Selling some items here and there on Amazon was once upon a time a nice little side hustle.
Fast forward to 2020, and becoming an Amazon seller is now the sole stream of revenue for the vast majority of sellers on Amazon’s Marketplace.
This is largely due to the level of flexibility being an Amazon seller allows. Working from home, choosing your own hours, and being your own boss certainly sounds appealing.
Added to this is the fact that it’s relatively easy to jump on the Amazon bandwagon and start selling products.
But just how much money can you stand to make as an Amazon seller? This article aims to answer this question, and many more about the intricacies of selling on Amazon.
How much money on average do Amazon sellers make?
By and large, most Amazon sellers opt to go down the FBA route (Fulfilled by Amazon).
Using FBA is a stress-free approach to handling all the administration and shipping required in your Amazon business.
Enlisting FBA’s service means you don’t have to worry about customer orders, or customer returns, or customer complaints, or customer questions – anything to do with customers at all, really!
FBA ensure that your orders are fulfilled quickly, and delivered quickly too. All adding up to very happy customers.
Let’s take a walk down the FBA path….
- Pre-arrangement of the number of product units are sent to Amazon Fulfillment Centres to be put into storage.
- Your products are then added to Amazon’s inventory.
- People purchase your products via Amazon’s website (yay!)
- The sold products are then packed, and shipped to your customers.
- FBA takes care of all returns, and customer service queries that occur during the whole route.
What are the Gains with FBA?
- No need to handle customer service demands or grievances, Amazon FBA have it covered
- No mistakes made with order placing and delivery, Amazon FBA have it covered
- No waiting for your orders, FBA orders are delivered quickly to your customers via Amazon Prime
- Your listings will be enhanced with the Amazon Prime badge, signalling trust and authority within the marketplace
- Frees up your time in your business
- Your listings will be visible to more people due to higher ranked listings, thanks to Amazon FBA
And although there are a fair few fees involved with Amazon’s FBA service, for the sellers who are selling extraordinary amounts of stock each month, and taking a multitude of orders, this FBA service pays for itself for the convenience.
Back to how much money typical Amazon sellers make.
Amazon sellers – what are the typical earnings per year?
49% of Amazon vendors make under $100k, 36% of Amazon vendors make $100k-$1m, 13% make between $1m-$10m, and only 2% of Amazon vendors enjoy more than $10m!
And which products sell the best on Amazon?
Home and Kitchen 18%
Toys and Games 11%
Sports and Outdoors 6%
And which products earn the most profits on Amazon?
The most profitable items on Amazon can be categorized like so:
- Child and Baby Products
- Active Wear, or Exercise Clothing
- Electronic Goods and Accessories
Obtaining the Perfect Products to Sell on Amazon
If you can put yourself in your shoppers’ shoes, so to speak, and imagine what they want and what they need, and then produce this to them (via Amazon), you’re onto a winner.
Don’t get too carried away however with thinking the product you’ve sourced is a perfect best-seller.
Research, research, research using IO Scout product finder tool.
Look at the potential profit margins, the competition for the product, and the niche the item belongs to.
To uncover the next Amazon best seller, you’re going to want detailed data on:
- The current sales of these items
- The keywords these items are currently standing at
- Item seasonality
- The long-term prospects of the product
Top Amazon Selling Categories in 2020
- Toys and Games
- Cameras and Photos
- Video Games
- Kitchen Equipment
- Health and Fitness
Tips and Tricks of Products to Sell on Amazon
The tips listed below offer opportunities for products you can envisage selling on Amazon.
- Products which have over 10 transactions per day
- Prime Shipping products
- The item is straightforward to manufacture
- The item is not seasonal
- The item is small
- The item is light
- The item is selling for around $21-$200
- The item is straightforward to pack and to deliver
A vital tip to sourcing great products to sell on Amazon:
Establish the items your intended customers want or need
Establish the spend for these items
If you can imagine you are your customer, give them what they want, and in a straightforward fashion.
Make sure you do your thorough market research before investing too much capital into a load of new stock to hold in your inventory.
A few things to find out about your intended products:
- How much they are selling at the moment
- The relevant keywords associated with this product
- Item seasonality
- The longevity of the goods
What about typical profits for Amazon sellers?
Across the board, and speaking generally, the vast majority of Amazon sellers enjoy fairly elevated profit margins.
- Profit margins greater than 10% - (67% of Amazon sellers)
- Profit margins greater than 20% - (36% of Amazon sellers)
How long can you expect to wait before becoming profitable on Amazon?
Happily, the answer to this question is not too long.
67% of Amazon sellers report that they turned a profit within their first year as a seller. And the average new Amazon seller makes a profit of around $26k annually.
How much does it cost to start as an Amazon Seller?
In order to gain complete perspective of your costs, you need to know how much it will cost you to get started in the first place.
There are some interesting statistics on sellers who commenced their Amazon selling career with $500, compared to those who began with more than $10,000.
Surprisingly, 33% of sellers that started with approx. $500 are still selling on Amazon’s Marketplace five years later (or more). This is compared to 13% of those who started at the upper end of the scale. It appears that in general, it takes longer to earn a substantial, and regular, profit selling on Amazon when you start out with a bigger cashflow.
Sourcing Product Fees
This platform is an online marketplace originating in China, enabling FBA sellers to generate and build their own products to sell on Amazon. When buying products in bulk using such a platform, there are potential profits to be made.
