Is selling on Amazon worth it in 2024? Yes, selling on Amazon is still worth it for many businesses and individuals in 2024. In this article, we provide you with aspects to help you give answers to the above answers, including:
- Pros of Selling on Amazon
- #1. Wide audience
- #2. Strong Reputation
- #3. Effortfulness Amazon FBA stock management
- #4. Easy Amazon Prime shipping
- #5. Low marketing costs
- Cons of Selling on Amazon
- #1. High competition
- #2. Limited control
- #3. Risky account suspension
- #4. High rate of returns
- #5. Numerous fees
Let’s start it out!
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Here are some key statistics about selling on Amazon in 2023:
- Amazon had over 2 million active sellers in 2023.
- Amazon generated over $554.02 billion in revenue in 2023. [1]
- Amazon makes an estimated $1.4 billion in sales per day.
- 19% of Amazon SMB sellers enjoyed a profit margin of 21% to 25% in 2023.
- 45% of sellers were generating $1,000 to $25,000 in monthly sales. [3]
How Much Does an Average Amazon Seller Make?
The average monthly sales for Amazon sellers vary widely:
- According to Statista, sellers on Amazon earn over 160 billion dollars on Electricals and over 140 billion dollars on Fashion and Apparel.
- On average, new Amazon sellers are earning an average profit of nearly $30,000 per year.
- 25% of Amazon sellers make $25,000 to $250,000 per month, translating to annual sales between $300,000 and $3,000,000.
- 45% of Amazon sellers make $1,000 to $25,000/month, which could mean $12,000 to $300,000 in annual sales.
- The profit margin for Amazon sellers varies, with over half of sellers (55%) seeing profit margins higher than 15% and 38% seeing profit margins above 20%. On the other hand, 8% said their businesses are not yet profitable.
Overall, the earnings of an average Amazon seller can range from a few hundred dollars to millions of dollars annually, depending on various factors, including sales volume, product category, and business expenses.
Is becoming an Amazon seller worth it? Totally yes. Many Amazon sellers have seen substantial revenue growth due to the platform’s wide reach and the ability to scale their businesses efficiently.
What Profit Margin Do Amazon Sellers Make?
Average profit margin of Amazon sellers:
- Most Amazon sellers achieve a profit margin of 15% – 20%, with 32% of sellers seeing profits of 20% or higher. Only about 9% of sellers have a profit margin of 5% or less, which is considered unsustainable for an eCommerce business.
- The largest portion of Amazon sellers falls into the 16%-20% profit margin range.
Profitability:
- Over half of Amazon sellers (55%) see profit margins higher than 15%, with 38% seeing profit margins above 20%.
- 47% of SMB sellers have reached lifetime profits of more than $100,000.
- Most Amazon sellers make at least $1,000 per month in sales, with some super-sellers making more than $100,000 each month in sales. 45% of Amazon sellers make $1,000 to $25,000/month, which could mean $12,000 to $300,000 in annual sales.
Pros of Selling on Amazon
Amazon has quite a few benefits to prove that yes is the answer to the question, “Is selling on Amazon worth it.” Below are some of the most prominent advantages of selling on Amazon:
- Wide audience;
- Strong reputation;
- Effortfulness Amazon FBA stock management;
- Easy Amazon Prime shipping;
- Low marketing costs.
However, be aware that Amazon vs Amazon marketplace are different. While products listed on Amazon itself belong to and are sold by Amazon, Amazon Marketplace is a platform for vendors where third-party sellers list and sell their own products alongside Amazon’s offerings.
#1. Wide audience
The first thing that makes opening an Amazon store worth it is that this platform has a vast audience. As we mentioned at the beginning, Amazon is the strongest giant in the eCommerce industry. Each month, Amazon.com records more than 2.7 billion visits. Furthermore, this platform has more than 310 million active users from 180 countries globally, outperforming Amazon competitors like Etsy, eBay, etc.
With this huge number of users, Amazon helps its sellers reach many customers. Even if you only have a small, not very prominent shop on Amazon, it is possible to reach millions of customers if you do an excellent job of optimizing your product listing or advertising programs. In other words, with Amazon, you only spend a little time looking for potential customers. All you need to do is turn them from potential customers into your end-users.
Does this answer your question of “Is selling on Amazon worth it” yet?
