It is possible to make a decent living as a seller on Amazon. Not everyone gets enough profits as a seller to make it a full-time job, but a lot does. Depending on who you ask that how much can you or sellers make selling on Amazon. You will get a figure, but it will not tell you the full story. Statistically speaking, the average Amazon seller makes around $42,000 in profits per year before taxes. That is just the average as many make much more than that and even more that do not reach that number.
The reason why people become Amazon sellers is different. Depending on who you ask, you may get answers such as building their own business, supplementing their existing income, and you may even hear some that aspire to get rich selling on Amazon. A good portion cites the opportunity to work remotely or while traveling, which is a valid enough reason. Most likely, your reason for starting a business on Amazon falls into one of the categories above. It means that you expect how much you earn to be happy with your investment.
Regardless of your reasons to become a seller on Amazon, this is probably one of the best times to get started. The online retailing sector has grown considerably in 2020 and 2021. Amazon has reported profits that exceeded expectations. In simple words, you can make a living on Amazon and if you have some time to kill, stick around, and you will learn how much money an Amazon seller makes. We will touch upon the following topics:
– How much do Amazon sellers make in both sales and profits
– Time taken to begin seeing profits and the initial costs to get started
– Profitability of selling on Amazon in 2021
– A few tips to make your business profitable much faster
1. How Much Do Amazon Sellers Make?
There are different ways in which you can build a business on Amazon. Most sellers use the FBA program or Fulfilment-by-Amazon since it adds a certain degree of convenience and can reduce overhead costs. Building a business on Amazon does involve certain costs, and if you plan on selling just on Amazon, the FBA program can help reduce costs and make it so much easier to manage everything. You have much less to manage. You do not have to bother with the storage of your inventory, packaging, shipping, processing of orders or returns. It also allows you to get more detailed reports regarding sales, profits, inventory, etc.
Average Monthly Sales For Amazon Sellers Make
Getting back to our topic, the average monthly sales may look very tempting or promising, but you need to understand a few differences between them. We are not going to get into great detail as to what all the numbers mean. So, I will keep everything short and simple as there are three categories of sellers you need to know about:
– 44% of Amazon sellers make $25,000 or less per year in annual sales. That does not mean profits. It is just the number of sales. Keep in mind that 17% make under $500 in monthly sales and 9% between $501 and $1,000 in sales per month.
– 19% of all Amazon sellers make between $25,000 and $250,000 in annual sales. It means that one in five sellers have the potential to make a full-time living from Amazon.
– 6% of all Amazon sellers generate more than $250,000 in sales per year. Reaching this stage can be difficult, and while it may become a goal of yours, it will take time to get there.
The above figures show the averages calculated on the past 12 trailing months. However, many Amazon sellers have been in the game for a while. Even if there has been an increasing number of Amazon sellers jumping into this type of business over the last year, many have been doing it for years. If we were to look at lifetime sales and averages, one out of two Amazon sellers has generated $100,000 or more in sales since the inception of their online retail business. The number looks promising, but they tell only half of the story. Sale numbers are not the same as profit. There are many variables at play that influence how much profit you generate on each sale.
Average Profit Margin For Amazon Sellers Make
Everyone wants a higher profit margin. For both large and small companies, profit margin determines the future of the business. Many small companies that are in an early stage struggle to become profitable. Some even operate at a loss to grow their sales numbers and become profitable. Amazon, on the other hand, offers the opportunity to score higher profit margins. You are more likely to make a profit in your first few months on Amazon than anywhere else. That happens because Amazon sellers have higher profit margins, which portray how much Amazon sellers make compared to other online retail businesses.
– 7 out of 10 Amazon sellers have a profit margin of 10% or more. To be more precise, 68% of all sellers can generate at least a 10% profit margin. Out of this 68%, some of them get even higher profit margins.
– 36% of all Amazon sellers manage to operate at a 20% profit margin. A 20% profit margin is nearly inconceivable for most businesses. If you managed to place yourself in this bracket, you are doing something right.
– 8% out of all Amazon sellers claim that they have not made any profit yet. Some may reach profitability at a given point, while some may quit when it is no longer sustainable.
What is important to note is sales numbers also influence that profit margins. Usually, the more you sell, the higher your profit margin gets.
Let us talk now about profits!
Profits are difficult to read by just looking at sale numbers. If you want to learn how much Amazon sellers make, the only number you should care about is profits. Sale numbers can often be misleading.
