Is Selling on Amazon FBA Still Worth It in 2023?

As the year draws to an end Many ask: Is Amazon FBA worth it in 2023 and beyond? The short answer is yes. However, let’s discuss the reasons behind this.

In 2021, the revenue of Amazon was an astounding $469 billion, an increase over $386 billion as of 2020and almost one-quarter (22 22.2%) of this revenue comes from third-party sellers! Third-party sellers comprise 89% use the Fulfillment by Amazon (FBA) for helping them run the Amazon business.

As competition has grown in Amazon and other e-commerce platforms as has the need for online shopping63% of shoppers look up their products using Amazon.

This article will discuss the reasons why selling through Amazon FBA by 2023 will still be worthwhile.

How much do Amazon sellers make?

This is a question that all new sellers ask is: how much money can I earn selling through Amazon? Let’s examine some statistics on the current profits that sellers earn from selling their products through Amazon FBA.

It is important to note that more than 70% of sellers from third parties have reported profits that are higher than 10%, while 32% have reported earning profits of more than 20 percent.

Let’s take a look at the numbers of sales for the month:

• 50 percent of Amazon sellers are selling anything from $1000 to $25,000/month
• 13% of Amazon sellers sell $25,000-$250,000/month
• 22percent of sellers are selling less than $500/month

A number of sellers have recently started selling their products on Amazon and, with the strength of Amazon’s supply chain and its massive client base, sellers are beginning to see the first signs of being successful.

Sure, revenue figures are impressive but what’s the actual profit?

I have a feeling, I’m sure. Revenue doesn’t tell the full picture of an individual’s business. It’s possible to make $1 million in sales but you’re not making any money if the costs exceed the amount.

In comparison to other traditional business like brick-and-mortar Amazon sellers enjoy significantly greater profits.

• 70 percent of Amazon sellers make profits that are greater than 10 percent
• 32 percent of Amazon sellers make at least an average of 20% profit margin
• 14 percent of Amazon sellers have earned earnings of more than $100,000

It’s not too bad considering that the majority of new sellers begin the business as an extra income!

These numbers are encouraging however, it’s important to note that 8 percent of businesses aren’t yet profitably and another 8percent aren’t sure whether they’re even profitable. If you’re unsure about your losses and profits You can have the complete financial picture of your company with a tool like Sales Analytics to track your performance.

Pros and cons of selling on Amazon

FBA is an amazing business model that permits anyone, no whatever their previous experience with e-commerce to create the doors of an online shop and sell products for sale to millions of potential customers. As with all things it comes with some drawbacks. Let’s go through a few of the advantages and disadvantages selling your products on Amazon.

PROS

• Access to the Amazon’s loyal customers: Amazon.com has more than 3 billion visitors each month and boasts over 300 million Prime members around the world. For a small, single-person company, you can sell your items on a site which receives millions of hits each day.
• If you are using FBA, Amazon takes care of logistics: If you use Amazon’s FBA program, you’ll transfer your merchandise to Amazon’s fulfillment centers and they’ll handle storage, fulfillment of orders, and even customer support for you.
• Prime Shipping: When sellers use FBA to fulfil their orders, their products will be eligible for an Amazon Prime badge and will have access to Amazon’s huge Prime client base, who buys exclusively directly from Prime sellers.

CONS

• Storage costs: Since you will be storing your goods within the Amazon fulfillment center when you are using FBA it is necessary to pay storage charges. There are two kinds of storage charges that are monthly and long-term. Understanding how to properly manage your inventory will save you money on storage charges.
• FBA charges: For Amazon to shop, pick, and pack and send out your products, they will be charged a fee. FBA fees are based on the weight and size that your item weighs. The amount varies between FBA fee and the referral fee, they are usually 30–40% of the cost of the product.
• It is easy for customers to return products: Because of Amazon’s generous return policy Certain sellers could be able to enjoy high rates of return on their merchandise. While this is great to customers, it’s an issue for sellers.

Is it too competitive to sell on Amazon?

Although competition has increased in the last couple of years Selling on Amazon is still a viable option for sellers who are new like you have learned earlier. If you sell on the US market, it’s thought to be the most highly competitive Amazon marketplace.

In any industry you choose to pursue there will be competition. the good thing about competition is that it signifies that there’s an audience for your product.