If you are just starting out, it would be better to read How to sell on Amazon
#2. Strong Reputation
Building a reputation is something every seller needs, and sellers on Amazon are no exception. But fortunately for these sellers, Amazon is a very effective tool for building a reputation for sellers, because:
- Amazon has always built itself up as a trusted and reputable marketplace. It has always promoted and made real efforts to bring the best to its users through customer services as well as strict regulations to ensure the quality of goods in its stores. As a seller on such a reputable platform, you are obviously more trusted by consumers.
- Amazon is famous for the fact that sellers on Amazon often have to go through a very strict verification process. This means buyers will reduce scam risk when shopping on Amazon.
Thus, a strong reputation is clearly a factor that helps strengthen the answer yes to the question is selling on Amazon worth it.
#3. Effortfulness Amazon FBA stock management
Amazon FBA (Fulfillment by Amazon) is a service where sellers store their products in Amazon’s fulfillment centers and Amazon handles storage, packaging, and shipping. This service is different from Amazon FBM where sellers do their own fulfillment process.
Amazon FBA, with 180+ global fulfillment centers, streamlines your business growth by handling inventory and logistics, as per “Selling on Amazon” reviews. You can save money on rent, hiring employees, and other costs. That’s why just 1 or 2 people run some 8-figure Amazon businesses without large warehouses or employees.
These benefits are a rare thing, it can be said to be a special privilege of sellers on Amazon. So, they can be part of the answer if you are thinking is Amazon business worth it or not.
#4. Easy Amazon Prime shipping
Along with Amazon FBA, Amazon Prime shipping is a great thing that the giant Amazon offers its sellers. Amazon Prime Easy Shipping is a feature that benefits Amazon sellers by providing a seamless and efficient shipping experience for their products. In fact, easy shipping is among the key answers to “Is selling on Amazon worth it”.
For more detail, these benefit includes:
- Sellers can provide customers with fast and reliable shipping options. These include free two-day or even same-day shipping on eligible products. This improves the overall customer experience, in accordance with various “Sell on Amazon” reviews.
- Sellers participating in the Easy Amazon Prime shipping program can send messages about guaranteed delivery dates to their customers. This can lead to trust and encourage customers to make purchases.
- Items that display the Amazon Prime badge are more likely to secure the Buy Box, which is the prominent button on the product page used for adding items to the cart. Undoubtedly, winning the Buy Box can lead to increased sales and visibility for sellers.
#5. Low marketing costs
With that being said, Amazon already attracts millions of customers to their website daily, and you also have access to these customers. Because the Amazon website acts as its own search engine, shoppers looking for the products you offer can easily find you.
So, depending on your niche and the crowded market, you may not even need to spend a dime advertising your product and still make sales. At this point, it is clear that yes is the answer to “Is it worth selling on Amazon”
Of course, with a huge number of sellers and everyone wanting customers to see their products first, it may be a bit difficult without any marketing efforts. However, you can spend very little on marketing by:
- Optimizing their product listings: You can use relevant keywords, and provide high-quality images and product descriptions. These aim to increase this organic traffic. Optimizing product listing almost only requires cost for staff, you can even do it yourself because it is quite simple.
- Utilizing Amazon advertising tool: Amazon provides various advertising tools and platforms, such as Sponsored Products, Sponsored Brands, and Sponsored Display ads. These allow sellers to reach their target audience effectively. These advertising options are designed to be cost-effective and provide a good return on investment (ROI) for sellers. Amazon also helps sellers to promote and protect their brands through the Amazon brand registry.
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Cons of Selling on Amazon
However, similar to any platform, there are selling on Amazon pros and cons. Amazon has some disadvantages that make you consider whether is selling on Amazon worth it. These disadvantages include:
#1. High competition
Too fierce competition is the first disadvantage that makes sellers think a lot that is selling on Amazon is worth it. As mentioned above, Amazon has up to 2 million sellers, a huge number. Of course, not all of these sellers are your competitors. There are 2 types of competitors that you have to face:
- Seller sells the same items: Unless you sell super niche products, like handmade or customized items, you’ll encounter many competitors in your industry. This is especially true when your store has the best products to sell on Amazon. Moreover, you need to understand that unlike Google Shopping, which organizes product pages by seller, Amazon pages are organized by product. So you must compete with sellers who own the same items for the Amazon Buy Box.
- Amazon: When Amazon starts selling a product similar to yours under its own brand, it naturally becomes your super competitor. You compete directly with Amazon, and attracting traffic to your listings can be difficult. So, if possible, always choose products that Amazon doesn’t sell.