According to some statistics, around 38% of Amazon sellers made more than $25,000 in profits since they started this side hustle. Keep in mind that these are not yearly profits but lifetime profits. Only 6% of them managed to become millionaires by selling on Amazon. What is interesting to note is that Amazon millionaires reached this status faster than your average business owner. These cases are rare, but when they happen, they happen very fast.
2. How much time Amazon Sellers take to reach profitability?
A small company can be unprofitable for several years. On Amazon, things are a bit different. Sellers were asked how long it took them to take their business to a profitable stage. 64% of the respondents claimed that they reached profitability within one year since starting their business on Amazon.
If we were to break down the numbers, things look even more promising. 23% of Amazon sellers took anywhere between 6 months and one year to become profitable. One in five or 20% of them reached profitability in 3 months. 17% managed to reach this status in 3 to 6 months.
Let us now talk about how much money you need to get started.
If you have not started planning anything yet, you most likely have no idea of your initial costs. How much you put down in the beginning also influences how much money you make. However, it is not all about the cash investment. Trading your time to plan and prepare your business also has a monetary value. Think of how much you would consider your time is worth at an hourly rate and multiply that by how much time you invest researching products, talking with suppliers, managing customers, marketing campaigns, running the numbers, etc. That is also part of your initial investment.
The bottom line is that many costs are involved that are not seen as cash, but you can quantify them. To better understand, know that 27% of the Amazon sellers that became truly successful only invested around $500 when they started. However, they did invest a lot of time researching and growing their business. Some of these lucky and hard-working folks have maintained their business for five years or more.
Assuming that maybe you are not one of these people that make a fortune with just $500, you may be one of the 58% of sellers that started with $5,000 as their initial investment. Let us have a look at a quick breakdown in numbers and percentages to understand how Amazon sellers start our their businesses:
- 18%: Started with less than $500
- 10%: Started with $501 to $1,000
- 12%: Started with $1,001 to $2,500
- 18%: Started with $2,501 to $5,000
- 14%: Started with $5,001 to $10,000
- 22%: Started with more than $10,001
The breakdown shows a relatively even distribution, but it is interesting to note that one in five started with at least $10,000 as their initial investment to get that business started. You may have to spend the initial investment sourcing the products, paying for samples, covering Amazon fees, or covering various promotions and giveaways.
Once you get your business started, you will not have to infuse your business with a lot of additional cash. You already have your inventory, and your sales will cover new inventory. Eventual marketing costs may become a reoccurring expense on your budget, but at some point, the business will pay for itself, including all additional costs.
Time You Need To Invest In Your Amazon Business
This topic gets interesting. The numbers I want to show you talk about the time you need to invest in maintaining your business operations which can vary depending on your sale volumes, what types of products you sell or how many different products you have in your inventory. It still does not factor in the time invested in getting your business started.
You often get waived in your face that Amazon sellers do not spend much time managing their business. It becomes a very attractive business opportunity once you learn how much Amazon sellers make and how much time they invest in the business.
According to some statistics, 6 out of 10 Amazon sellers spend less than 20 hours managing their business. 17% of all Amazon sellers spend around 30 minutes per day working on their business. Around 10% of Amazon sellers invest at least 51 hours per week in their business at the other end of the spectrum. There is a link between time invested, sales, and profits. Usually, the more time you invest, the faster the business will grow. The biggest chunk of your time will be invested in the early stages of the business.
3. How profitable is it to be an Amazon Seller in 2021
Due to the current state of the world we live in, the online retailing sector has grown a lot over the past couple of years. 2021 followed the same trend as 2020. That means there is still a good opportunity to become a seller on Amazon. There is an overall degree of optimism, shared by 80% of all Amazon sellers who claimed to continue their business throughout 2021. 68% made a clear statement that Amazon is still a viable way of earning a living online and will continue to remain so for the foreseeable future.
If we look at Amazon, it seems like it has created a world of its own. With hundreds of millions of customers, hundreds of thousands of products, and an increase in demand for discounted products, Amazon continues. A major contribution to the growth of Amazon is attributed to third-party sellers like yourself. Even with this massive growth, there is still room for you to find your niche and sell large product volumes.
