Do you ever wonder how much Amazon FBA sellers are making?
Why are so many people talking about Amazon FBA?
In this article we’ll look at exactly how much Amazon FBA sellers are making and quickly go over how you can get started with Amazon FBA yourself.
What is Amazon FBA?
Amazon FBA or fulfillment by Amazon is a way of selling your own products on Amazon, without dealing with inventory and shipping.
Instead, you use Amazon FBA facilities to store, pack and ship your products for you.
This is one of the best ways to start an automated e-commerce business in 2021.
An Amazon FBA seller only has to worry about finding the right products, buying inventory, and listing products on the Amazon marketplace.
Everything from there on out is automated by Amazon. Even returns and customer service are completely taken care of by Amazon staff.
How Do Amazon FBA Sellers Make Money?
Amazon FBA sellers make money by offering products on the Amazon marketplace.
Many Amazon FBA sellers buy bulk products for dirt-cheap prices from Alibaba and ship them directly to Amazon FBA Facilities.
These facilities will then automate the process for the seller and take care of everything from there.
For every item that is sold, the Amazon FBA seller will make a profit.
Let’s quickly break down a product sold on Amazon FBA so you can get a better idea of how this works.
We can easily break down the profits by using Amazon’s built in profit calculator.
Let’s use the posture brace as our example which is being sold for around $19.99 right now.
We can find this product for $1.99 on Alibaba if we order 500 pieces.
- Amazon Listing Price: $19.99
- Cost of Goods: $1.99
- Referral fee: $3.00
- Amazon FBA fee: $2.50
Total profit: $12.50 for every posture brace sold.
Assuming we ordered 500 pieces and every piece ends up selling, we can make a grand total of $6,250 on this product.
Of course, your product would have to sell for that. And Amazon FBA can get very competitive.
How Much Do Amazon FBA Sellers Make?
On average, new Amazon sellers are making around $42k per year in profit according to a Jungle Scout survey based on 4,864 Amazon sellers.
How To Start With Amazon FBA
Here are a couple of quick steps new amazon sellers make to get started with Amazon FBA.
This section is just to give you an idea of how it works, you should probably use a more elaborate guide to actually get started.
Step 1: Sign up to Amazon FBA
Signing up to sell on Amazon is quite easy and pain-free, just follow along with the steps. At one point you’ll have to pick between an individual (free but limited) or a professional account (39.99/mo but unlimited).
If you’re serious about Amazon FBA you can go ahead and pick a professional account but if you’re just looking around you can pick the individual plan and upgrade in the future.
Step 2: Pick a niche
Just like any ecommerce business, you’ll have to find a good niche to get started.
Without a proper niche, you won’t know where to get started and you’ll likely end up selling every day items that every seller on Amazon is already selling.
Niche research is a skill on it’s own so I suggest you start researching.
This jungle scout article will get you started.
Step 3: Find product(s) to sell
Once you’ve found yourself a niche, it’s time to start looking at potential products. Ideally, you’ll sell products that aren’t already listed on the Amazon marketplace.
So get Googling and make a list of products within your niche that look promising but don’t have any Amazon results.
Step 4: Find an Alibaba supplier
Once you have a good list of products that you want to sell, you can head on over to Alibaba and find suppliers for these products.
Be sure to reach out to multiple suppliers for the same product so you can get the best quote possible.
Step 5: Ship products to Amazon FBA
This step is a little difficult to explain and would make this article too long so let me redirect you to this youtube video instead.
Step 6: Optimize your product listing
If you’re a frequent buyer on Amazon, you’ll know that some descriptions are pretty elaborate. If you pay close attention you’ll also notice these are heavily optimized for certain niche-relevant keywords.
Amazon sellers should know a thing or two about how to rank on google and optimize their titles and descriptions accordingly.
Frequently Asked Questions
What percentage does Amazon take from FBA Earnings?
Amazon will take an 8-20% ‘referral fee’ on each sold product. The most common referral fee is 15%.
Amazon will also take a $2.50+ FBA fee (price increases by package weight) on each sold product.
Can you lose money with Amazon FBA?
You could definitely lose money with Amazon FBA by purchasing a bulk inventory of bad products that are over-saturated or simply no one wants.
Is Amazon FBA Profitable in 2021?
Considering Amazon is the world’s largest online retailer, I don’t think it should be surprising that Amazon FBA is still profitable in 2021.
Amazon has such a big ‘trust’ factor amongst buyers and makes purchasing online simply so easy that it really is one of the best platforms to sell your products on.
Conclusion
Amazon FBA looks to be a good business-model still in 2021 with the average new seller making a decent amount of profit in their first 2 years.
However, it’s also a very competitive business-model and you can definitely end up losing money if you don’t know what you’re getting yourself into.