You may be debating whether or not you should launch an Amazon FBA business by 2023.
The thought of beginning such an endeavor is both terrifying and exciting. It is important to think about the market, the statistics, and your ambitions before taking on the endeavor of Amazon FBA selling.
Let’s evaluate the upsides and downsides of starting your own Amazon FBA business in 2023.
The real concern is “HOW”
Using outdated private label and wholesale practices will not help your Amazon FBA business at all. Because e-commerce is expanding, businesses are popping up, and the world is altering, it’s hard to see how clinging to old school techniques will benefit you in the long run.
The reasons for this are many, including the fact that Amazon is currently oversaturated, China sourcing doesn’t always work, the recession, and so on. Furthermore, in December 2022, Amazon stock was down 50% from its all-time high. In addition, Amazon has 9 million sellers, and every day another 4,000 merchants sign up. Does this mean there is nothing left to sell on Amazon?
But does that mean that you shouldn’t sell?
If Amazon is becoming oversaturated, this indicates that Amazon is continuously expanding. And we need to figure out HOW to differentiate ourselves from the crowd.
The growth of Amazon is shown in the below picture
Amazon’s revenue has grown from $28 billion in 2010 to $528 billion in the first quarter of 2023. Every year, this number rises.
Amazingly, 60% of the sales from the 50% of online purchases that occur on the Amazon website are from third-party sellers. What this means is that the more e-commerce and Amazon sales rise, the more money you and I will make.
Now, let’s talk more about what you shouldn’t do and what you should do to make your Amazon sales worthwhile.
Old-School Techniques to sell on Amazon
Let’s discuss some old-school Amazon selling techniques from which you can make money but can’t sustain yourself in the long-run.
Old-School Technique # 01
Let’s Look at the picture below.
There is a Dual Z-axis product that costs $176 at Walmart but $349 at Amazon. What a shocking price difference! One technique to make money on Amazon is to buy low at Walmart and sell high on Amazon. Those that do so engage in retail arbitrage.
After deducting Amazon’s costs and fees, you’ll see that a sizable portion of the earnings are now yours. Of course it is.
With this strategy, you can’t merely rely on Walmart to stock up on deals and discounts to resell on Amazon, which is a major flaw.
On top of that, you are using the listings of others to sell the product. Therefore, it’s not always the case that customers will come to you.
Old-School Technique # 02
Look at the picture below.
The item displayed up top is an exclusive toddler high chair. It costs only $84 on Tundra, but $219 on Amazon. You can make a fortune. Plus, you’re saving 50% off the suggested selling price of the product. You can make a profit by buying in bulk and then reselling on Amazon. We call this a “wholesale” model.
The main issue with this business strategy is having to compete with a large number of other competitors over a small number of available listings. You have to compete to get the buy box. Sometimes you have to compete with the product’s own manufacturer.
If you’re lucky, you’ll sell a product that no one else is offering, giving you a leg up on the competition and a chance to rake in profits for a while. But in the long term, it’s not worth it.
Almost all major brands also prohibit e-commerce sites from selling their products. That almost renders it worthless.
Old-school technique # 03
In the above two techniques, you are selling the products on the listings of others. But with this technique, you will sell the product on your own product listing.
Let’s take the example of the headlight shoes shown below.
This pair of headlight shoes costs $14 on Amazon. And sales of this product are soaring. If you enter the product’s seller rank into Jungle Scout’s sales estimator, you get a monthly revenue estimate of roughly $50,000. However, the same item can be purchased on Alibaba for only $1.29. You may have heard of the term “private label” for this practice. In fact, 59% of Amazon sellers currently use this strategy.
The PL business idea appears to be as simple as a piece of cake. As easily as choosing the best product on Alibaba, adding your brand, and selling it on Amazon to make a killing. Looks incredible.
However, if you’re selling the same boring Alibaba product on Amazon, you’ll find hundreds of other sellers selling the same product with their own Product listings, competing for nothing, wasting money on PPC, and so on. So, This old-school approach to private labeling is packed with troubles.
Modern Techniques to sell on Amazon
The three old school techniques have thus far proven inefficient. Private label, wholesale, and retail arbitrage are all suffering. You can make some cash, but it won’t be quite as much as our huge profits. The question therefore becomes, What is the most modern, effective strategy for selling on Amazon today?
The best strategy for success on Amazon nowadays is to sell something you’re truly passionate about. You’ve created a one-of-a-kind product that stands head and shoulders above the rest of the offerings in your marketplace. There are two options available for doing so.
- Making a brand new product that precisely addresses consumer demands.
