Selling on Amazon is a primary income source for many Amazon sellers while for others, it’s a means to complement existing earnings.
Regardless of your purpose, the ultimate goal is to establish a thriving Amazon business. But just how profitable is it to sell on Amazon? How much do Amazon sellers make?
With a staggering 2 million third-party sellers on the platform and a continuous influx of new registrants, competition is fierce. However, new sellers can still achieve an average yearly profit of nearly $30,000, provided they employ the right strategies and planning.
Success won’t come overnight, but with persistence and determination, it’s most certainly achievable.
Is Being an Amazon Seller Profitable Still in 2023?
Yes! Without doubt becoming an Amazon seller can be an extremely profitable venture.
According to Jungle Scout’s 2023 Amazon Seller Report, in which over 2000 Amazon sellers were canvassed, a promising 85% of sellers plan to continue their Amazon journey, with 82% of them considering it a dependable source of income.
While it’s important to note that 9% of businesses have yet to see profits, it’s also encouraging to learn that over 70% of third-party sellers are already profitable.
As an expansive platform closely connected to various industries, Amazon offers ample opportunities for sellers to identify profitable niches and maintain healthy profit margins.
There may be a select few newcomers who experience rapid sales growth and generate over $250,000 a month, but it’s crucial not to set unattainable expectations.
Instead, focus on finding a popular and profitable product to sell, and be patient. By launching an Amazon FBA business, you’re creating an asset that could potentially be sold for 3 to 7 times your annual profits in the future.
How Long Does It Take To Become Profitable?
Building a profitable online business on Amazon requires patience and persistence. Some Amazon FBA sellers might not even experience sales within the initial three months after listing their products if they haven’t got their launch strategy right.
However, that shouldn’t deter you from selling on Amazon. In the Jungle Scout seller report mentioned above they discovered;
- 22% of Amazon sellers make profits within the first three months.
- 13% take 3 to 6 months to become profitable.
- 19% register profits within 6 months to 1 year.
- 10% of the sellers see profits within 1 to 2 years.
- Only 2% take an excess of 2 years to become profitable.
- 7% of sellers don’t know when they became/or will become profitable.
Overall, 64% of sellers become profitable within the first year of selling on Amazon.
With the right strategies, tools, and market research, it’s really up to you and the actions you take as to how quickly you become a profitable Amazon seller.
How Much Did Amazon Sellers Make on Average in 2022?
The Jungle Scout survey revealed that most Amazon sellers register average monthly sales of $10,000, while some of the most successful Amazon sellers make an excess of $100,000 in monthly sales.
Here is a more granular breakdown:
- 17% of the sellers make under $500 in monthly sales.
- 10% make $501 to $1,000 monthly.
- 17% make $1,001 to $5,000 monthly.
- 12% stay within the $5,001 to $10,000.
- 16% reach the $10,001 to $25,000 range.
Summary: 45% of Amazon sellers make between $1,000 and $25,000 in monthly sales, which translates into $12,000 to $300,000 in annual sales.
Also;
- 12% of the sellers earn $25,000 to $50,000 monthly.
- 8% make $50,001 to $100,000 monthly.
- 5% earn between $100,001 and $250,000 monthly.
- 1% of sellers make $250,001 to $500,000 in monthly sales.
Summary: 25% of Amazon sellers make between $25,000 and $250,000 in monthly sales, which translates into $300,000 to $3,000,000 in annual sales.
What about lifetime sales?
Here’s some interesting data:
| % of SMB Amazon sellers | Lifetime Sales | Aggregate |
|---|---|---|
| 23 | ≤ $25,000 | 43% of Amazon sellers made less than $100,000 in lifetime sales. |
| 12 | $25,001-50,000 | |
| 8 | $50,001-100,000 | |
| 12 | $100,001-500,000 | 46% of Amazon sellers made over $100,000 in lifetime sales. |
| 15 | $500,001-1,000,000 | |
| 13 | $1,000,001-5,000,000 | |
| 3 | $5,000,001-10,000,000 | |
| 3 | $10,000,001-50,000,000 |
While lifetime sales volume can be a sign of a thriving Amazon business, it doesn’t necessarily reflect the seller’s actual earnings. To get a clearer picture, it’s essential to examine Amazon seller profits instead.
What Was The Average Amazon FBA Income And Net Profit?