When sourcing the perfect products to sell on Amazon, there’s some good rules of thumb to follow, to save you lots of headaches later on! These are:
- Try and choose items that are small in size, this diminishes the shipping costs incurred
- Try and source items that don’t weigh very much, again this reduces the shipping costs
- The sweet spot for pricing on Amazon is roughly between $20-$50
- Aim for items that are low in competition, yet high in demand
- Seek out items that, upon reviewing on Amazon, have a fairly low number of customer ratings
To seek out these kinds of items, you can turn to Amazon Product Tools, of which there is a seemingly endless supply of in the market today.
What are Amazon Product Research Tools?
Amazon Product Research Tools take the work out of product research and product pricing and tracking for you.
Instead of wasting your valuable business time observing product inventories, struggling to summon up a brand-new, never-seen-before, product to jump out at you, you can alleviate some of this strain by using these tools.
The best Amazon Product Research Tool will help you to:
- Uncover brand -new product niches
- Follow your competitors’ prices
- Precisely determine competitive but lucrative prices for your items
- Collect essential data from the Amazon Marketplace.
All of which are a minefield to accomplish purely using a spreadsheet!
When you start to think about all the aspects of running an Amazon FBA business, and all the tasks that are involved, such as….
- Product Research
- Product Sourcing
- Sales Tracking
- Product Tracking
- Competitor Monitoring
- Gaining Customer Testimonials
- Creating Quality Product Listings
Which are the best product research tools for Amazon sellers?
IO Scout is one such product research tool for Amazon FBA selling businesses, of which there are many.
IO Scout offers these special features for FBA sellers:
Other product research tools available online in competition with IO Scout include:
- Sellics – A complete management tool for FBA seller
- Keepa – Price history charts and insights for FBA sellers
How much should you invest in initial Amazon inventory?
Recommendations come in at least 400 to 500 units of your product. This figure allows enough stock to launch your product well, start ranking on Amazon’s Marketplace, and potentially start offering giveaways and discounts to boost your initial product sales.
And, as you can imagine, starting your Amazon business with a relatively low price point product enables you to invest in enough stock to get started, without a)breaking the bank, and b) not running out of stock.
How do you ensure your Amazon listings are seen?
The very first thing to do when you’re considering optimizing your page is to conduct thorough keyword research. If you’re familiar with SEO, it’s not quite the same on Amazon. Try out some Amazon keyword tools is our guidance here.
You can optimize your listing further by completing the following steps:
- Adding these researched keywords to all sections of your listing including the title of the item, the description of the item, and the item’s features
- Including high-quality, professional-grade images
- Concentrating your item’s highlights on your item’s uses and advantages, and taking into consideration your customers’ wants, needs and requirements before committing to purchasing your item
The last thing you want to happen is to generate all these lovely new leads to your item pages, and have disappointed visitors, because alas, your item pages do not contain what they typed into the sear bar. Be sure that your listings are appropriate to your newly founded keywords.
Amazon wants to bring potential customers together with the products they want to buy (obviously!), so Amazon won’t connect the dots between the customer and your product if it isn’t clear that what you are proposing to sell them is what they are searching for.
For products on Amazon’s Marketplace, make sure you are providing listing information that is:
- Relevant to their keyword search
- Useful to your prospective customer
- Entices them into placing an order for the product
A product page which converts successfully has the following features:
- A thorough explanation of the item
- Product images which are high-quality and professional (this includes videos, too)
- Eligible for Amazon Prime and all its features
- An attractive title, which is also precise and reflective of the product
By including this valuable content within your product listings, you will be rewarded by Amazon, as the outcome of this will be customers who are interacting with your page, and enjoying lower bounce rates. They will hang around to find out more about your product as they will be interested and intrigued as to what you are offering. Once Amazon realises that your product page description is appropriate, and the price is suitable, conversions will happen.
Check out what your competitors are up to, so do some keyword research on your competitors’ item descriptions. It may be that your competitors who are doing better than you in the Amazon BSR ratings are optimising their keywords more effectively; it may be that they are more efficient at answering their customers’ queries in the item description. Perform some analysis, and work out where you can improve your product listings.
Tactics to Successfully Sell on Amazon FBA
- Research your intended products using a site like IO Scout to determine the likelihood of them selling, and selling well.
- Consider sales rankings of existing similar products on Amazon’s inventory. This can have an impact on your FBA storage fees, if your products are hanging around in Amazon Fulfilment Centre’s shelves!
- Bundle! Bundle products together that share similarities to reduce competition.
- Get to grips with selling on Amazon by starting small to test the water, and not investing too much initially.
How much time and effort does it take as an Amazon Seller?
Like any business, you need to put the work and effort in to see results. If, like the vast majority of Amazon sellers, you are seeing this as a new business venture as your sole income, then time will need to be spent on your new business.
In the beginning, it’s likely a lot of time will be required as you research new products, check they’re viable, find suppliers, check product niches and categories, create listings, and so on. And then, after a while, it’ll settle and you’ll find your groove. The average amount of time spent on Amazon selling businesses is reportedly 11-20 hours a week. That’s not too bad!
Key Takeaways to make profit on Amazon
Selling on Amazon’s Marketplace is a time-consuming business. And you won’t always get it right every time, and choose the perfect product to sell every time. But that’s part of the process.
So, experiment – enjoy the process, and learn from errors. Soon you’ll pick up on trends in the Marketplace, and gain a really clear understanding of what your customers want – so you can give it to them!
Wishing you the very best of luck with your Amazon selling venture!