Do you think it’s worthwhile to sell on Amazon? Check out my Amazon seller feedback to learn more about the pros and cons of selling on Amazon FBA and whether or not it’s a good option for you to supplement your income.
Because you can’t make money on Amazon unless you know what you’re doing, this analysis of “Is it worth it to sell on Amazon?” will teach you the ins and outs of selling on the website as well as cutting-edge strategies for optimizing your earnings.
If you want to make money on Amazon, you need to know what you’re doing.
Follow me as I go into detail about my experience with Amazon’s Fulfillment by Amazon program.
Amazon Isn’t Just Another Ecommerce Platform
Let’s begin by comparing Amazon to every other platform on the planet. For starters, we can’t think of any others that take their name from a tropical forest.
To add insult to injury, it completely dwarfs the opposition. Here are some numbers that ought to give you an idea of the scope we’re discussing:
- Amazon is used by over 300 million active customers in 180 different countries.
- We’ve seen a 52% YoY increase in sales through intermediaries.
- Worldwide, there are over 150 million Amazon Prime subscribers.
- When comparing the two leading mobile shopping platforms, Amazon’s app has twice as many users as Walmart’s.
- Amazon is the preferred online retailer for 89% of consumers.
- 4,000 items are sold by small and medium-sized businesses in the United States every minute on the site.
You can bet that entrepreneurs in every corner of the globe are vying for a spot in Amazon’s marketplace. Presently, about 2 million merchants are signed up, and that number is expected to grow rapidly.
There are a lot of other sellers on Amazon, so the fact that you’ll be competing with them is important. As a result of the high level of competition on the platform, merely adequate performance is never acceptable.
You need a plan, and then you need to execute that plan well if you want to stand out from the crowd.
How Should You Proceed With Selling on Amazon?
Amazon’s low entrance barrier is both its strength and its weakness. You won’t have a hard time getting started, but keep in mind that this means there will be greater competition than in other areas.
You should also be mindful of the possibility of competing with Amazon on this platform. Amazon Retail is the firm’s private label, and it offers a dizzying variety of goods.
It’s not just that Amazon Retail might undercut you occasionally. As a matter of fact, it’s rather routine for many retailers.
Since Amazon collects more customer data in one day than you could in a lifetime, things can get very challenging for these vendors. With this information in hand, Amazon is able to aggressively price its goods and feature them prominently.
Two takeaways from this predicament are as follows:
- Keep away from direct competition with Amazon wherever possible.
- When you use Amazon FBA, you can lessen the impact of the downsides.
To start, the first part is self-evident. If your opponent also owns the game and can make up the rules as they go, you have a good chance of coming out on the losing end of any competition.
As an alternative, let’s think about lesson two. By using the FBA route, you can take advantage of Amazon Prime. Do not forget that the 150,000,000 dedicated members of this program. So, it’s a huge help when your FBA products are featured.
You can take advantage of Amazon Super Saver Shipping when you list items for sale through Amazon FBA. Therefore, if your product meets the Super Saver Shipping threshold or is combined with other qualifying products, a customer who isn’t a Prime member can still receive free shipping.
Small businesses can benefit greatly from both Amazon Prime and Amazon Super Saver Shipping. Furthermore, these tools facilitate communication with target audiences in ways that would be difficult or impossible to achieve in any other way.
Keep in mind that you will not have access to the same customer relationship management (CRM) tools if you sell on Amazon‘s platform as you would if the customer purchased from your own domain.
It’s a one-time deal that doesn’t leave room for repeat business or a lasting friendship.
You should carefully consider paying the Amazon FBA fees in light of the benefits the program offers unless you are completely confident in your ability to market and ship your products.
Pros and Cons of Selling on Amazon
Now we know that Amazon is the key to opening up massive markets everywhere. But what exactly are the benefits and drawbacks of using the service?
Pros of Selling on Amazon
- Prime Members: You may tap into Amazon’s built-in customer base of 150 million satisfied Prime members who will always choose Amazon.com.
- Amazon FBA: When you use Amazon’s fulfillment service, you don’t have to worry about logistics, inventory, or delivery.
- Untapped Potential: Despite rumors to the contrary, Amazon has no plans to disappear. Your prospects will improve as Amazon expands.
- Consumer Expectation: You should expect customers to treat your products like Amazon just as they would treat you like you’re a celebrity if you posted photos of them on Instagram.
