Is Selling on Amazon FBA Still Worth It in 2024?

Is Selling on Amazon Still Worth It in 2024? Absolutely, Here’s Why.

In the ever-evolving landscape of e-commerce, Amazon continues to be a market leader, boasting an impressive revenue of $574 billion in 2023, a significant leap from $514 billion the previous year. Notably, a substantial portion of this revenue—nearly 23%—is attributed to third-party sellers, underscoring the pivotal role they play in Amazon’s ecosystem. Moreover, 82% of these sellers leverage Fulfillment by Amazon (FBA), showcasing its critical importance in their operational strategy.

The realm of e-commerce is undoubtedly competitive, more so now than ever. Yet, the increase in competition is paralleled by an equally robust growth in consumer demand for online shopping experiences. Statistic that supports this trend is that over half of consumers (51%) initiate their product searches on Amazon, highlighting the platform’s dominance and the trust it has among shoppers.

In this article, we’ll explain why selling on Amazon FBA is still worth it in 2024 and beyond.

How much do Amazon sellers make?

The earnings of Amazon sellers can vary widely based on a range of factors, including the type of products sold, the scale of their operation, and their strategy for utilizing Amazon marketplace, especially Fulfillment by Amazon (FBA) versus merchant-fulfilled options.

Let’s see some monthly revenue numbers:

• 40% of Amazon sellers sell anywhere from $1,000 to $25,000/month
• 30% of Amazon sellers report sales above $5,000/month 
• 31% of sellers make under $500/month in sales

Monthly Sales	Percent of Sellers
Under $500	31%
$501 – $1,000	17%
$1,001 – $5,000	22%
$5,001 – $10,000	11%
$10,001 – $25,000	7%
$25,001 – $50,000	5%
$50,001 – $100,000	4%
$100,001 – $250,000	1%
$251,000 – $500,000	1%

Pros and cons of selling on Amazon

Amazon’s Fulfillment by Amazon (FBA) program is a game-changer, making it easy for anyone to start selling online, regardless of their experience. It’s a straightforward way to get your products in front of millions of people. But, like all things, it comes with both upsides and downsides.

Pros of selling on Amazon

– Reach Amazon’s Massive Audience: Imagine your small business tapping into Amazon’s nearly 3 billion monthly visitors and over 300 million Prime members globally. With just a few clicks, your products can be where millions are looking every single day.

– Let Amazon Handle the Heavy Lifting: With the Fulfillment by Amazon (FBA) program, you ship your products to Amazon, and they take over from there. Storage, shipping, returns, and even customer questions—Amazon covers it all. This means you can focus more on your products and less on the logistics.

– Prime Advantage: Products fulfilled by FBA automatically qualify for Prime. This gives you a direct line to Amazon Prime customers who prefer shopping with the convenience and speed of Prime shipping.

Cons of selling on Amazon

– Storage Costs: Using FBA means your items are stored in Amazon’s fulfillment centers, leading to storage fees. There are monthly fees for the space your products occupy and additional fees for items stored for a long time (aged inventory). Mastering inventory management can help you dodge steep storage costs.

– FBA Fees: Amazon charges fees for storing, handling, and shipping your products. These fees vary based on your product’s size and weight. Generally, combined with referral fees, you might pay around 30-40% of your product’s price in fees. It’s crucial to factor these costs into your pricing strategy.

– Returns: Amazon’s customer-friendly return policy can lead to higher return rates for your products. While this policy is great for customers, it can be a challenge for sellers, requiring you to manage returns and potentially affecting your bottom line.

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

The investment required to start selling on Amazon varies widely, depending on the scale of your operation and the nature of your products. Financially, you could need anywhere from a few hundred to several thousand dollars to cover initial inventory, FBA fees, and other startup costs. Time investment is similarly variable, with initial setup potentially requiring several weeks to months of research, product sourcing, and listing optimization. For a detailed breakdown of both financial and time commitments, refer to our comprehensive article on starting your Amazon selling journey. There, we delve into the nuances of budgeting, inventory management, and strategizing for success on Amazon, providing a roadmap for both new and seasoned sellers aiming to navigate the complexities of the Amazon marketplace efficiently.

Is it too competitive to sell on Amazon? 

Despite the growing competition, launching a new business on Amazon can still lead to success, as we’ve discussed. Interestingly, the U.S. Amazon marketplace is seen as the least competitive, making it an attractive option for new sellers.

Remember, encountering competition in any business is a positive sign. It indicates a strong demand for your products, showing that you’re on the right path.

In fact, it’s not that amazon is oversaturated is that some products and categories are oversaturated like Yoga mats, for example. 

This perspective highlights a crucial strategy for potential Amazon sellers: the importance of niche selection. While some areas, like yoga mats, may appear oversaturated, countless opportunities remain in less crowded categories. The key to success on Amazon is not just about entering the market; it’s about finding the right niche where your products can stand out and meet specific customer needs. By focusing on areas with less competition but still a significant demand, utilizing advanced Amazon ads techniques you can carve out a profitable space for your business. This approach requires diligent research and understanding market trends, but it can lead to a rewarding venture on Amazon’s vast and dynamic platform.

Is Amazon FBA worth it? Final thoughts

Yes, Amazon’s marketplace is indeed competitive. Launching a venture here demands a fair share of time and investment. And dispelling a common myth, it’s not a venture you can simply set up and forget. Steering an Amazon FBA business towards success involves a continuous cycle of learning, determination, and diligent effort. So, is venturing into Amazon’s selling space worthwhile? The decision ultimately rests with you, but our stance is a resounding yes.

We believe the advantages of selling on Amazon significantly outweigh the challenges. Will every new seller on Amazon strike gold? Probably not. However, with dedication to refining your approach, embracing continuous improvement, and learning from setbacks, success on Amazon is not just possible but probable.

After all, if countless others have navigated their way to success on Amazon, what’s stopping you? Embrace the challenge, and you too can join the ranks of successful Amazon sellers. Contact us to get started!