Running an Amazon FBA business comes with various costs that include:
- Inventory acquisition cost
- Amazon fulfillment and storage fees (for slow-moving items, there will be long-term storage fees)
- Referral fees
- Advertisement and promotion expenses
- Other business expenses like research software, business registration, taxes, etc.
To determine the average Amazon seller income or net profit, it’s crucial to deduct all of these and any other related expenses from total earnings.
The higher the profit margins the better! However, factors such as transportation costs and changes in fee structures can contribute to fluctuations in profit margins.
Average Income and Net Profit in Numbers
So, how much profit does an Amazon FBA seller make?
The JS research reveals something interesting!
Very small sellers often struggle to reach break-even and register profit, and it can take them a few years to become profitable.
However, small to medium sized sellers have decent profit margins. The research found that 52% of Amazon SMB sellers have 10%+ profit margins, and 25% of sellers have less than 10% profit margins. The rest are either not profitable or they don’t know.
The table below gives the granular breakdown of the profit margins reported during the survey:
| Percentage of Sellers | Profit Margin |
|---|---|
| 8% | Don’t know |
| 14% | Not yet profitable |
| 12% | 1-5% |
| 13% | 6-10% |
| 11% | 11-15% |
| 14% | 16-20% |
| 10% | 21-25% |
| 13% | 26-50% |
| 4% | 51-100% |
But that’s only the percentage value. How much profit can you make in an absolute dollar amount?
That’s difficult to say. The net profit or income in absolute dollar amounts will depend on Amazon fees when you start selling, plus the COGS (cost of goods sold), etc.
Jungle Scout found that 14% of the sellers earned a profit of $50,000+, while only 9% of sellers exceeded the lifetime profits of $100,000.
Here is the granular breakup:
| Percentage of Sellers | Absolute Profit in Dollar Amount |
|---|---|
| 62% | Less than $25,000 |
| 6% | $25,000 to $50,000 |
| 5% | $500,001 to $100,000 |
| 6% | $100,001 to $500,000 |
| 2% | $500,001 to $1,000,000 |
| 1% | $1,000,001 to $5,000,000 |
| 0% | $5,000,001 to $10,000,000 |
| 9% | Yet to make profits |
| 9% | They don’t know |
The absolute profit you can make when you start selling on Amazon will depend on your profit margins. Depending on your product costs, strategy, and profit margin, you could very feasibly become a super seller and earn over a million dollars in profits.
How Much Money Do Resellers Make On Amazon?
Also known as arbitrage, reselling on Amazon is another business model you can explore.
Although it requires less investment, it’s difficult to predict how much you can earn.
Your earning potential will depend on several factors;
- The type of products you sell: Some products will have higher profit margins than others. Also, if you can find discounted products from other marketplaces or retail stores, profit margins can be even higher.
- The inventory size: For arbitrage, you’ll source your products from other retailers. This means there will be a limit on how much you can purchase. If you don’t have a big enough inventory to meet demands, you’ll lose out on sales.
- Your product portfolio: Sticking to just one product may limit your growth. If you can stock and sell many products, your earnings will increase, however, increasing inventory size and expanding your product portfolios will require a bigger investment.
Even if you find profitable products, you might run up against some restrictions. Many brands don’t allow the reselling of their products, and some categories are restricted by Amazon.
Navigating these restrictions can be a significant challenge, however if you have the budget, you could employ a professional ungating service to assist you.
When executed correctly, reselling on Amazon has the potential to be extremely profitable.
Tips To Maximize Profits As An Amazon Seller
Here are some vital tips to maximize profits as an Amazon seller:
Effort:
Amazon selling is not a shortcut to instant wealth. It requires dedication and effort to identify the ideal product, the right supplier, and an effective strategy to outperform competitors.
New sellers who don’t succeed are often those who invest minimal effort and expect success to materialize on its own. Unfortunately it doesn’t work like that. You have to make it happen.
Research, Research, Research:
Finding the right product is your first step towards maximizing profits. Your chosen product needs to be in high demand and ideally facing minimal competition.
Additionally, it’s crucial to partner with a reputable supplier to source quality products and create a dependable supply chain.
Don’t fly blind. Use reputable research software like Jungle Scout to find winning products; study your competition, find suppliers, manage inventory, and manage PPC campaigns. Remember, data is your best friend.