Cons of Selling on Amazon
- Independence: When you sell on Amazon, you give up some say in how your goods are handled before they reach your customers (especially if you are an FBA seller).
- Competition: When selling on Amazon, you have to worry about competing with other sellers in your niche as well as Amazon’s algorithm.
- Social Shift: The public’s adoration of Amazon has waned in recent years due to Jeff Bezos’ fixation on space and worries about working conditions at the company’s warehouses. Selling on Amazon could damage your brand’s credibility if your business is based on moral principles.
- High Return Rates: Products sold on Amazon may have a higher return rate than those sold elsewhere because of the company’s business model, which makes it easy for customers to return purchases.
- Fees: Find out how much it will set you back to use Amazon FBA so you can figure out how much money you’ll be making.
The Amazon FBA Fee: To Pay or Not to Pay?
Many strategies exist for conducting business on Amazon, but they may all be divided into two broad buckets:
- You’re a Fulfillment by Merchant (FBM) seller
- You’re a Fulfillment by Amazon (FBA) seller
If you choose to sell through Amazon’s FBM program, you’ll manage your store in the same way you would if it were hosted on your own domain. It’s up to you to keep track of stock and fulfill orders from clients.
The second choice is to become an Amazon Fulfillment by Amazon (FBA) vendor and have Amazon handle everything else. Amazon will handle inventory management and customer shipping once these shipments have arrived.
While there are some similarities between the classic dropship model and Amazon FBA, there are also significant differences. In dropshipping, for instance, you never ever see or handle the merchandise.
The goods are stored at the drop shipper’s warehouse until it is purchased.
When using Amazon FBA, you must arrange for the product’s acquisition. You, as the product’s rightful owner, must ship the item to Amazon so that the company may manage the transaction’s ancillary details.
The 6 Types of Amazon FBA Fees
When comparing dropshipping with Amazon FBA, the way in which fees are handled is another major distinction. Your drop shipper may only want a flat rate per transaction if you work with them.
However, Amazon employs a multi-pronged strategy, so it is important to examine the various FBA fees in further detail.
- Monthly Inventory Storage Fees: Monthly storage fees are exactly what they sound like: a charge made every month that your goods are stored in one of Amazon’s warehouses. Pricing is tiered and dependent on the number of goods you have in stock.
- Returns Processing Fees: When customers have given free shipping both ways, they are more likely to make a buy. If a return is necessary, however, the shipping costs will not be covered by Amazon. If you don’t offer free return shipping, you’ll have to pay this cost every time a consumer sends an item back to you.
- Fulfillment Fees: These Amazon FBA costs are most similar to those charged by companies that specialize in drop shipping. There will be a per-item fee added to each sale to account for the time and resources expended in sourcing, preparing, and transporting the purchased item to the buyer. The cost of returns and customer care is included in these prices.
- Long-Term Storage Fees: Amazon places a premium on effectiveness due to the massive scope of its operations. If your goods remain in their warehouses for more than a year, you will be charged a storage fee.
- Removal and Disposal Fees: Costs Associated with Taking Items Away and Disposing of Them Amazon will either return the items to you at no cost or responsibly recycle them if you request them, saving you the cost of long-term storage. There will be a cost associated with your selection.
- Unplanned Service Fees: Unanticipated Service Charges: If your stock is well-maintained, you won’t ever have to worry about this last service charge. However, these punitive measures would be incurred if you were to deliver to Amazon some of your products without suitable packaging or labels.
What Can I Sell on Amazon FBA?
Understanding what you can sell on Amazon FBA and which products require clearance will help you reach your full product offering potential.
Categories Not Required for Approval
- Used and certified refurbished Amazon devices
- Automotive and Powersports
- Baby Products (excluding apparel)
- Camera and Photo
- Cell Phones and Accessories
- Consumer Electronics
- Grocery and Gourmet Foods
- Health and Personal Care
- Home and Garden
- Independent Design
- Industrial and Scientific
- Kindle and Amazon Fire TV Accessories
- Major Appliances
- Musical Instruments
- Office Products
- Personal Computers
- Pet Supplies
- Tools and Home Improvement
- Toy and Games
- Video Games
Please study the Amazon selling criteria for each category as there may be exceptions.