- By introducing an innovative twist to an existing product that no one else is offering.
Let me tell you the truth. It takes a lot of time and effort to develop the passion product, but the payoff is well worth it because the product won’t act like old-school previously discussed techniques, which yielded tremendous profits at first but eventually faded out. Instead, you can expect 10 times as much profit in the long run.
It shows that if you approach the sale of your passion product with the right strategy, you can make a profit on Amazon. But rather than how to make the passion product, we’re debating whether it’s worthwhile to sell on Amazon. Here you may read blogs where we share our knowledge and experience in the area of developing your passion product.
- How to differentiate your product on Amazon – Best Guide
- Most popular Amazon items to sell for substantial profit in 2023
- 10 most important lessons to learn before starting your Amazon FBA business
Why do people claim that selling on Amazon isn’t worth it in 2023?
You’ve learned that selling on Amazon is a good option if you have a passion product, but everyone you talk to today says you shouldn’t bother because they used to sell on Amazon the old fashioned way and failed. And because they have already made up their minds not to sell on Amazon before giving it a fair shot, they will advise you to do the same.
Here are the reasons why people say that Amazon is not worth it in 2023.
Reason # 01: Amazon is overly Saturated
I have already outlined why Amazon is already saturated. There are already 9.9 million sellers on Amazon, with another 4,000 sellers signing up every day. However, just 2 million sellers actually engage in business, with just 1 million of those sellers based in the United States.
Also, it’s true that many sellers provide conflicting information regarding earnings potential.
Here, you need to set yourself apart by selling the passion product after learning how customers are interested. Find out what items are selling well on Amazon with the use of several tools, such as Helium 10, Jungle Scout, or AMZ Scout.
Reason # 02: Some resellers are real torchers.
On Amazon, certain sellers steal the ideas of others and pass them off as their own. They either resell your items without permission or hijack your product listings and start selling your products. Another option is that some resellers will make an exact replica of your product and sell it on Amazon for less. Most Chinese sellers take advantage of this edge. Either that, or they manage to get all the established sellers on Amazon blacklisted or banned without their realizing it.
You can take preventative steps to counteract these adverse patterns by signing up for Amazon’s Brand Registry program, keeping a close eye on the product listings, notifying Amazon of any violations, and, if necessary, taking legal action to enforce your intellectual property rights.
But here are the things that are most crucial to keep in mind.
- Typically, hijackers selling online opt for generic, low-quality private label products. If your product is a passion product, I bet no one will be able to copy it. Also, get a patent for your product. It protects you from any other possible harmful practices.
- Instead of relying just on Amazon’s PPC, it’s a good idea to create a social media presence and extend it to other platforms. Then we shall see who dares go up against you.
Reason # 03: Recession in Amazon is dominating
It’s for the dumbest of reasons. Which industries or markets have been largely unaffected by the current economic recession? Bitcoin and the stock market both indicate a recession. The economy of the United States is currently in recession. Thus, the Amazon market experiencing a recession is not unusual.
Yes, Amazon’s stock has gotten very low in the past three years, shipping costs have gone up by 23%, and manufacturing costs have also gone up. However, the stock market image below demonstrates that Amazon stock will soar in 2023. This is why many people in 2023 believe that selling on Amazon is worthless.
All the world’s largest fortunes had their beginnings in the midst of the recession.
In addition, as an Amazon seller, you are unaffected by the ups and downs of Amazon stock.
And if you use some clever reasoning, you’ll realize that as inflation rises, sellers often expect buyers to spend more money on their product. This is exactly what happens. Therefore, either your shipping expenses or your product manufacturing costs are increasing, yet your prices are also increasing. The amazing part is that you make the same amount of money that buyers used to make before the recession.
Hiring an Amazon consultant is the best option for having your business avoid the economic recession. In light of this, we have published several related blogs enriched with our experience.
- Top tips for selecting the best Amazon consultant to scale your business
- Why should you consider hiring an Amazon account management service?
Also, we wrote about the top reasons for Amazon seller failure.
- Why do 95% of FBA Amazon sellers fail?
- Amazon FBA case study: learn best lesson from the failed FBA Amazon sellers
You may find the solution in the above blogs as well.
Let’s move to the fourth reason.
Reason # 04: Huge cost in the beginning without profit
It’s tough to start a new business. Right. Because of this, the term “startup” was introduced.
Start-up costs are high for all businesses, including an Amazon business. However, there are extra costs in the Amazon startup that people usually consider.
