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Will selling on Amazon FBA still be worth it in 2024?


Is it worth selling on Amazon in 2024? In short: Yes.But let’s go why.

Amazon’s revenue in 2023 was a whopping $574 billion, up from $514 billion in 2022. Almost a quarter (23%) of its revenue comes from third-party sellers. Of the third-party sellers we surveyed, 82% use Fulfillment by Amazon (FBA) to fulfill orders on Amazon Business.

As competition increases on Amazon and other e-commerce platforms, so does the demand for online shopping. 51% of consumers start their product search on Amazon.

This article explains why it’s still worth selling on Amazon FBA in 2024 and beyond.

Want to learn more about selling on Amazon? Check out our complete guide.

How much do Amazon sellers earn?

This is a question every new seller has. Our complete guide explains how much Amazon sellers make in full, but it also explains how much sales revenue and net profit current sellers make by selling products on Amazon FBA. Let’s look at some statistics.

Let’s look at some monthly revenue numbers.

  • 40% of Amazon sellers sell between $1,000 and $25,000 per month
  • 30% of Amazon sellers report sales of $5,000 or more per month
  • 31% of sellers earn less than $500 per month
Monthly sales Percentage of sellers
less than $500 31%
$501~$1,000 17%
$1,001 – $5,000 twenty two%
$5,001 – $10,000 11%
$10,001 – $25,000 7%
$25,001 – $50,000 Five%
$50,001 – $100,000 Four%
$100,001 – $250,000 1%
$251,000 – $500,000 1%

Many sellers have recently started selling products on Amazon, and are showing early signs of success due to the power of Amazon’s supply chain and large customer base.

Can you make money selling on Amazon?

Revenue alone doesn’t tell you everything about a person’s business. Even if he has sales of $1 million, he will not make a profit if his costs exceed that amount.

Compared to other traditional businesses such as brick-and-mortar stores, Amazon sellers can expect relatively high profit margins.

  • 57% of Amazon sellers achieve profit margins of 10% or more
  • 28% of Amazon sellers earn at least a 20% profit margin
  • 30% of Amazon sellers have lifetime profits of more than $50,000

Not too bad considering many new sellers start this business as a side hustle.

SMB seller profit margin Percentage of sellers
~1-5% 12%
6-10% 16%
11-15% 13%
16-20% 15%
21-25% 15%
26-50% 13%
51-100% 1%
Currently not making a profit 13%

While these numbers are encouraging, it’s worth noting that 13% are still not profitable. If you don’t know your profit and loss, you can use tools like Sales Analytics to track sales and profits to get a complete financial picture of your business.

Financial command center for Amazon Business.

Jungle Scout’s Sales Analytics lets you track your Amazon sales data in real-time to instantly see your profits, track commissions, and understand the financial health of your business.

Advantages and disadvantages of selling on Amazon

FBA is a great business model that allows anyone, regardless of their e-commerce experience, to open an online store and list their products to millions of potential customers. However, as with all things, good things also come with drawbacks. To help you decide if Amazon FBA is worth it, let’s take a quick look at some of the pros and cons of selling on Amazon.

Advantages of selling on Amazon

  • Access to Amazon’s loyal customer base: Amazon.com receives nearly 3 billion monthly visits and has more than 300 million Prime customers worldwide. As a small independent business, you can list your products on a website that receives millions of hits a day.
  • When using FBA, Amazon handles the logistics. When you use Amazon’s FBA program, you send your inventory to Amazon’s fulfillment centers and handle storage, order fulfillment, and even customer service.
  • Prime shipping: When a seller uses FBA to fulfill an order, your products will receive a Prime badge, giving you access to Amazon’s vast Prime customer base that only orders from Prime sellers.

Disadvantages of selling on Amazon

  • Storage fee: If you use FBA, your products will be stored at Amazon’s fulfillment centers, so you will need to pay storage fees. There are two types of storage fees: monthly fees and long-term storage fees. Learning how to manage your inventory correctly can help you avoid high storage fees.
  • FBA fees: Amazon must charge a fee to store, pick, pack, and ship your order. FBA fees vary depending on the size and weight of the item. FBA fees and referral fees combined are typically 30-40% of the product price.
  • Customers can easily return items: Due to Amazon’s generous return policy, some sellers may have a high return rate for their products. It’s convenient for customers, but it’s a hassle for sellers.

How much money and time does it cost to sell on Amazon?

You can see how much money you could potentially make, but how much does it cost to start an Amazon business? Not only does it require an up-front financial investment, but it also requires an investment of time.

money

One of the most frequently asked questions at Jungle Scout is, “How much money should I start with?” Most sellers (64%) started their Amazon business with about $5,000 or less, while 25% started with less than their $1,000 and 16% started with less than their $500.

If you plan to launch your own private label brand, yes, you will need to prepare more funds. However, if you want to make money as quickly as possible, retail arbitrage or wholesale trading is the way to go, even if you have a small budget.

Again, keep Amazon’s fees in mind when deciding whether it’s worth selling on Amazon. Before investing in inventory, make sure that if you sell your product on Amazon at the sales price you choose, you’ll make a profit after all fees.

What fees do I incur as an Amazon seller?

