Almost 43% of sellers have made more than $100,000 by selling on Amazon. Besides, every day 4000 new sellers join the platform.
Hence, the competition has increased drastically over the past years, and most sellers are wondering if Amazon is worth it in 2024.
The answer is yes, Amazon FBA is worth it even in 2024, as it saves your time and money by taking care of your shipping, inventory, delivery, and much more.
In this article, I have mentioned all the details about Amazon FBA and whether it is worth selling on the platform.
Amazon FBA: At A Glance
If you are in a hurry and don’t have enough time to look at the platform’s details, here is a quick summary for you.
Note: We have rated the platform according to our experience.
|Compatible with all devices.
|$0.99 per item sold$39.99 per month
|8% to 15%
|Varies according to products.
|Include advertising fees, inventory fees, etc.
|Amazon fulfills shipping and delivery.
|Amazon provides customer support.
|Beginners and sellers that donot have enough time.
Tip: You can check out this article if you want further details about the latest Amazon trends and statistics.
Amazon FBA: Pros And Cons
Before we get into details, let us look at the pros and cons of Amazon FBA.
Pros of Amazon FBA:
- You get access to Amazon’s loyal consumer base.
- Amazon FBA takes care of shipping for you.
- You become an Amazon Prime Seller.
- High traffic and higher conversion rate.
- Sellers get access to a ready-made market of 300 million consumer base.
- The brand authority of Amazon helps in gaining the trust of the consumers.
- Beginner friendly.
Cons of Amazon FBA:
- Amazon charges the sellers to store their products.
- Amazon charges additional fees for shipping.
- Customers can easily return their products.
- High competition rate.
- Sellers get limited access to consumer information.
- Restricted platform and customization access.
Who Is Amazon FBA Right For?
Amazon FBA is best for you if you:
- Are a beginner to dropshipping.
- Do not have enough time to spend on your business.
- Want to set up an FBA business as a side hustle.
- Do not want to create your own website.
- Unsure of starting from scratch.
- Unsure of gathering your own consumer base.
Amazon FBA: Overview
Amazon FBA stands for Fulfilled By Amazon. This is because Amazon fulfills your orders and ships your products to the customers.
It is a third-party marketplace; hence, it does not provide any customization or branding options.
All you can do on the platform is list your products and optimize them with the help of SEO. If you want to get started with Amazon FBA, then refer to our guide here and start selling with it in no time.
How Much Do Amazon Sellers Make?
As you are considering selling on Amazon, you must be curious to know how much Amazon sellers make.
This answer varies from seller to seller depending on their years of experience, the time they dedicate to the business, and the amount they have invested in the industry.
However, here are some average numbers that will answer your question.
According to Jungle Scout, 65% of third-party sellers earn a profit of 10%, while 32% of sellers have reported making a profit of almost 20%.
Here is a table displaying the monthly sales generated by Amazon sellers.
|Percentage Of Amazon Sellers.
|$100,001 – $250,000
|$50,001 – $100,000
|$25,001 – $50,000
|$10,001 – $25,000
|$5,001 – $10,000
|$1,001 – $5,000
|I don’t know
Source: Jungle Scout.
Tip: Jungle Scout is one of the best tools to help you start your journey on Amazon.
And the good news is you can claim Jungle Scout at a discounted price with the help of our coupon code.
Why Choose Amazon FBA Over Other Ways Of Selling On Amazon?
Before we get into the details of how Amazon FBA works, you need to understand the different methods used to sell products on Amazon.
There are four ways to sell on Amazon: retail arbitrage, wholesale, private label, and Amazon FBA.
In this method, the sellers pick up products from other websites like Walmart or Alibaba and sell them for profit on Amazon. This method requires huge research, scrolling, and switching between sites to find the best deal.
In this method, the sellers can purchase a single item for wholesale and sell them on Amazon. Buying it wholesale and in bulk will cost less than buying from a retail seller. Then you can list these products on Amazon and sell them for profit.
The sellers purchase a unique item from a site like Alibaba for a very affordable price and then sell them on Amazon under their private label, which means under their brand name. They can generate huge profits here, and this method is called private label selling. Follow our step-by-step guide to start a private label business with Amazon FBA.
