Selling on Amazon, is it worth it?
Is selling on Amazon worth it? If you find yourself asking this question, you aren’t alone. There are over 10,000 search queries on Google every month asking this exact question “Is selling on Amazon worth it”.
There are over 1.9 million active 3rd party sellers on Amazon, and the reason there is so much interest in selling on Amazon are obvious. In 2023 Amazon accounted for nearly 40% of all U.S. eCommerce revenue, with over $440 Billion in sales.
Many business and individuals have have achieved a very high level of success selling on Amazon and it is only natural for others to want to emulate that success.
Contributing to the interest in selling on is the massive Amazon Seller Ecosystem, with companies offering software, “experts” selling webinars, authors writing books, and “Youtube Experts” posting videos on how to succeed in selling on Amazon. All of the above, as well as Amazon itself, have a vested interest in increasing the Amazon Seller Base.
What doesn’t get as much attention is the fact that selling on Amazon has drastically changed over the past 5 years, and primarily to the detriment of sellers.
One of the most impactful changes was the increased impact of Amazon Ads. As recently as 5 years ago, the role ads played in selling on Amazon was negligible. Strategy for achieving top results in Amazon search revolved around improving organic ranking.
But that has drastically changed. In 2023 Amazon earned $46.9 Billion from Ad Revenue, and the trend is increasing with 2024 Q4 Amazon Ads revenue growing by 24%. Great news for Amazon, but for Amazon sellers, not so much. .
Amazon has now become “Pay to Play”. In addition to the FBA fees and standard 15% Amazon Commission, advertising on Amazon is now a required expense and that expense as a percentage of sale keeps rising, eating into Amazon Sellers profit margins.
Another drastic change for Amazon Sellers has been the influx of foreign sellers. Chinese sellers now account for over 50% of U.S. 3rd party marketplace sales. This wasn’t an accident, Amazon actively recruited Chinese Sellers and seemingly caters to them.
Not only does this increase the competition for Amazon Sellers, but if you source a product from China to sell on Amazon, it possible that at some point you will find yourself competing directly with your supplier on the Amazon Marketplace.
The fact is that right now Amazon is dominating the eCommerce marketplace which makes it difficult to ignore, but success selling on Amazon is more challenging than in the past, and there are more stories of failure than success.
So, is it still worth it to sell on Amazon?
The answer to that is more nuanced than in the past, and I’ll dive into it my next blog post.