thatThird-party vendors generated $103 billionin sales using the Amazon marketplace. This revenue was generated by nearly two million different seller accounts selling on Amazon.

When deciding which markets to sell in depends on what you are selling and the scale of your operation.

Remember, selling in your own store doesn't mean you can't sell your products in one marketplace to get the benefits of both, nor does selling in one marketplace mean you can't sell in another as well. It is advisable to take the time to discover each one at a time.

Many successful marketers do just that – they “own” their businesses and brands online, while gaining exposure and sales from the high volume of traffic found in online marketplaces.