Categories Required for Approval
- Postage stamps
- Collectible Coins
- Fine Art
- Holiday Selling Requirements in Toys & Games
- Made in Italy
- Music & DVD
- Sports Collectibles
- Streaming Media Players
- Videos, DVDs, & Blu-ray
- Personal Electronic Mobility (E-Mobility) Devices are things like hoverboards and other products that help people move around.
- Sony PlayStation Requirements in Video Games
If you would like to sell in one of these categories on Amazon, please visit Seller Central to submit your request.
Is Amazon FBA Worth It?
That depends on your ability to supply Amazon with a high-quality item that is certain to sell well on a regular basis. When sales are brisk, you won’t have to worry about anything beyond the monthly costs of storing, shipping, and handling returns.
Considering you can put your products on the largest online marketplace, the expense of selling on Amazon is relatively small.
Long-term storage, removal and disposal, and unanticipated service expenditures are only incurred when sales are low or when business operations are disrupted.
But as we are all well aware, there are always unexpected challenges when operating a small business. Because of this, you can’t rule out the possibility of having to pay these supplementary costs at some point.
In order to weather the inevitable financial storms that accompany the ups and downs of running a business, we advise you to set aside money in your budget to cover the extra fee that will inevitably arise from time to time.
Is Selling on Amazon Worth It? Time to Test and Learn.
First, let’s take a look at the upsides and downfalls of selling on Amazon.
- Potentially huge exposure to people all around the world
- Helpful links and materials for sellers
- Market infrastructure already in place
- Amazon’s name recognition boosts credibility.
There are a number of advantages to using Amazon Fulfillment by Amazon (FBA), including increased sales through Amazon Prime and Amazon Super Saver Shipping, reduced inventory requirements, and elimination of customer shipments.
The money you save on labor and time spent may more than cover the cost of using Amazon’s Fulfillment by Amazon service.
However, it would be excessive of us to suggest Amazon FBA to everyone. As was previously noted, success with this program is contingent on its fit with your business model and your implementation of cost-cutting measures.
A scalable strategy like this is crucial to your Amazon sales. You may improve your company’s operations and prevent catastrophic blunders by expanding your product offering, monitoring its performance, and making data-informed judgments about future fulfillment strategies.
Take our no-cost selling on Amazon masterclass if you want to learn even more ideas. Melisa Vong, the course’s instructor, lays out a plan for creating a profitable Amazon business and offers advice on how to use the site to make a living.
Conclusion: Is Selling on Amazon Worth it?
In spite of these drawbacks, selling on Amazon remains a great choice for vendors.
You may take advantage of Amazon’s large customer base if you know how to price your goods competitively and how much profit it will generate. It helps broaden the customer base for your company.
Nothing worth having comes without some degree of difficulty. It’s critical that you’re able to reap as many rewards as possible from your Amazon sales and that obstacles don’t stand in the way.
Frequently Asked Questions (FAQs)
Is Amazon FBA free to start?
FBA can be set up at no cost to you. However, you will be required to pay a fulfillment fee and a storage fee once you begin sending products to Amazon’s fulfillment centers. Both of these charges apply to everything. Pricing varies by type of goods, size, and weight.
What Items Can Be Sold Through The FBA?
Before getting into an FBA agreement, the seller must first approve the product catalog. Through FBA, you can trade in apparel, homewares, furniture, fixtures, and even necessities. The e-commerce behemoth may not approve of all regulations regarding sensitive commodities for sale via its inventory management.
Why do some things need to be approved to sell?
We restrict the sale of some products to prevent harm to our clients and to keep their trust in us. When it comes to the safety, authenticity, or compliance of the products we sell, we have the right to impose some limitations. If you want to Sell on Amazon despite certain limitations, you’ll need to fill out a Seller Central application first. It will be possible to add the product to the catalog if your request is accepted. However, not all of the products that have distribution limitations will have applications accepted.
How can I identify if a product needs approval?
If you search for the product you wish to offer under Add a Product and it already exists in our shop, you will see if approval is needed. To see what kinds of permissions are needed, click the Show restrictions button. If you’re looking for something that isn’t currently in our catalog but is similar, try browsing Add a Product. When you create your listing, you will likely encounter the same selling limits that apply to similar products on the market. If you want to make sure that the category or product type you’re planning to list doesn’t have any sales limitations, you may check Categories and items that require permission.
