Is it worth it to sell on Amazon in 2022?
There are many benefits and challenges for Amazon sellers, but in today’s market environment, is it worth it to sell on Amazon in 2022? Short answer: yes.
What do you think makes Amazon one of a kind, and why is almost everyone looking to sell on the platform? The fulfillment option on Amazon is a key driver of its popularity. When you think about the benefits of fulfillment by Amazon, it just makes sense to build a brand and start selling on the marketplace.
You can create your dream brand, ship your products directly to Amazon and have them take care of nearly everything else. Amazon FBA is an incredible business model because it allows anyone, regardless of their e-commerce experience, to open a store, list products, and start making money. But, as most FBA sellers realize, it isn’t as cut and dry as many make it to be.
With the popularity of Amazon comes a few challenges as well, including:
- Fierce competition with millions of sellers listing products on the platform
- More and more sellers from around the world, including China which is a big supplier of cheap items
- The rising cost of goods makes it difficult to make a profit
- Increased logistics and shipping costs incurred when shipping inventory to Amazon fulfillment centers
- Difficulty sourcing for products with Amazon enforcing strict policies that could see your account suspended if your products don’t meet their standards
Despite these challenges, Amazon still offers great opportunities for sellers. It all depends on whether your business model is compatible with Amazon. In fact, it’s worth noting that in 2022, despite the disruptions caused by the COVID-19 pandemic, three-quarters of Amazon sellers are still profitable.
Keep reading to learn more as we explore why selling on Amazon is worth a shot.
We think it is worth it to sell on Amazon in 2022
The world of e-commerce is vast, but very few companies have the influence Amazon has enjoyed for years. Amazon receives nearly 3 billion monthly visitors, making the platform twice as popular as Walmart’s second-ranked mobile shopping app. So, as a small business, listing your products on Amazon puts your products in front of millions of visitors per day.
So why is Amazon the most powerful, effective small business incubator in the world’s history?
- Amazon Prime members: Over the years, Amazon has built quite an audience boasting nearly 160 million Prime members in the USA alone. Why are Amazon Prime members significant? These people pay a monthly subscription to Amazon, and because of that, Amazon is usually their first shopping destination.
- Low capital investment: With Amazon, anyone willing to accept the risk of online arbitrate and retail arbitrage (OA/RA) can easily start a business with little investment. Online arbitrage is where you purchase a product from an online seller and sell it at a profit on another marketplace like Amazon to eBay. With retail arbitrage, you buy products from one market and resell them elsewhere at a higher price.
- Testing product ideas is inexpensive:Market research is important when conducting business; sometimes, it can be quite expensive. But not on a platform like Amazon. Amazon receives millions of visitors daily, and you can take advantage of that to get an early read on the market value for a product you want to launch. You can always deactivate the listing if the product doesn’t resonate with people. No harm, no foul.
- Specialty goods:These are unique consumer products that only a specific group of buyers are willing to purchase. They include designer clothing, fancy groceries, fine watches, expensive perfumes, and special types of cameras, among others. Usually, these products are impossible to sell in a brick-and-mortar retail store without a large customer base. Amazon makes it easy for sellers to sell these types of products. Considering that there are 160 million Prime members, most of whom are willing to spend on specialty goods, it’s worth a shot.
What challenges will sellers face on Amazon?
One of the biggest challenges sellers on Amazon must worry about is competition. With nearly 2 million users enrolled and more on the way, starting a business on Amazon means bumping elbows with millions of rival sellers.
The entry barrier when starting on Amazon is quite low, which is usually a blessing and a curse. The mere fact that getting started isn’t too difficult means that you must brace yourself for stiffer competition than you would encounter elsewhere.
There is also another element of Amazon’s competitive landscape many don’t even know about. In some way, you will also compete with Amazon itself. How? Amazon has its own private label, Amazon Retail, that sells a staggering array of products.
How do sellers still find opportunities?
The competition has only increased in recent years. So, how do sellers find opportunities despite the growing competition from other sellers and Amazon itself? Here is how:
- Amazon-only versions of products:Brand owners selling also in brick-and-mortar stores can create Amazon versions of their products. Amazon has conquered the e-commerce space; even physical stores use this to sell their products. But selling on Amazon is very different from selling at a brick-and-mortar store. There is a need to create Amazon-only versions of your products. Doing so helps keep RA/OA sellers off your listings, creating a competitive advantage that helps you succeed on Amazon.
- In-depth analysis tools:One can use many tools to stay ahead of the competition. Tools like Helium 10 can help you find product categories where there is still an opportunity to sell. Whether through product research, sales analysis, keyword research, or earning reviews, these tools help aspiring Amazon FBA sellers build successful businesses on Amazon.
Side note: If you are an RA/OA seller, you must be very careful about overstocking any product because of the “race to the bottom “on prices. This is where price-cutting gets so extreme that margins disappear completely. In a typical race to the bottom, competitors fight fiercely for customers because of continuous price reductions. But feel free to overstock products during high volume sales times like Christmas and other special holidays because these are the times when you are likely to make more sales than any other time in the year.
How can I learn more about selling on Amazon?
With the many opportunities available for entrepreneurs, selling online or the thought of it can be daunting. Fortunately, many Amazon sellers continue to enjoy success thanks to the many available resources. Here are places where you can learn more about how to get started when it comes to selling on Amazon:
- YouTube: It is a new age of social media and online content creation, and YouTube has everything you need to learn about starting a business on Amazon. As long as you have an internet connection, there are so many channels you can browse through if you want to become an Amazon FBA seller.
- Online courses: There are so many courses online that you can subscribe to if you want to learn more about selling. These courses (free and paid) are created by experts who’ve spent years successfully selling on Amazon and other eCommerce spaces. One course worth checking out is the Freedom Ticket by Helium 10. The course will equip you with the knowledge and tools required to start and grow your business on Amazon.
- Amazon FBA Facebook groups:Facebook groups are another free resource you can exploit to get started on your Amazon selling journey. Search for Amazon FBA groups, ask questions, navigate seller issues from members, and even get to meet like-minded entrepreneurs.
So, is selling on Amazon worth it in 2022? Absolutely yes!
With millions of people visiting the platform daily and a staggering 160 million Amazon Prime members, it’s clear why businesses are lining up to sell on Amazon.
But at the end of the day, you must be open to change to succeed on the platform. After all, you will be competing with millions of other sellers. You also have to take advantage of the many resources and Amazon masterminds available at your disposal to learn more about selling on the platform and how to navigate through the many challenges you may encounter. These two are all the tools you need to start and build a successful business on the world’s largest online marketplace.
Do you need a little help starting your Amazon journey? Riverbend Consulting offers expert consultants to help you on your way. Reach out to us for more info.
Lesley is co-founder and co-owner of Riverbend Consulting, where she oversees the firm’s client services team. She has personally helped hundreds of third-party sellers get their accounts and ASINs back up and running. Lesley leverages two decades as a small business consultant to advise clients on profitability and operational performance. She has been an Amazon seller for almost a decade, thanks to her boys (21 and 15) who do most of the heavy lifting.
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