  • Introduction fee. Referral fees are paid by all Amazon sellers, regardless of whether they use FBA or FBM to fulfill orders. This is a “fee” paid to Amazon for each item sold on Amazon’s platform. This fee is typically a flat percentage of 15% or less.
  • FBA fees. If you use Fulfillment by Amazon for your products, Amazon charges FBA fees based on the weight and size of your products. For example, if you sell a small standard-sized item that is 15 inches x 12 inches x 0.75 inches or less and weighs 4 ounces or less, you will pay a fulfillment fee of $3.22.
  • FBA storage fees. When you store your products on Amazon, you are charged a monthly storage fee for the space your products use. For example, from January to September, Amazon charges $0.87 per cubic foot.
  • Subscription fee. If you have a professional seller account on Amazon, you will be charged $39.99 per month.
Learn how much it really costs to sell on Amazon.

How did the seller finance the business?

When starting their first Amazon business, 81% of sellers chose to start their own business or tap into their personal savings. If you don’t have a lot of money to start with, we recommend bootstrapping (which means starting with a small amount of money and continuing to reinvest) or personal savings.

It is risky for new sellers to use credit cards or loans, as it will be difficult to repay the debt if you purchase poor quality inventory. Having said that, 6% of the sellers borrowed money from family members, 23% used credit cards, and about 15% started their business with some kind of loan.

How long did it take you to make a profit?

Amazon sellers make money much faster than a typical small brick-and-mortar business. Although it can take more than two years to make a profit, 22% of Amazon sellers report that it took them less than three months to make a profit, and 58% said it took them within their first year to make a profit. We are making a profit. No, Amazon isn’t a “get rich quick” game, but it’s very possible to start making money early.

However, this is not the case for all sellers. For sellers who have launched a brand, it may take a little more time before they start seeing some profits. 16% of sellers said it took them 3-6 months to make a profit, and 11% said it took them about 1-2 years to make a profit. This is common with private label products, especially at the launch stage.

Sellers spend money on promotions and advertising to keep their listings running smoothly.

Discover all the different ways to make money on Amazon (whether you sell or not).

time

To successfully sell on Amazon, you need to put in the time to succeed. With consistency, he can quickly launch his first product within 3 months, just like 48% of his other Amazon sellers. 23% were launched within his 6 weeks.

However, I don’t feel like I need to get it up and running right away. For his 19% of sellers it took him 6 months to he 1 year to launch his Amazon business.

Go at your own pace and do what you feel most comfortable with.

How much time does a seller spend each week on business?

In the early stages, you’ll probably spend more time on your own adventure. His 12% of sellers spend 21-30 hours a week on their business, and 16% start selling full-time on Amazon, working almost 40 hours or more.

If you use FBA to handle all your order logistics, like 50% of sellers, it makes sense to spend less than 10 hours a week on your business.

The amount of time you spend on your business depends on what you want from it.

To learn more about what it takes to sell on Amazon, check out our Seller Status report.

Is there too much competition to sell on Amazon?

Competition has increased in recent years, but as you learned above, selling on Amazon can still be profitable for new sellers. In fact, Amazon Marketplace is considered the least competitive when it comes to selling on the US marketplace.

There will always be competition in any business you decide to pursue. And competition is good because competition means there’s a market for your product.

Nearly 600,000 new sellers will sign up to sell on Amazon this year. Yes, that’s a huge number of sellers, but remember that Amazon’s market share continues to grow every month, quarter, and year no matter how you look at it.

So while having more sellers may make things more difficult for existing sellers, they won’t necessarily be stealing sales from each other, but will be sharing a much larger and growing customer base.

As a new seller, don’t jump on a product without doing any research or just because it’s “popular.” Take the time to do the proper product research you need to succeed in e-commerce and Amazon.

Is Amazon FBA worth it?final thoughts

Yes, Amazon is competitive. It takes a lot of time and money to get started, but contrary to popular belief, it’s not a set-it-and-forget-it type of venture. Running an Amazon FBA business requires learning, patience, and hard work. But is it worth selling on Amazon? Ultimately, the answer is up to you, but here’s what we say. yes.

In our opinion, there are far more benefits than downsides to selling on Amazon. Will every seller who launches a product on Amazon be successful? Probably not, but if you work hard, constantly improve, and learn from your mistakes. will be Successfully sold on Amazon.

Anyone can do it. why can’t you?

How can I learn how to sell on Amazon?

There is certainly a learning curve to working with Seller Central efficiently. It’s no surprise that 29% of Amazon sellers say they need more training and 24% are confused about how selling on the platform works.

Despite all the opportunities for entrepreneurs, the idea of ​​selling online can be daunting. His 39% of sellers are concerned about competition and 33% are frightened by the online sales process.

Our guide will walk you through every step of selling on Amazon, from opening your account to launching your first product.

Seller resources

Fortunately, countless Amazon sellers are finding success on their own with the help of great educational content available online. Many of them are free. For example, on Jungle Scout’s free resources page, you’ll find a wealth of high-quality content, including blog articles, reports, videos, and more. It also includes more powerful initiatives, including a complete and detailed guide on how to sell on Amazon for beginners in 2024. Once you’ve gained attention and secured a budget to continue your seller education, you can level up and take courses. Hire a coach or attend industry events.

Other valuable resources from Jungle Scout include:

Do you have any other questions about selling on Amazon FBA? Let us know in the comments!

Take your Amazon Business to the next level.

Start and grow your Amazon business with Jungle Scout’s suite of data intelligence tools.



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