Please utilize Add a product to view the approval requirements for the ASIN that produced an error message when you attempted to add your products via a feed.
How do I apply to sell my product?
On the home page of Seller Central, click Catalog and then Add Products.
1. Find the item that you want to sell.
2. In the search results, click the link next to the item that says “Show limitations.”
3. To start the application process, click “Apply to sell.”
What do I do if my item doesn’t have a “Apply to sell” button?
At this time, we are not taking applications from potential retailers interested in carrying this item. Keep checking back for updates, since the rules on selling may be modified at any time. The Selling Partner Support team is unable to comment further on these choices.
How do I manage my selling applications?
Clicking Apply to Sell within Add a Product will launch the application and create a draught within your Selling Applications dashboard. You can see the status of your application, reapply, or view the requirements for your draught from the dashboard. There is also the option to narrow your application search by category (For example, ASIN, Brand, Category).
What percentage of sales does Amazon take?
Amazon will always deduct a referral fee from your earnings. It could range from 8% to 14%, depending on the product. For the vast majority of product types sold on Amazon, the lowest referral fee is $0.25.
How long does it take for Amazon to pay you?
You should allow five business days for Amazon to deposit selling proceeds. Keep in mind that Amazon will not make payments to a credit card or a payment system like PayPal that has been used to set up a seller account.
Is selling on Amazon a lot of work?
While 13% of sellers put in 21-30 hours per week, 19% have made selling on Amazon their full-time job and put in over 40 hours each week. What you get from your company is directly proportional to the amount of time you invest in it. Check out our State of the Seller Report for additional details on how to succeed as an Amazon seller.
Is Amazon a good way to sell?
Brands, organizations, and aspiring sellers all stand to gain a lot by using Amazon as a distribution platform. However, just like with any other channel, you need to know what it takes to sell on Amazon and how to get started.
Is it worth it to become an Amazon seller in 2022?
Does it make sense to become an Amazon seller in 202? Absolutely! A new seller on Amazon may expect to generate an annual profit of $30,000 on average. That’s more than twice as much as 22% of US families make in a whole year.
What is the success rate of Amazon seller?
The success rate of Amazon FBA is 25% of Amazon sellers had monthly net profits between $1,250 and $6,250, while 20% of Amazon sellers had monthly net profits of $6,000 or more.
How do beginners make money selling on Amazon?
If you’re just starting out and want to earn money on Amazon, here are some of the finest strategies.
1) Enroll in Amazon’s Fulfillment Service by creating an account.
2) The first step in selling anything online is creating a listing.
3) Drop off your items at the Amazon distribution center closest to you.
4) For each purchase you make, all you have to do is advertise your goods, and Amazon 5) Will handle the rest, including delivery.
Can you start Amazon FBA with no money?
While certain expenses are inevitable when selling on Amazon, others may be avoided (or, fewer dimes than you might expect). The results of a poll conducted by Jungle Scout among more than 4,000 Amazon sellers showed that even those who began with less capital ultimately succeeded.
Is Amazon FBA a good side hustle?
It doesn’t matter whether your Amazon FBA company is a side hustle, your main source of income, or a passion project; you want it to be profitable. As of 2021, selling via Amazon FBA is still a worthwhile endeavor, with substantial profits available to those that approach the business in the proper manner.
Which product sells most on Amazon?
Electronics, cameras, clothing, jewelry, beauty, personal care products, and sporting goods are projected to be Amazon’s best-selling product categories in 2022.
Does Amazon charge if your item doesn’t sell?
You will be charged more by Amazon for storage if your account contains a lot of old, unsold stock. There are two main types of storage costs that Amazon charges: monthly and annual.
How long does it take to start making money as an Amazon seller?
Within four to six weeks, you might see your first signs of profit. And that’s assuming you have any idea what you’re doing. In a more detailed response, I would say that numerous things influence not just how fast you can begin earning income, but also how much revenue you can create.
What is the minimum FBA fee?
With an Individual Selling plan, Amazon charges a $0.99 selling fee per item. When you sign up for the Professional Selling Plan, you’ll pay $39.99 per month and never pay any additional fees per item.
What percent does Amazon take?
When an item is sold via Amazon, the company receives a referral fee. It varies by kind of goods. The standard referral fee is from 8-15%.