Amazon FBA helps you to dropship your products on Amazon, and the best part is Amazon takes care of all the logistics part. You just need to send your products to the Amazon warehouse, and the rest is taken care of by the FBA.
85% of Amazon sellers are either doing wholesale or private label, increasing the competition on the Platform.
On the other hand, Amazon FBA helps you stand out from other sellers and saves you from many competitors in case you have unique and good quality products.
How Does The Amazon FBA Program Work?
With Amazon FBA, you purchase the products you want to sell from Amazon’s website, and then you must send those products to an Amazon warehouse.
Once these products reach the Amazon warehouse, these products become prime-eligible. This means that prime customers are more likely to buy your products as the products are available for faster delivery.
Once the shoppers order your products, Amazon will ship your products to the required destination, and your order will be completed.
Moreover, to sell with Amazon, you can find a manufacturer and purchase and ship these products to the Amazon Warehouse and sell them on Amazon.
To start selling with Amazon, you can either start from scratch and create your own product or use an existing product, rebrand it as your brand, and sell it on Amazon.
What Factors Should One Consider Before Selling On Amazon FBA?
Before you start selling on Amazon, you need to consider factors like money, time, shipping, sales volume, and control.
If you are fulfilling your orders by yourself, then you will have to look after some extra costs apart from the cost of purchasing products like
- Cost of storage space.
- Cost of packaging and labeling materials.
- Cost of delivery and shipping.
- Inventory management and Shipping.
- Cost of solving customer issues and inquiries.
Whether you have a team or you work alone, these costs will reduce your profit margins, and you may even have to face some loss. Here, Amazon FBA comes at rescues.
With Amazon FBA, your costs reduce dramatically as you save some significant costs of inventory space, packaging, labeling, delivery, shipment, etc.
However, you will have to pay some fees to Amazon to store your products and manage the delivery and shipment of your products.
We discussed pricing and other costs you must pay to Amazon to manage your products later in this article, but here’s a list of some of the costs you will have to pay Amazon:
- Amazon Fulfillment fees. (Varies according to your product category.)
- Storage fees for the inventory. (This depends on the time and space required for the product storage. )
- Fees for processing your returns.
If you do not have enough time to look after the storage and shipping, then Amazon FBA is the right option for you. It saves a lot of your time by taking care of your products and inventory.
Amazon FBA saves your time by looking after the following:
- Receiving your products from the suppliers or manufacturers.
- Storing your products in the inventory.
- Packaging your orders for shipment.
- Shipping your orders to the customers.
- Collecting tracking numbers.
- Processing returns.
- Solving customer queries and taking care of customer service.
3. Sales Volume
If you have a sales volume of fewer than 40 units per month, then Amazon FBA is not for you. However, if you have a sales volume greater than that, then Amazon FBA is a better option for you.
This is because the amount of time and effort you save on your business can be invested into your business research and other required things.
When you fulfill your orders through the FBM(Fulfillment By Merchant), you have more control over your packaging and provide a personalized touch to your packages.
However, in the Amazon Fulfillments process, you do not have enough control over your packaging and have some restrictions over the product packaging customization.
Consumers expect free and fast deliveries of their purchased products today. More than 64% of shoppers expect their orders to be shipped within three working days.
Hence, if you are an Amazon FBA seller, then you become a prime seller, which means your customers will get free delivery, and that too within two days.
How Much Does It Cost To Sell On Amazon?
Now, the next important thing you must know is the cost you must pay for Amazon FBA services. First, let us look at the pricing you must pay to join as an Amazon seller.
The selling plan of Amazon offers the seller two options: you can either pay per sale made or pay monthly to the platform.
So there are two selling plans you can go with an individual plan and a professional plan.
- Individual plan:
The individual plan will cost you $0.99 per item sold, and it is suitable for you if you are a beginner and have not decided what to sell. You can stick to this plan if you sell less than 40 items per month.
- Professional plan:
This plan will cost you $39.99 per month. Most of the FBA sellers stick to this plan. This plan provides flexibility to advertise your products and use advanced tools like APIs, reports, etc.
|Adding new products in the catalog
|Support of fulfillment by Amazon
|Creates a listing in Bulks
|Access to brand owner tools
In addition to the selling fees, you will have to pay referral fees to Amazon. The platform takes this fee in exchange for referring your product to the customer.
