Why to start business on Amazon?

Is it too late to start selling on Amazon?

As of 2019, millions of businesses from all over the world are selling on Amazon. According to SimilarWeb, Amazon.com is the Top-14 most visited website and Top-1 site for E-commerce And Shopping in the world. As of 2018, Amazon’s share of the US ecommerce market hit 49%.

More than 50% of all Amazon sales come from third-party sellers.The percentage of sales from third-party sellers has been rising from 40% in 2013 to 53% at the end of 2018.

According to Marketplace Pulse, tha Amazon Marketplace stats for 2019 are as follows:

Is it too late to start selling on Amazon?
  • 6,000,000 is the total number of Amazon sellers (including inactive ones)
  • 2,500,000 is the number of active sellers with products for sale
  • 200,000 is the number of sellers with $100,000 in sales
  • 50,000 is the number of sellers with $500,000 in sales
  • 24,000 is the number of sellers with $1,000,000 in sales

Every year more than a million new sellers join Amazon - so far this year more than 860,000 sellers have already joined - however less than 10% of the currently active sellers were able to achieve $100,000 in yearly sales, and only 1% achieved $1 million in sales.

Around 3,300 new sellers join Amazon Marketplace every day. Every hour 141 brand new sellers becomes a part of Amazon Marketplace. Every minute there are 2 sellers joining Amazon. At the current rate, more than 1,200,000 new sellers will have joined Amazon by the end of the year.

According to Feedvisor, when asked what platform they are considering expanding to next, over 35% of the Amazon sellers said none. This emphasizes the notion that sellers do not want to move outside of Amazon and instead are prioritizing building out and scaling their Amazon operation.

The Amazon numbers are appealing and here are the main takeaways from IO Scout:

  • Competition on Amazon is increasing every day, as more and more sellers are joining Amazon Marketplace;
  • Now is a great time to start your Amazon business, as Amazon’s Marketplace is growing year over year;
  • There is a great opportunity to make more than $100,000 / year with Amazon Marketplace and join Top-10 percent Amazon sellers.

There is a Chinese proverb, which says: “The best time to plant a tree was 20 years ago. The second best time is now.”


What are the options to sell on Amazon?

There are multiple strategies on how to start selling on Amazon Marketplace.

Strategy #1 is dropshipping. Dropshipping has low entry cost for a seller. However, a seller is in constant search of goods and it’s hard for him to delegate the tasks associated with the business. There’s also a high risk of getting the account banned. A seller does not affect the quality of the product or marketing when choosing dropshipping.

Strategy #2 is winning the Buy Box or arbitrage. According to Feedvisor, over one-third of Amazon sellers’ catalog is fully comprised of items that compete for the Amazon Buy Box. Arbitrage is a popular way to sell products through Amazon by buying a brand name product and flipping it on Amazon for profit. This is a much easier way of making money on Amazon, at least in the short-term.

At the same time, there are a few issues that arbitrage sellers may face:

  • An invoice proving that the products were purchased from manufacturer is required.
  • There is a high possibility of having account suspended in case issues with manufacturer arise.
  • The profit from arbitrage is on average lower compared to Private Label or wholesale.

Strategy #3 is selling wholesale products. Selling wholesale means buying products directly from the manufacturer and reselling them on Amazon for a profit.

When selling wholesale, you purchase the products from the manufacturer and sell them as without any alteration under the manufacturer’s brand.

In order to start selling wholesale products, you require getting a wholesale license.

Selling wholesale products is considered to be one of the most profitable Amazon business strategies. The most important part of wholesale is finding profitable Amazon wholesale products, which generate a great number of monthly sales.

Strategy #4 is Private Label. According to 2019 Feedvisor data, 62% of sellers have private label products in their catalogs.Over 25% of Amazon sellers have catalogs that are 100% private label and over 30% stated that private label items make up 60% or more of their catalog.

For sellers, private labels offer immense profit potential and the ability to sell items made by other manufacturers under their own, unique brand name.


How to start working on Amazon Marketplace?

In general, there are 4 main steps how to start selling on Amazon in case you choose going after strategy 3 or 4:

Is it too late to start selling on Amazon?
  1. Product research - finding 1-5 rockstar products for selling
  2. Supplier research - looking for suppliers, finding them and ordering from them
  3. Ordering the first batch - delivering the product to Amazon; setting up accounts and services, preparing for launch
  4. Launching sales - the product is delivered to Amazon warehouses; launching marketing activities; product promotion

To start off, you will need to do your Amazon product research. This is the most crucial step for many reasons. In case you enter an unpopular product category and start selling a product for more than your competition is selling it for, you could lose money on that product.

In case you would like to find the perfect product for selling to make good revenue, you will need to take your time to find a popular product category, do competitive analysis and identify a product that you can improve upon or sell at a better price.

Being a data-driven team, we recommend using a data-driven approach towards product research. Some experienced Amazon sellers prefer listening to their gut feeling when choosing products to sell on Amazon. Indeed, gut feeling is fantastic for helping your business to stay human. Absolutely, with experience (and lots of data) comes wisdom, and eventually you’ll become more confident with your gut feelings.

For all of you who is ready to start product research to find high-margin products with low competition, we created IO Scout. To start your product research now, feel free to sign up with IO Scout for trial period NOW!

$14.5/month billed yearly

$29/month billed monthly

-62.5% -25%
  • 120 million products database access
  • Unlimited researches
  • 25 products in tracker
  • 2 devices included
  • Up to 5000 rows in export
  • 24/7 support

$24.5/month   bestseller   billed yearly

$49/month   bestseller   billed monthly

-62.5% -25%
  • 120 million products database access
  • Unlimited researches
  • 45 products in tracker
  • 5 devices included
  • Up to 10000 rows in export
  • 24/7 support
  • Chrome extension

$34.5/month billed yearly

$69/month billed monthly

-62.5% -25%
  • 120 million products database access
  • Unlimited researches
  • 85 products in tracker
  • 10 devices included
  • Up to 20000 rows in export
  • 24/7 support
  • Chrome extension

None of the IO Scout authors, in any way whatsoever, can be responsible for the use of the information contained in or linked from these web pages