Forbes recently called the Amazon FBA business (Fulfillment By Amazon) a “gold rush”, and there’s no denying what’s happening in the industry. Amazon FBA businesses, even smaller-scale sellers, are seeing incredibly high returns on their investments. So much so that large-scale investors with a lot of capital are acquiring Amazon FBA business and paying out the sellers. This is called the “micro-acquisition space” and compared to traditional investments for online businesses it’s unique, as investors can grow a product in whatever they want, and see insanely high ROIs. This article will explore how and why the ROIs at Amazon FBA businesses are so high comparatively, and how you can get in on the action.
Comparing Amazon FBA To Other Ecommerce Sites
Amazon FBA gives sellers access to the global market, with built-in brand recognition through the company. Although they do charge a portion of the profits as a fee, around 35% per sold item because they are taking care of the shipping and storage costs, they offer business to make a name for themselves. Other sites, for example, Etsy, charges a transaction fee and a fee for listing and processing. Due to other sites forcing the seller to pay for shipping themselves generally they don’t offer free shipping, which can harm sales and ROIs. The reason that Amazon FBA businesses see higher ROIs than other online businesses is due to the ease of the user experience on the website, the free and fast shipping they know and love, and a global market that feels safe purchasing from Amazon.
How Much Are Amazon FBA Sellers Making
Jungle Scout reports that half of Amazon sellers make between 1K-25K per month and 13% make between $25,000-$250,000 per month in sales. However, they also report that 22% of sellers make less than $500 a month, so it can vary depending on the amount of research and marketing skills a seller has. The ROIs depend on the product’s profit margin, the higher price you can sell at and lower your cost of goods, the more money you make.
How to Sell On Amazon
Before you begin to sell on Amazon, you need to do a fair amount of analytic and product marketing research about what will have a fruitful ROI. Products that work for many sellers are ones that can be sold year-round, are relatively small-as this helps with storage and shipping costs, and haven’t been oversaturated in the market. Sellers will need to have capital they can invest in their business. Many sellers don’t invest large amounts of money (~$500-1k), they invest their time and energy. Noticing the growth trends can help sellers decide on which products will do well in the coming year or years.
Amazon FBA not only makes selling easier through their fulfillment order method, but they also offer sellers access to consumers from around the globe. Amazon is only growing each and every year, so if you’re considering starting an Amazon FBA business, now is the time to do it.
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