By now, you’ve probably heard about how many people are jumping on the train of e-commerce. Specifically, many people are becoming sellers on websites like Amazon.
Whether it’s because people believe following this path is an easy way to make money or you’re looking to become your own boss, you must be wondering: “How much money can I actually make?”
In this article, we’ll talk about how average incomes for Amazon sellers and how much you can expect to make!
Amazon and Third-Party Sellers
Before we talk about specific income, we’ll first need to talk a little about how people make money on Amazon. If you didn’t already know, Amazon allows third-party sellers to post product listings on their website. It’s an increasingly popular way to make some cash on the side or start your own online retail business through the e-commerce giant.
Amazon sells a lot of products using third parties. In fact, you might be surprised to know that over half of the products that have been sold in 2021 came from a third-party seller. Whether it’s selling their own products or Amazon products, people have been using this to make money online for a few years now, kind of like Ebay.
Hearing this might come as a shock to you and now you might be wondering how you can cut yourself a slice of the Amazon pie and establish your own brand. Additionally, Amazon has a variety of tools that can help these sellers such as Seller Central.
This is where vendors can change a variety of things such as pricing and their Amazon listings. Most notably is something that is known as Fulfillment by Amazon (FBA) or sometimes it’s just called Amazon FBA. An Amazon FBA Seller has access to a lot of benefits.
It can make managing your e-commerce business a lot easier because Amazon will manage things like shipping and return orders so you don’t have to! All you have to do is ship your items to one of Amazon’s warehouses and they’ll handle deliveries whenever and items of yours are shipped.
However, there are FBA fees when you use this service. So new Amazon sellers might be scared off from this and prefer to deliver their items themselves. This method is known as Fulfillment by Merchant (FBM).
Average Sales For Amazon Sellers
Now that you have some context behind third-party selling on Amazon, let’s talk numbers. Specifically, let’s look at the average income for sellers. First, we’ll look at average earning for most people who are sellers, and then we’ll take a look at how much money the top sellers rake in.
According to some recent research, most people make a decent amount of money. Many sellers make at least $1,000 a month in sales. This number proves that you can easily use Amazon selling as a steady side hustle or passive, supplemental income.
However, this is just the low end of the average spectrum. It was reported that nearly half of all third-party sellers on Amazon make between $1,000 to $25,000 a month in sales! Of course, that’s not even mentioning what sellers at the top of the chain are making per month.
They make up a small percentage, only about 19%, but these people earn anywhere between $25,000 to $250,000 a month in sales! This means you’d be making about 3 million dollars in total revenue at the end of the year. There are also people who make even more than that, but only make up about 6% of sellers.
But what about people at the very bottom? Should you be worried about that statistic? Thankfully, you won’t really have to worry. Especially if you’re just starting out, you shouldn’t be expecting to make that much money. That being said, people on the lower end of the spectrum make under $500 a month.
However, they make up a smaller percentage than those who make over $1,000 a month.
Profits and Lifetime Sales
While all of these big numbers are obviously tantalizing, it’s important to stay grounded when it comes to new business ventures. What we just talked about were sales, not total profits after things like fees and taxes. Not to mention the fact that we haven’t even begun to discuss how much you can expect to make during your business’ lifetime.
So, as an Amazon seller, how much can you expect to reach in terms of lifetime sales? Thankfully, the numbers for this are pretty high, much like the average monthly sales. It’s been reported that a great deal of Amazon sellers ends up making over $100,000 in sales in their business’ lifetime. Surprisingly, this number is on the lower end of the spectrum.
In fact, 43% of Amazon sellers will make over $100,000 during their business’ lifetime. While this is certainly appealing, sales don’t really show us everything. We’ll take a look at how much profits the average Amazon seller can expect to make to give you a more realistic look into how profitable being a seller can be.
Depending on who you talk to, the profit margins for Amazon sellers can seem reasonable or unfortunately low. Generally speaking, Amazon sales will actually see higher profits than a startup small company that tries to do this on its own.
As an example, you’ll find that most sellers will have a profit margin higher than 10% and you’ll see other sellers making profits over 20%. It should be remembered that these profit margins were ultimately taken from lifetime earnings, rather than from one year.
The reason for this is because profit margins can fluctuate drastically during a year due to things like demand, expenses, and other factors. Therefore, sellers who participated in the study used their lifetime profits.
What Can I Expect For Lifetime Profits?
Now here comes the big question. After all the considerations about average sales numbers, profit margins, and so on, it’s time to talk about how much money you can expect to be returned as profits. The good news for you is that the profits tend to be quite noticeable. In fact, the brunt of Amazon sellers has reported lifetime profits over $25,000.
While this might seem low in the grand scheme of things, this is what you might expect to make if you’re using Amazon as a side hustle or way to create passive income. Someone who’s taking this venture more seriously will undoubtedly make more. In fact, it was reported that 6% of all Amazon sellers saw millions in profits from this business alone.