Around 600,000 sellers be registering to sell their products on Amazon during the year. That’s an enormous quantity of sellers, but it is important to remember it is a fact that the market share of Amazon continues expand each month, quarter, and year, however you look at it.

While more sellers could create more challenges for the existing sellers however, you’re not taking sales away from one another however you will share a larger and expanding customer base.

If you’re a brand new seller, don’t buy a product without conducting any research or because it’s “popular.” Take your time and conduct the necessary study of the product to ensure you are successful on e-commerce and Amazon.

How do I learn to sell on Amazon?

There is certainly an education curve in order to navigate Seller Central efficiently. It’s not too unusual that 35 percent of Amazon sellers believe they require more education in addition to 24% who of sellers are not sure the way that selling through the platform operates.

In spite of the many opportunities open for entrepreneurs, the idea of selling products online is intimidating 26% of sellers are worried about competition and 33% of them are scared by the prospect of selling on the internet.

Watch the below video to know What to Sell On Amazon in 2022? Learn How to Do Product Research On Amazon | Advanced FBA Guide

What does it take to sell on Amazon?

You are aware of the amount of money you could earn however, how much will it cost to begin your Amazon company? Not just an upfront financial investment, as well as an investment in your time.

MONEY

One of the most frequently asked concerns we get asked on Jungle Scout is, “How much money should I start with?” Although the majority of sellers (69 percent) began with their Amazon business with a minimum of $5k, 32% began with less than $1000, and 16% had less than $500!

If you are planning to start an own brand of private labels it is true that you will require more funds. However, if you’d like to earn money immediately wholesale or retail arbitrage are excellent options for those with smaller budgets.

How did the sellers finance their businesses?

When they first started an Amazon business eighty percent of the sellers choose to start their own business by bootstrapping or make use of personal savings to begin. If you’re not able to invest much to start with, I suggest bootstrapping (this means that you begin with a modest amount of money, and then continue to invest) or savings from your personal account.

Utilizing credit loans or cards is dangerous for new sellers as it is difficult to pay the debt if you buy a poor product. However 9 percent of sellers took money from family members and 18 percent utilized a credit card and around 14% took out some kind of business loan in order to begin.

What was the time it took to take them to make profits?

Amazon sellers are making money faster than a typical brick-and-mortar small company. Although it could take two or more years to make profits, 20% of Amazon sellers claimed that it took less than 3 months to make into a profit. Yes, Amazon is not a “get rich quick” scheme However, it is possible to make money from the beginning.

However, this isn’t the case for all sellers, however. If sellers are launching their own brand, it could take a little longer before they start to make some money. 22percent of the sellers said that it took them 3–6 months to make a profit, and 10% said it took a minimum of 2 years to turn profits. This is normal for private label products especially in the initial period of launch.

Sellers are investing money in marketing and promotion to in the promotion of their listings.

TIME

In order to sell your product successfully on Amazon You must invest the effort required to achieve success. If you’re steady, you will be able to start your first product in less than 3 months, as 55 percent others Amazon sellers have completed. 29% launched their products in less than six weeks!

Do not feel that you have to start up this quickly, however. A quarter of the sellers needed six months to one year to start the Amazon business.

Take your time and find what feels most comfortable for you.

How long do the sellers invest in their businesses?

After you have your business operating You’ll need to manage it. If you use FBA to manage the entire order process it is possible to spend under 10 hours each week in your business, as 43% of sellers use to do.

At the beginning it is likely that you will be spending more time working on your business. 13% of sellers work an average of 21–30 hours per week in the business . 19% have embraced full-time on Amazon and have been working for nearly 40 hours or more.

The amount of time you devote to your business is contingent on the outcome you wish to get from it.

So, is Amazon FBA worth it?

Sure, Amazon can be competitive. It takes a lot of money and time to begin however, and contrary to what many people believe it’s not a simple, forget-it-all-about-it kind of business. Being a successful Amazon FBA business requires learning and perseverance as well as dedication. But is worth the effort? The answer to that question is dependent on you, however, we’ll say yes.

According to us, there are more benefits for selling your product on Amazon than disadvantages. Does every seller who launches an item on Amazon succeed? Most likely not, however, if you put in the effort to constantly make improvements and take lessons from the mistakes you made, you’ll be successful selling on Amazon.