- Startup cost
- Amazon FBA Fees
- Selling fees
- Amazon pick, pack and ship fees
To be clear, the expense listed above is just an image that is shown to new sellers. If you’re an experienced Amazon seller doing some serious cost analysis, you’ll see something like the chart below.
Stop being shocked if you feel shock coming on. This is how things work on Amazon. Everyone who sells on Amazon must bear these expenses.
Some sellers ignore these starting hiccups, start their businesses with only $1,500, and eventually turn a monthly profit of $100,000 to $200,000. Also, if you connect your Amazon seller central with the brand referral program, your Amazon FBA fees will be reduced.
Furthermore, consider how much time and money you’d have to invest in attracting customers and delivering orders if you were to manually pick, pack, and transport items to your clients without a platform.
So, compared to that cost, the cost that Amazon charges is minor. And instead of spending time worrying about those things, you have plenty of spare time to expand your Amazon FBA business.
In addition, if you plan to sell the passion product, you should seek funding via platforms like Kickstarter and Indiegogo. You need to come up with something entirely novel. If you’re having trouble understanding how to raise money using these channels, eComFist can help.
Reason # 05: Making money on Amazon used to be easy, but today it’s like breaking stones.
It is true. Making money on Amazon was easy five, six, and seven years ago. You can turn any product you receive into a money-making machine by simply listing it on Amazon. But in the present day, there is a lot of competition, saturation, and other obstacles.
1-Avoid falling into the trap of Analysis Paralysis.
You will look back in a year and wonder why you didn’t start your Amazon FBA business sooner. People will look back at selling on Amazon five years from now and say it was much simpler than it is today. So, even though the Amazon market is saturated today, you’re afraid because you don’t want to make a mistake and waste your money. Thus, avoid the pitfalls of analytical paralysis.
2-Don’t use wrong approach
Don’t make the mistake of settling for a boring wholesale or private label product that’s just a copy and paste. Simply put, making “bucks” instead of “real money” is easier. There is no way to run a business in this manner that generates sustainable, passive income. Spend as much time as necessary developing a truly unique passion product.
3-Always follow a formula
Don’t just watch a video on how to establish a business and start doing it. Instead, stick to the tried-and-true procedure, which includes such stages as product conception, design, production, marketing, and sales. If you feel like you can’t do it, please contact us , a reputable Amazon marketing agency, for assistance.
Tips to succeed on Amazon in 2023
You’ll need to put up your best effort if you want to make the most of Amazon FBA in 2023. But what are the most effective strategies for maintaining a competitive edge?
1-Negotiate price with your suppliers
It is crucial to your success as an Amazon FBA seller that you successfully communicate your expectations to your suppliers. Do not be afraid to have polite conversations in order to get a good price.
2-Revamp your keyword strategy
The number of people who check out your Product listings is directly proportional to the caliber of the keywords you use. If you take the time to refine your keywords, more people will see your products, and you’ll have a greater chance of making a sale.
3-Think about investing heavily in passion products.
Consider selling passion products at higher RRPs to obtain favorable profit margins as shipping expenses and production costs increase. There is more room to absorb price increases with higher price products than with less expensive items.
4-Invest in Amazon PPC Ads
Amazon Ads are a powerful instrument for generating sales in the world of e-commerce. Knowing how to make Amazon PPC advertisements work for you is crucial if you want to build a connection with customers.
5-Expand your brand presence
Consider expanding your business beyond Amazon if you want to increase traffic to your listings. Building a solid social media presence, for instance, can attract new buyers and lead them to your Amazon product listings.
6-Don’t be afraid to get into the specifics
Last but not least, while expanding an Amazon business, knowing your cash flow and your ACoS (actual cost of sales) is crucial. Those who would like to go out on their own as Amazon FBA sellers must pay close attention to the bottom line.
Conclusion: Is it worth for you to sell on Amazon in 2023
When you’re done reading this blog, you’ll hopefully be convinced that selling on Amazon is still worthwhile and that you can make a fortune selling your passion product. Those who suggest that selling on Amazon isn’t worthwhile simply justify their statements with the above reasons that I have already refused. And Amazon makes it easy to scale up a new venture, so e-commerce keeps growing.
To stay ahead of the competition, it’s important to think about the passion products you sell, bargain for the best prices, use relevant keywords, and focus your advertising.
Amazon FBA selling can be adjusted to match your needs, whether you want to start off small or move up the seller ranks. Starting an Amazon FBA business in 2023 could turn out to be one of your best decisions of the year. So, how long are you going to wait?
So, let us help you in 2023 with the right amount of capital and strategies for your Amazon FBA business. Contact us and one of our experts will reach out to you.