#2. Limited control
Amazon seller limits control in several ways that can lead to suspicion for “Is it good to sell on Amazon, which is:
- Strict policies and guidelines: These policies cover various aspects of selling on the platform, including product listings, pricing, customer service, and fulfillment. Sellers must follow these guidelines to maintain their selling privileges on Amazon.
- Algorithm-driven search and ranking system: The platform uses complex algorithms to determine the visibility and ranking of products in search results. This means that sellers have limited control over how their products are displayed to potential customers. They must optimize their listings and maintain high customer ratings to improve their chances of ranking higher.
- Logistics services: Amazon provides shipping, customer service, and returns as a way to control the customer experience. While this can be advantageous for sellers by providing a streamlined process, it still makes sellers doubt whether is is selling on Amazon worth it or not.
#3. Risky account suspension
Sellers on Amazon may face the risk of account suspension due to several reasons, including:
- Policy violations: Amazon has strict policies that sellers must comply with. Violations of these policies, such as selling counterfeit products, manipulating reviews, or engaging in prohibited activities, can lead to account suspension.
- Poor performance: Amazon evaluates sellers based on their performance metrics, such as order defect rate, late shipment rate, and customer feedback. If these metrics fall below Amazon’s standards, it can result in account suspension.
- Suspicious activity: Unusual or suspicious account activity, such as a sudden increase in sales or a change in seller information, may trigger Amazon’s system to flag the account for review. If the activity is deemed suspicious, the account could be suspended pending an investigation.
Account suspension can be a significant setback for sellers and lead to concerns about “is selling on Amazon worth it or not”. However, you should know that Amazon takes these measures to protect its customers and maintain the integrity of its platform.
#4. High rate of returns
In 2023, the average return rate typically sits between 5% and 15% across different categories of products. Amazon considers a 10% return rate to be normal.
In accordance with sales on Amazon reviews from sellers, high return rates can have a lot of negative impacts for them, including:
- Returns can result in financial losses for sellers, as they may have to refund the purchase price and bear the cost of return shipping.
- A high rate of returns can negatively impact a seller’s reputation, leading to decreased customer trust and potential loss of future sales.
For these reasons, it is not difficult to understand when customers doubt whether it is good to sell on Amazon or not. For return concerns or help managing returns on Amazon, contact Amazon Customer Service.
#5. Numerous fees
As many selling on Amazon reviews, there are Amazon seller fees that you may have to pay. The specific fees depend on the type of selling plan you choose and the products you sell. Here is a breakdown of the main fees associated with selling on Amazon:
- Monthly subscription fee: You should opt for the Professional selling plan if you plan to sell more than 40 items per month, and you’ll be charged a monthly fee of $39.99. Individual sellers, on the other hand, you will need to pay a per-item fee of $0.99 for each item sold.
- Referral fees: Amazon charges referral fees on each item sold, which is a percentage of the item’s sale price. The referral fee varies depending on the category of the product and can range from 6% to 45% of the sale price.
- Fulfillment fees: If you choose to use Amazon’s fulfillment service (Fulfillment by Amazon or FBA), you will incur fulfillment fees.
- Other fees: There may be additional fees for services such as advertising, storage, and optional programs. These fees are optional and depend on the specific services you choose to use.
Sois it worth selling on Amazon as an individual? The answer is yes. This fee structure is ideal for individual sellers who only plan to sell a small number of items each month. It allows them to avoid a monthly subscription and instead pay a fee only when an item is sold, which can be cost-effective for those with low sales volumes.
Significantly, these fees can be a real burden for sellers with low-profit margins. At this time, opening an Amazon store is not a good thing to do for them.
Is selling on Amazon Worth It: Amazon vs. Other Marketplaces
To be more certain about the answer to the question is selling on Amazon worth it, we will compare Amazon with 2 other top marketplaces to sell online, which are eBay and Etsy.
Amazon vs. eBay
Amazon and eBay are two of the largest online marketplaces in the world, but they have different business models and strengths.
You can read the article Amazon vs eBay comparison to know more
First, about “how does Amazon selling work”, Amazon is a first-party retailer that sells products directly to consumers. It also allows third-party sellers to list their products on its platform. Amazon is known for its wide selection of products, competitive prices, and fast shipping. It also offers a variety of services to its customers, such as Prime membership, Amazon Music, and Amazon Video.