How Quickly Can I Turn Profits On Amazon?
With the possibility of becoming a millionaire looming in front of you, you must certainly now be thinking this: “How long will it take for my Amazon business to turn a profit?” Well, we have some good news for you. The short answer is that you’ll likely see profits in your first year.
But you’re no doubt interested in the statistics behind that statement. Research has found that over half of independent Amazon sellers, around 64%, stated that they saw profits within a year. To break that down even further, 20% saw profits within 3 months, 17% saw profits within 3-6 months, and 23% saw profits between 6 months and a year.
If you’d like a better idea of the average income from selling on Amazon, you should check out this article. It’s got all the information that you need about the subject.
How Much Money Is Required To Start Selling On Amazon?
When you look at a business model like the Amazon Marketplace and e-commerce, you might think that this is something that you’d need a lot of money for. That you’d need a big loan so you can buy the necessary inventory and to be able to cover any extra fees and costs that come your way.
This couldn’t be further from the truth. Surprisingly, you don’t need that much money to get started with selling on Amazon. The research reports that 28% of sellers only used about $500 to $1,000 to start selling. Even then, the statistics show that you probably won’t spend more than $10,000 if you’re just starting out.
The money that you use to start out is typically spent on referral fees, advertising, shipping costs, and getting the products you actually want to sell. It should be noted that making the initial Amazon seller account is free. There is more you’ll have to invest than just money, though.
Of course, you’ll have to invest a lot of your personal time into this, depending on how serious you’re taking it. This is especially true if you’re planning on making this a full-time job, rather than something to make money on the side. It also depends on if you’re going to be the only one managing things or if you have a team.
Something you may want to consider, whether you’re starting an Amazon business or having trouble managing it, is something called automation.
Automation, What Is It?
This is a topic that we specialize in, as you’ve no doubt noticed. To put it simply, automation, in terms of e-commerce, allows software and various AI to handle a lot of things for you. It’s a very convenient and efficient way to keep your online business moving along efficiently.
Many online business owners end up switching to this method as they don’t like putting up with the repetitive parts of online business owning. What parts are typically automated in an online business? Some examples include automatic emails to customers, automatic ordering of new stock, customer service, private labels, sourcing, dropshipping, listing the best new products, and a lot more.
Automation services can also deal with retail arbitrage if that is the route you’d like to go with your Amazon FBA business.
How Automation Works
E-commerce automation works one of two ways: doing it yourself and hiring people like us. We generally don’t recommend automating your online business yourself as there’s a lot of different tools, software, and systems that you have to make yourself. You may find yourself spending more time trying to automate things than actually being able to sell products.
Therefore, it’s a lot easier to just hire a company that already has these tools to handle things for you. Hiring a company like us is more than just letting a computer do all of the work though. We also have a team of highly trained experts who make sure that your company will increase in profitability.
Whether you’re a small business or a larger retailer, we can handle all of it for you!
Looking To The Future
After having seen all of this, you may begin to wonder if this selling craze using e-commerce is simply just a fad. It’s a very fair concern as many people believe that the rate at which people shop online will decrease once the world recovers from the pandemic.
That being said, you shouldn’t worry. A large number of people are very confident that they’ll continue to use online shopping. It’s very unlikely that you’ll see a huge drop in Amazon’s sales or figures. Online shopping is such an easy and convenient part of many people’s everyday lives.
Therefore, it’s unlikely that they’ll all just stop using it one day. Additionally, Amazon is such an integral part to a lot of many different industries. What this means is that there’s no doubt that sellers will be able to find some sort of market that can satisfy a consumer base.
Even if you’re a new seller and are totally unsure about what you should sell, choosing something niche can be a great way to turn a profit!
Extra Tips For Becoming A Succesful Amazon Seller
Don’t stress about getting everything right immediately. Part of this system is finding out what things do and do not sell. There’s no way to find out if you’ll fail or succeed without taking the plunge and trying things for yourself. Of course, there are ways to increase your chances of success.
Automation services can help make your life easier as you manage your business, and you don’t have to become super serious about selling all at once. What matters is getting your foot in the door and having a foothold on the market.
Make An Effort
A lot of people look at selling on Amazon and see it as some sort of “get-rich-quick” scheme. The unfortunate truth is that this is not the case.
You need to put the effort into watching trends, sales reports, and managing funds if you want to be successful. Even if you are working with an automation business it’s still important to be thoroughly involved in your selling process.
Selling on Amazon is one of the latest and greatest ways that normal people can get into business with the online retail titan. At a glance, it’s a fairly simple way for someone to get into the e-commerce scene but once you start putting in the effort, things get more complicated.
Additionally, you’ll be surprised by the number of successful sellers in this field. You can make a steady income if you play your cards right and maybe even come out of it as a millionaire!