Amazon is one of the biggest e-commerce businesses, and they are making hundreds of billions of dollars in revenue.
Being this massive business, they are always trying to give a platform to those who want to be a seller on Amazon.
Amazon FBA is one of those programs that offer people who want to sell items on a platform without having to deal with the warehouse.
Amazon FBA, also known as Fulfillment by Amazon, is a service that allows you to purchase items, dispatch them to an Amazon warehouse and sell your products from there.
You don’t need space for a warehouse or deal with handling as Amazon takes care of everything, and you only need to make a sale.
But is this system profitable? This article will take a look at whether Selling On Amazon is profitable or not.
Is Selling On Amazon Profitable?
Every new seller asks if Selling On Amazon is profitable and if it is worth all the risk and trouble.
Thousands of Amazon FBA sellers are making money on different scales, depending on the number of sales, profit margins, and costs.
So knowing the exact number of how much FBA sellers make is a little tough, but finding out the average number isn’t.
There are sellers making under $500/month, and there are sellers making over $250,000/month, but the percentages of the total sellers vary.
Here are the monthly sales numbers and how many percentages of sellers are making those numbers.
|Monthly sales||Percentage of Amazon sellers|
|$1,001 – $5,000||27%|
|$5,001 – $10,000||13%|
|$10,001 – $25,000||10%|
|$25,001 – $50,000||8%|
|$50,001 – $100,000||4%|
|$100,001 – $250,000||1%|
As you can see, most make between $1,000 and $10,000 a month. It’s important to remember that even though it seems many make some sort of profit, there are also quite a lot that can’t even make a profit.
It mostly depends on the success of your products, your marketing, and the profit margin on the product to make this profit.
Selling On Amazon Profit Margin
Ideally, you want to have as high a profit margin as you can get as a business owner, but things don’t work like that, especially in an e-commerce platform where there are a lot of sellers.
The profit margin of Amazon FBA sellers varies quite a lot, mostly depending on the type of the product and your popularity as a seller.
Most sellers, over 50%, have a profit margin higher than 10%, which is quite a good profit margin for any business.
There are businesses with over 50% profit margin, but they are only 4% of total Amazon FBA sellers.
Overall, the average profit margin for an Amazon FBA business is between 5% to 20%.
The type of product is the most important differentiator in determining your profit margin. Here is a breakdown of profit margins.
|Profit margin||Percent of sellers|
|Not currently profitable||14%|
What Do You Need to Do Amazon FBA?
Starting Amazon FBA, as it is fulfilled by Amazon, is quite easy. You don’t need to worry about anything regarding the housing of your products, as Amazon handles everything from keeping them to shipping them to your customer. Here are the steps you need to take to start Amazon FBA.
Not every product you are going to sell is going to be a hit. You have to find what works.
That’s why take your time to research the market, see which products are trending and have a high success rate. Try to select a few for starters that you think have a higher success chance.
Once you find which product you want to sell, it’s now time to find a reliable, fast, and quality supplier.
You can find this supplier everywhere as long as they can deliver to the Amazon warehouse. Make sure they use quality products, and they can deliver more items as you need them. Amazon also offers entrepreneurs the opportunity of an Amazon delivery franchise which helps you in selecting a quality supplier.
List Your Products
After you get the products to the Amazon warehouse, it’s now time to list all the products.
Make sure you have all the information about the product you sourced into the Amazon warehouse and put all of it onto the product page.
Amazon is a marketplace, and it does a fairly well job of recommending products to users.
However, you still need external marketing or use Amazon’s internal marketing to get views on your product.
As more people see it, there are more chances of you making sales. Use influencers, Google marketing, or any other method that you think is feasible for your product.
When you finish all these steps, there is nothing else to do. Just keep an eye on the amount of the product and source new ones, as you are almost sold out.
Meanwhile, you can search for more products and add them to your Amazon FBA market.
How Long Does It Take to Start Making Profit?
Generally, it takes at least a few months to see your first profits with Selling On Amazon.
Most sellers see their first profit within the first year of starting Selling On Amazon, which is not a terrible number considering your investment is fairly low than most businesses.
Here is the breakdown of the timeline vs. the profit of Amazon FBA businesses.
|Within 3 months||22%|
|Within 3-6 months||13%|
|Within 6 months-1 year||19%|
|Within 1-2 years||10%|
|Within 2+ years||3%|
As you can see, the majority of Amazon FBA sellers make their first profit in the first six months of selling.
There is still about 20% that takes about a year, but their overall percentage is lower compared to the first six months.
Is Amazon FBA Too Saturated?
You probably hear a lot about e-commerce, dropshipping, and Amazon FBA, and you might think that it’s too late.
That is slightly true because there are many newcomers, and it’s not as easy as it was to be successful. However, success depends mostly on you, your effort, and the research you do.
You have to always be one step ahead of your competitors and do deep research without giving up in the first few months.
If you do most things well and don’t give in to small mistakes, the saturation of the market won’t matter as much.
The most important step is to choose a winning product and market that extremely well.
Tips to Maximize Amazon FBA Income
In a market that is as saturated as Amazon FBA, you need to know little tips and tricks to put your market and products above others.
Here are some tips that are proven to be effective by many Amazon FBA sellers. You can utilize these to increase your chances of being successful.
- Less planning, more action: Most Amazon sellers say that they launched their businesses immediately once they had the idea. Amazon FBA is fairly easier to make mistakes and learn from.
- Don’t think that it’s a get-rich-quick scheme: This is a business, not a magic way of making money. You will essentially be running a business, and that’s why you need to take your time and don’t rush.
- Invest time to find the perfect product: If you don’t find the perfect product, you will not make enough sales to keep your business running. Don’t be afraid to spend as much time as you need to find the most effective product you can sell.
For the last couple of years, one of the most popular things in the commerce business has been Amazon FBA and dropshipping.
Many made a lot of money off of Amazon FBA, and many keep making the same amount of money.
You might be wondering if you can take some profit off of Amazon FBA, and you can, as it is quite profitable.
Most people make anywhere between $500 to $10,000 a month selling on Amazon FBA. The opportunities are quite high, and there is no limit to how much you can make.
Sourcing the right product from the right supplier and doing the marketing well will put you ahead, and you can have a profitable Amazon FBA business.
Can everyone do Amazon FBA?
Yes, if you have the capital and all the other resources, you can start with an Amazon FBA account.
All you need to do is register and follow Amazon’s steps to avoid getting your account under restriction.
What is the difference between Amazon FBA and Dropshipping?
Amazon FBA requires you to buy the products in advance and put them into Amazon’s warehouse.
They ship everything with Amazon support, making the delivery smooth. Dropshipping is selling the products without buying the items beforehand.
You simply make an agreement with a supplier and order products to the customer’s address through your supplier as the orders come in.
Can you fail with Amazon FBA?
Yes, Amazon FBA is like any other business, and your investment might go to waste if you can’t manage it well. If you can’t sell your products and make a profit, you will fail.
Amit Gupta is an experienced expert in digital marketing and co-founder of DrFranchises. With more than 11 years of knowledge in franchise digital marketing, SEO, email marketing, and social media marketing, Amit has helped many brands achieve incredible success online. As a passionate entrepreneur and owner of 7 franchises, he continues to study franchise models, looking at costs, revenue, and profitability to guide brands toward profitable growth. When he’s not working on digital marketing, Amit enjoys spending time playing with his beloved dog.