Learn How to Build Your Own 7-Figure Amazon FBA Business
Part of the Junglescout suite of excellent FBA tools, the learning academy is a comprehensive video training library containing hours of content, including training videos, webinars, and interviews with successful Amazon sellers.
Whether you’re just starting your business, or growing your brand, get expert training from Amazon sellers without the hefty price tag.
Account for All Costs:
Make sure to include all costs while calculating the potential profit margins. Surprise expenses can make a dent in your profits.
The standard Amazon FBA revenue calculator doesn’t account for all expenses. I recommend using the Jungle Scout Profit Calculator.
It is the most complete profit estimator and covers extra possible expenses like upfront costs, fixed costs, variable costs, etc.
Also, don’t forget to track changes in suppliers’ costs. An increase in product costs can lower the profit margin of your Amazon business.
Cheap is Not Always Profitable:
You may be tempted to select the supplier offering the lowest price. That could potentially compromise the product’s quality, leading to customer dissatisfaction and negative reviews can significantly impact your seller rank.
Do your research!
Adjust Strategy:
A successful business must be dynamic and adjust to changing market conditions and demands. Adjust your strategy as and when needed. If sales velocity drops, consider a price reduction, PPC campaigns, etc.
For very slow-moving products, avoid stocking too many units to reduce inventory storage fees.
Manage Advertising Expenses:
It is easy to overdo advertising, especially when you get clicks, and your conversion rate is good for the traffic you receive.
However, ensure that your advertising expenses don’t exceed 6 to 10% of the profits. If you make $50 in profits, your advertising expenses need to be only $3 to $5.
Amazon FBA Fees:
FBA fees eat up 25% to 40% of your margins. Many sellers don’t realize that packaging size, storage duration, etc., can quickly erode profits. So, ensure that you are thoroughly aware of the factors that impact fees and, by extension, profits.
Product Returns:
Product returns are a reality for any FBA online business. However, your Amazon business will take a hit if there are too many returns.
This can harm not only your reputation but also reduce your sales velocity due to the detrimental effect on your listing. As returns aren’t cost-free, they can ultimately erode your profits.
Be Careful With Product Promotions:
Promotions like lightning deals, discount codes, etc. are good for maintaining sales momentum, but promotions also have a margin impact.
You may feel tempted to rack up as many sales as possible by going to the bargain basement for a couple of days, especially for slow-moving products, but know your numbers and ensure you’re not erasing your profits.
Don’t Forget Taxes:
Depending on where your customers are, tax rates can vary significantly. If you’re selling in multiple countries, calculate a median tax and add it to your product price to ensure that taxes are not scraping off your profits.
Learn How to Build Your Own 7-Figure Amazon FBA Business
Part of the Junglescout suite of excellent FBA tools, the learning academy is a comprehensive video training library containing hours of content, including training videos, webinars, and interviews with successful Amazon sellers.
Whether you’re just starting your business, or growing your brand, get expert training from Amazon sellers without the hefty price tag.
How Much Do Amazon Sellers Make? – FAQ’s
Does selling on Amazon make a lot of money?
Making a lot of money selling on Amazon will depend on what you are selling, your sales velocity, your ability to outperform your competitors, and so much more! Selling on Amazon is not a get-rich-quick scheme. It is possible to make a lot of money by selling on Amazon if you have good planning and excellent research capabilities.
Can you make 6 figures off FBA Amazon?
Yes, you can make 6 figures off FBA Amazon, in fact, we made over 7 figures in our first year selling on Amazon. There are several sellers who make more than a million dollars in absolute profits per year.
For that to happen, you’ll need high sales volume and maintain a large inventory, which requires a significant investment.
Start slow and keep reinvesting your profits back into your business to scale it quickly.
How Much Do Amazon Sellers Make – Summary
Building a successful and profitable Amazon business is a journey that requires time, dedication, and strategic planning. From selecting the right products and suppliers to managing returns and maintaining a positive reputation, each step is crucial to your venture’s success.
While the road to becoming a prosperous Amazon seller may be challenging, the potential rewards make it a worthwhile pursuit.
Remember to set realistic goals, be patient, and continuously refine your strategies to thrive in the competitive world of Amazon selling. By doing so, you’ll be well on your way to building a sustainable and profitable online business.
