I don’t mean to be the bearer of bad news, but the data is out and it shows that Amazon re-sellers are a dying breed. The most successful Amazon sellers are brand owners or those who represent brands via exclusive relationships.
While you can still make money as a re-seller, it’s not a long-term sustainable business model.
This is EXACTLY what I did with my own Amazon business. To the point where 99% of my sales come from exclusive relationships.
Before getting into strategy though, let’s look at some numbers from 2017.
- Amazon had a total of 2.5 Million active sellers worldwide (excluding sellers who registered but never listed products for sale).
- 140,000 of active US sellers achieved sales of over $100,000.
- And just 20,000 US sellers had sales of over $1 Million. Yet this group accounted for the majority of the third-party sales (by dollar volume).
- The average net profit for many small-scale Amazon sellers is roughly twenty percent after all expenses.
- Therefore, based on the data, most active US Amazon sellers in 2017 made less than $20,000 in profit.
- And around 80 percent of these US sellers made less than $10,000 profit for the year.
So why do the majority of active sellers make so little?
I have some theories……
- Many new sellers “dabble” with selling on Amazon, yet never really treat it as a serious business.
They might sell some used books and do a little in store or online arbitrage. But after a while, they go back to focusing on their day jobs and quickly lose interest.
2. They lack the capital to generate enough sales. It takes money to make money selling on Amazon.
For those with limited capital, I always suggest starting with used books. But this requires you to re-invest all of the profits for months, maybe even a year or more in some cases and most people just grow impatient waiting.
3. Overwhelm. Taxes, import laws, certifications, brand restrictions, IP infringements, gated categories, advertising, conversions etc. is a lot to take in. Many sellers think it’s too hard and throw in the towel. (Hint: It’s not!)
Don’t get discouraged though!
It’s not impossible to make money selling on Amazon, but it does require careful planning, solid strategy, consistency and realistic expectations.
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