This fee varies for different categories, and most referral fees range between 8% to 15%.
Fulfillment Service Fees
The fulfillment fees include the storage and shipment fees. It varies depending on the number of products stored and the time they are stored. Plus, the shipment fees are also charged by considering various factors.
The other fees included in the Amazon FBA costs are advertising fees, premium account fees, service fees, etc.
Check out here for further details on Amazon costs and fees.
How To Start Selling On Amazon FBA?
After going through all the details of Amazon FBA, you might wonder how to start selling on Amazon.
Think no more! You must follow three easy steps to start selling on Amazon as an FBA seller.
Step 1: Create an Amazon seller account.
To create an Amazon seller account, visit the Amazon seller website with the help of this link and provide them with the required information to create an Amazon seller account.
Image source: Amazon.
Step 2: Set up your Amazon FBA account.
You must set up your account by listing the products you want to sell. Then send the products purchased from the manufacturer straight to the Amazon warehouses or Amazon fulfillment centers.
Step 3: Manage the inventory.
Now all you need to do is manage your inventory and process your orders.
The rest will be taken care of by Amazon.
Tips To Increase Sales Using Amazon FBA
You can use & apply these tips to increase your Amazon sales using the FBA services:
- Choose Trending Products To Sell: One of the most important steps of selling on Amazon is selecting the best products to sell. You need to conduct thorough product research to find the products that have high-demand, but only a handful of sellers are selling them on Amazon.
- Use Amazon FBA Tools: If you don’t know how to sell on Amazon then we would recommend you using the best Amazon FBA tools. These tools not only help you automate your business but also give you the learning resources you need to sell on Amazon effectively.
- Optimize Your Listing: Write optimized titles and descriptions of your products. You can use the keywords in them to improve the rankings of your products on Amazon. This will eventually lead to more sales and conversions.
- Manage Your Inventory: You must manage your inventory effectively to avoid overstocking and stockouts. Set inventory minimums in your store so you don’t sell products that you don’t have.
- Use Amazon Advertising: If you want to get noticed among thousands of sellers, then use Amazon Advertising, where you will be able to show your products in the Sponsored Products section of Amazon. However, you need to set a daily budget for this so you don’t pay more than you have to.
Why Do Most Of The Sellers Fail To Generate Profit On Amazon?
Most sellers cannot succeed on Amazon FBA as they expect returns just as they start their business.
However, you must be patient with Amazon FBA business and wait for some time to generate profit from your store.
Treat your business like a child and feed it with love and patience, and it will surely generate returns in the future.
More On Amazon:
Final Verdict: Start Selling On Amazon Using FBA To Automate Shipping, Warehousing, and Delivery
There are 310 million active Amazon users worldwide, and selling on Amazon allows you to put forth your products in such a huge marketplace.
Apart from that, 66% of people start their product research on Amazon, and you are more likely to generate sales if you have a unique and good product.
So, yes, Amazon FBA is worth it!
I hope the above article has helped you answer your question and has provided you with enough information about the platform.
You can really make money with the help of Amazon FBA. It is a billion-dollar industry, and many sellers make millions of dollars by selling on Amazon. You just need proper guidance and patience to generate a good amount of profit.
On average, the sellers generate around 16% to 50% profit by selling on Amazon. Hence, most Amazon sellers generate a profit between $2000 to $6000 in a year. Besides, the revenue generated by these sellers is calculated to be between $800 to $1200 per month.
If you want to become a seller on Amazon and want to have a good start, then you must go for an Amazon FBA course. In the course, you will learn the basics to start your journey and the mistakes you must avoid while starting your journey. Some proper guidance and a good start are all you need to excel in your Amazon journey. Hence the Amazon FBA courses are worth it.
If you are willing to work full-time as an Amazon FBA seller and work dedicatedly on your business, you can indeed become a millionaire with Amazon FBA. However, you won’t be rich overnight and will have to start slowly. Patiently investing your time and dedication in the shop will surely make you rich.