Are people STILL getting flat out rich selling on Amazon? Is it STILL possible to randomly source a few cool products from China, throw them up on Amazon and watch the cash roll in?
Want the short answer?
Kinda'... I know, I know, that sounds weak, but let me explain.
Two or three years ago some people did do very well selling just about about anything on Amazon. The marketplace was huge, the competition was relatively low and Amazon was doing everything they could to court and pay sellers.
Now...not so much. More common are the stories about people buying $4,000 Amazon training courses that promise to reveal "secret strategies", the same strategies sold to 10,000 other novice sellers, or people running up massive credit card debt to fund their Amazon business only to find out that the product they picked won't sell.
But you absolutely still can win. You just have to play the game differently.
Here are my thoughts on both sides of the fundamental question, "Is the Gold Rush Over for Amazon Sellers?"
Why the Gold Rush is NOT over for SMART Amazon Sellers
See how I added the word "smart" to the title? More on that in a minute...
First, some stats ('cause who doesn't love some stats?) In 2017, less than 10% of all retail sales happened online. That doesn't sound very impressive.
However, that's still over $400 billion. Even better, look at the forecast for the next 5 years in just the United States:
That's a whopping 56% increase and an additional hundreds of billions of dollars, some of which can be YOURS!
Rest assured, if you are selling online, you are in the place to be!
But what about selling on Amazon?
This online giant is flat out C-R-U-S-H-I-N-G the competition, accounting for nearly half of all online sales. Even crazier, their lead is actually getting bigger, not smaller.
One other cool fact. Third party sellers are actually the second most profitable Amazon business segment trailing only their Amazon Web Services. Amazon NEEDS you!
Bottom line, if you are selling online and you haven't at least considered selling on Amazon, you are fighting for the breadcrumbs. That doesn't mean you can't win by operating on multiple other channels. It just means that you would be foolish to miss out on the insane marketplace Amazon continues to create.
Why the Gold Rush IS over for MANY Amazon Sellers
There are currently over 2,000,000 Amazon sellers. That's a lot of competition, even if there are over 500,000,000 products for sale.
Yes, there are over 70,000 businesses selling more than $100,000/year on the site.
However, the average seller having their fulfillment done through Amazon (called FBA) is selling just 74 units per month.
Profit margins have been squeezed too. 15% is average, 20% good and anything over that great!
That means on $100,000, an annual figure reached by just 3.5% of all sellers, you'll clear $15,000 - $20,000. That is certainly nothing to sneeze at, but also not a figure you'll likely be able to retire on.
Also, realize that while the sheer number of players has increased, so has their skill, training and determination, especially those doing private label. A majority use a multi-tool approach to marketing including: Amazon Sponsored Product paid advertising, post on social media, creating A+ content, etc.
The problem is that most sellers don't look at it as a real business, something they will actually have to work at.
Second, they have unrealistic expectations. They think they can double or triple their money in 60 - 90 days working 4 hours a week. Possible, but HIGHLY unlikely.
Finally, they blindly follow somebody' s"system". The problem is that 10,000 other people are also following the same exact system to pick and list the exact same products, compete against each other and drive the list price and profits to ZERO.
So how DO You Win on Amazon?
That's along and complicated answer, but let me see if I can hit the high points:
- Approach Amazon as a real business, something you'll have to actually work at.
- Play the long-game. Don't look at this as a get rich scheme or a one hit wonder. Build a profitable business based on sound business fundamentals.
- Differentiate your products from others through better packaging, by adding bonuses, additional features, etc.
- Learn Amazon-sponsored ads. They are still very cheap compared to other advertising channels and they work. They let newcomers even the playing field with established brands and products.
- Take amazing photos. It's the single most important thing that gets your ad clicked on over others above and below it.
- Learn how to do killer keyword research and write copy that integrates the winning keywords while still sound human.
And finally, have fun! It's incredible what a game changer actually enjoying what you do has on your business.
So what's your opinion on the state of Amazon? Is the gold rush over? I would love to hear your comments below.