Estimate Sales and Profit For New Amazon Sellers Make Per Year
Talking about new sellers that may be starting in 2021, prospects are looking positive. If you were to start today, you could expect to make around $19,500 in sales each month or around $234,000 yearly after your first year. Here is the short answer to the question of how much do Amazon sellers make. This group of Amazon sellers has an average profit margin of 18% which means that your potential take home is around $3,511 per month. Multiplied by 12, that is $42,142 in profit per year.
It does not sound much if you plan to make a living on it, but depending on how much time you invest in the business every week, it can be a side hustle that can supplement an income from a regular job. Depending on how your business grows and how you play around with product pricing and profit margins, you have the potential to make more than $42k per year.
4. Tips to get your business profitable as fast as possible
– Start Now!
The first tip that I can give you is to stop postponing. It would be best to start now as it can take time to reach a high sales volume. Success is built over time, and no shortcut can get you there overnight. You can do things to get there earlier, and starting now is one of them.
Don`t believe me? 68% of Amazon sellers have one major regret, and that is not starting earlier. It is not a get-rich-quick scheme, and time is the essence. However, you should take your time doing product research, look at all the analytics and go in with confidence in what you are planning to do and sell.
– Invest as much time as you can!
Many Amazon sellers regret not investing enough time in the early stages. It could have saved them money and effort. Not all products sell well, and some of the success of a product can be attributed to product research, sourcing, and pricing. Take your time, do the research and try to get in with as much confidence as possible.
Keep in mind that your business needs to evolve continuously; otherwise, it will never grow. You should always research new products and try to find new niches. Diversification translates into security. If one product starts performing poorly, you have other products that keep your business afloat. Please do not overlook this, and do not be fooled into believing that it is a business with a set-and-forget model. If you do not put in the time, your business can die.
– Use proper research tools
Research is probably the most important and recurring activity that you will have. Your business decisions need to be based on factual data. It will help if you have proper reporting tools, product research tools, keyword research tools, tools to help you determine profit margins and costs, and so on. Jungle Scout and Helium10 are the tools I recommend.
Most Amazon sellers regret not using better tools initially and feel like they could have boosted their business in the early stages if they had accurate research data. If you want to know how much do Amazon sellers make, think about the importance of using proper tools to maximize profits.
1. Can you make a full-time living as an Amazon seller?
How much do Amazon sellers make is closely related to how much time he puts into the business. As profit margins are quite high on Amazon, it is possible to make a full-time living as a seller. Some even managed to become millionaires by selling on Amazon alone.
2. How much does the average Amazon seller make in yearly sales?
38% of all Amazon sellers make at least $10,000 in monthly sales or $120,000 in annual sales. The actual profits can vary depending on the profit margin each seller makes with their products.
3. How much time should I invest in my Amazon business?
You can invest as much as you want. 59% of all Amazon sellers invest less than 20 hours per week. Successful sellers that manage to make a full-time living out of it tend to invest a bit more.
4. How long does it take on average to become profitable on Amazon?
There is no straight answer to this. On average, 60% of all Amazon sellers reach profitability in less than a year. A third of them manage to achieve this in their first three months since their first product launch.
5. How much money should I invest in getting my business started?
It depends on what product you want to sell, how much you source it, and how much you want to have in your inventory. The most successful Amazon sellers started with just $500. 22% of all Amazon sellers started with $10,000 or more.
I know this post is a long read, but plenty of valuable data portrays a very good picture of what to expect. Selling on Amazon presents itself as a great opportunity due to the profit margins that you can achieve. However, it takes time and sweat to get there. Not everyone makes a full-time living on Amazon, and there are some reasons why some do not succeed. You will get there if you manage your business right, but it will not get you rich overnight.
In closing, I would like to congratulate you on getting so far. Remember that the info above should serve as a general guideline regarding how much Amazon sellers make. To get to that stage, you need to get through some steps. You can also read my other blog on How To Start Amazon FBA Private Label Business. If you are ready to start the Amazon FBA business, you can check the Amazon FBA course to learn deeper step-by-step A to Z starts from scratch. They will help you If you have questions or you need help during your learning. Most importantly, it will help you to build your Amazon FBA online business successfully.
I hope you will succeed with your journey of Amazon business endeavor, but most of all, it motivates you to keep going and push forward. You will find motivation with each step you take to build your Amazon business. Please do not feel overwhelmed, and do not hesitate to learn from others who have done it before. An Amazon FBA Course can be a good source of information and help you avoid mistakes that others have made.
“The secret of success is to do the common thing uncommonly well.” – John D. Rockefeller Jr.