Can you make a living selling on Amazon, if so how much?
Updated: May 30, 2020
Thompson and Holt managing partner Craig Gedey is not surprised by a leading survey’s findings that 86 percent of third-party Amazon Sellers are making a profit - but urged people to look further into its results.
That figure was the headline statistic from the Jungle Scout survey entitled “The State of the Amazon Seller in 2020”, which covered 1,046 such businesses on the website. Third party Amazon Sellers are now responsible for more than half of the company’s annual revenue, which has been placed at $280 billion in 2019.
86% of Amazon Sellers Made money in 2019
The survey took place between November 14 and December 10, 2019, covering 1,046 Amazon sellers who have more than a year of selling experience and at least one live product listing. Respondents represented 93 countries, all 14 Amazon marketplaces, and all relevant Amazon product categories. They were ages from 18 to over 80, as well as all genders and levels of education.
The results of the survey show what a fruitful and profitable platform Amazon can be for third-party Sellers, with the vast majority making money on the site.
But Gedey - a former Amazon Seller himself before turning his focus to helping those that fall foul of Amazons Business Solutions Agreement - says the survey as a whole needs to be taken into account rather than just looking at the headline figure.
Gedey explained: “The 2020 State of the Amazon Seller Report by Jungle Scout provides a fascinating insight, covering the health of Amazon businesses, including their profit margins, diverse sales strategies and plans for 2020.
“Of course people will look at the 86 percent profitability figure and think that everything is rosy for those that sell on a third-party basis on the website. Further figures underline that to an extent - the results showed that 67 percent of businesses are profitable within their first year selling,
How much do you make Selling on Amazon?
61 percent say their Amazon profits increased during 2019, and some new Amazon sellers are earning upwards of $800,000 per year in profits.
“But within the findings there are also clear concerns about the power that Amazon has as well. A total of 76 percent of sellers are concerned about Amazon suspending their seller account without reason, a fear we see on a regular basis at Thompson and Holt. Beyond that, 58 percent of third-party sellers say Amazon has made it harder for them to compete in their product category, and 53 percent say Amazon sells its own products that directly compete with theirs.
“Then there are the issues surrounding China, a rapidly growing marketplace for Amazon. In the survey, 68 percent of sellers are worried about Chinese suppliers selling their or similar products at lower cost, 47 percent have had to pay more for their products due to higher tariffs on goods from China, and 34 percent have passed on those costs to their customers with higher prices.
“So while the vast majority are making a profit, there are real concerns there for how the website operates in certain ways, and we also don’t have the detail of the size of profits for those 86 percent of Sellers. Some could be relatively small, while others are evidently significant.
“Amazon remains a marketplace full of potential for third-party sellers, but we would always advise them to keep as up-to-date as possible with the ever-changing landscape of the platform, and the issues that arise.”
Why do some Amazon Sellers fail to make money?
The report suggests that 14% of Amazon sellers fail to make any money by selling on Amazon. Why is this? There could be several factors ranging from selling the wrong product, operational issues or the Amazon account has been suspended. These sellers should read our last post about the seven tips for selling on Amazon in 2020.