On the other hand, eBay is a marketplace that lets sellers list their products on eBay, and buyers can bid on them or purchase them at a fixed price. eBay is known for its wide selection of new and used items, as well as its auction format. It also offers a variety of services to its sellers, such as seller protection and shipping discounts.
Here is a comparison table to help you decide “is selling on Amazon worth it” or eBay:
Features | Amazon | eBay |
Business model | First-party retailer and third-party marketplace | Marketplace |
Product selection | Wide selection of new and used items, including Amazon-branded products | Wide selection of new and used items, with a focus on unique and hard-to-find items |
Pricing | Typically uses a fixed pricing strategy | Allows sellers to set their own prices through auctions or fixed listings. |
Shipping | Fast shipping, especially for Prime members | Shipping times vary depending on the seller but limitation is 30 days |
Services | AWS Marketplace, Amazon Seller Forums, Amazon Pay Seller Central, etc. | Seller protection, shipping discounts, eBay Money Back Guarantee |
Fees | Seller fees vary depending on the product category | Seller fees vary depending on the listing format and product category |
Amazon vs. Etsy
Amazon and Etsy have different focuses and strengths. Amazon sells various products, including everything from electronics and clothing to groceries and pet supplies, and more. Hence, it is no surprise that Amazon business selling is known for its wide selection of products.
Meanwhile, Etsy is a marketplace for handmade and vintage goods. Sellers on Etsy list their own unique items, such as jewelry, clothing, home decor, and art. Etsy is known for its unique and one-of-a-kind products and its supportive community of sellers and buyers.
Here is a side-by-side comparison of Amazon and Etsy:
Features | Amazon | Etsy |
Focus | General marketplace | Marketplace for handmade and vintage goods |
Product selection | Wide variety of products, including everything from electronics and clothing to groceries and pet supplies | Unique and one-of-a-kind products, such as jewelry, clothing, home decor, and art |
Pricing | Competitive prices | Prices vary depending on the seller |
Shipping | Fast shipping, especially for Prime members | Shipping times vary depending on the seller |
Fees | Various fees for selling on its platform, including referral fees, fulfillment fees, and subscription fees for certain seller plans | Seller fees vary depending on the listing format and product category |
Community | Large and diverse community of buyers and sellers | Supportive community of sellers and buyers |
For more details about Etsy, check out our article Is Selling on Etsy Worth It in 2024: 6 Key Factors to Consider!
Is Selling on Amazon Worth It: FAQs
Yes, selling on Amazon can be profitable, but it depends on various factors such as product selection, competition, pricing strategy, and marketing efforts. Some sellers have found success and made significant profits on the platform, while others may struggle. It is crucial to conduct thorough research, analyze market trends, and develop a solid business plan to maximize profitability. Yes, selling on Amazon can be a good business opportunity for many entrepreneurs. The platform offers a large customer base, robust logistics infrastructure, and various marketing tools. However, success depends on factors like product selection, competition, and effective marketing strategies. Thorough research and careful planning are essential for a profitable venture. Yes, selling individually on Amazon can be worth it, especially for those who have a few items to sell or are selling as a hobby. However, success depends on factors like product selection, competition, and marketing strategies. Thorough research and careful decision-making are crucial for a profitable venture Selling on Amazon can be both hard and easy, depending on various factors. While the platform provides opportunities and resources for sellers, it is also competitive and requires effort to stand out. Success depends on factors like product selection, marketing strategies, and understanding Amazon’s fees and policies Yes, Amazon FBA (Fulfillment by Amazon) can be worth it for many sellers. While it requires time, money, and effort, there are more upsides than downsides. Success depends on factors like product research, continuous improvement, and learning from mistakes. With dedication and hard work, selling on Amazon FBA can be profitable and rewarding.
Is It Worth Selling on Amazon?
Overall, is selling on Amazon worth it? The answer is yes.
Nevertheless, it depends on a lot of different factors. You need to look at whether the benefits Amazon brings you are enough to overcome the disadvantages it causes you. Hopefully, through our provided article, you now fully understand Amazon as well as “how does Amazon selling work”.
Besides, Amazon is not the only marketplace, so you can consider whether other marketplaces like Etsy or eBay are more valuable for your business. In case these marketplaces all bring many benefits, you can do business on all platforms. And our LitCommerce tool will help you simplify this business process. Reach out to us to learn more about LitCommerce.
Finally, if you want to know more interesting information about the eCommerce industry, don’t forget to follow our retailer blog.