If you’re looking to start an Amazon FBA business, you’re not alone.
The market is constantly changing and it can be difficult to know if selling on Amazon is still worthwhile.
In this blog post, we’ll look at some case studies, detailed statistics, and the pros and cons of Amazon FBA in 2023 and help you decide if it’s the right choice for you.
Is Amazon FBA still worth it in 2023?
E-commerce is still here to stay, and with Amazon currently dominating 37.8% of US e-commerce sales, 2023 will be a great year to start an Amazon FBA business.
To support this, analysts predict that global e-commerce will grow to $8.1 trillion by 2026 from $5.2 trillion in 2022.
If there was ever a time to get on the FBA train, it would be now!
Advantages and disadvantages of Amazon FBA
Pros:
High Traffic – Amazon is the largest online retailer in the world with a huge customer base and brand recognition. Thanks to this, you can easily get your products noticed and sell them quickly.
Great Customer Service – You don’t have to worry about shipping or customer service – Amazon’s excellent network of distribution centers takes care of it for you!
Scalability – Amazon FBA is a great choice for both new and established businesses as Amazon helps you grow your business by giving it more exposure.
Passive Income – Amazon FBA does not require a lot of time to work effectively because Amazon provides you with most of the tools you will need.
A Great Investment – While your money may be at higher risk than it would be in a traditional bank savings account, you can make a lot more money by investing in resealable products on Amazon.
You can fire your boss and never have him again!
Disadvantages:
Amazon is the largest online retailer in the world, which means competition can be fierce.
Amazon’s strict requirements can make Amazon FBA seem like a more challenging option than other e-commerce platforms.
All in all, with Amazon’s huge reach and huge customer base, Amazon FBA still remains an attractive option for entrepreneurs who want to start their own business on Amazon.
How Much Do Amazon Sellers Make?
Compared to other traditional brick-and-mortar stores, Amazon sellers generally have higher profit margins.
This is because of lower overhead costs, less need for staff, and Amazon provides a cost-effective fulfillment service that is second to none.
(For context – I used to run my FBA business out of a shared office space, but since the Covid restrictions, I still run my business from home and am the only employee, which is an extremely cheap way to do business.)
Let’s look at some statistics on how many sellers are profiting from selling products on Amazon FBA.
About 65% of third-party sellers reported profit margins greater than 10%
About 32% reported profit margins greater than 20%.
50% of Amazon sellers sell anywhere from $1,000 to $25,000 per month
13% of Amazon sellers make $25,000-$250,000 in sales per month
22% of sellers sell under $500 per month
Not too bad considering many new sellers start this business as a side hustle!
What will be different in 2023?
The last few years have been uncertain for everyone in many different ways.
Specifically for Amazon sellers, facing higher CPU (Cost Per Unit) due to oil prices increasing production costs, higher shipping fees due to increased fuel prices, and inflation hitting a 30-year high due to changing consumer spending habits has been difficult for everyone. bottom line.
However, things look much more positive for 2023.
With Amazon’s stock price poised to go through the roof again and consumer spending rising from the cost of living crisis in 2022 (up 6% by mid-2023), this is great news for Amazon sellers.
How to stay ahead in 2023
Keyword-specific listing
In order to compete and rank well on page 1, product listings must be highly optimized with super specific keywords.
The need to do deep keyword research and know exactly what our customers are looking for when they are looking for products is absolutely essential.
Know your numbers
Knowing your numbers is an important part of any successful business.
For e-commerce businesses, cashflow is everything!
So call the Actual Cost of Sales (ACoS) numbers, know your profit margins and become a PPC wizard.
Sell slightly higher tickets
With increased production costs and shipping charges, one way to combat declining profit margins is to increase your chances of making a higher margin.
It’s difficult to adjust for any associated selling costs when your RRP is $5.95.
But when your RRP is $59.95, you have a lot more leeway.
Although you’re less likely to generate as many sales with a higher ticket item, your margins will undoubtedly be higher and you can still make more profits with fewer sales.
How to Make Higher Profit Margins on Amazon FBA in 2023
Strong negotiations with your manufacturer
To get the best price per unit, you need to be able to negotiate effectively with your manufacturer.
This means being clear about what your pricing expectations are and what level of profit margin you need to make your Amazon FBA business sustainable.
Building a strong working relationship with your supplier is important, so finding the balance between being a difficult customer and getting a good deal will be key.
Tune your PPC ads on Amazon
With Amazon FBA, you don’t have to pay for any physical space or staff.
This means that Amazon ads are one of the biggest costs associated with your Amazon business.
However, they are also one of the most powerful tools in an Amazon seller’s arsenal when it comes to increasing sales and profits.
So take the time to become a wizard with your PPC ads and constantly look for ways to improve them. Maybe try some new campaigns or test different ad sets.
If you are proactive in this area, you can significantly increase your sales and profits in the years to come.
Master the shopping box
A surefire way to increase your profits is to have a strong handle on the Amazon Buy Box.
According to Amazon, an estimated 80% of all Amazon sales go through the Amazon Buy Box.
You can automate this service to make sure you always dominate the buying field with Repricer tools.
Increase external traffic to your product information
Instead of limiting your Amazon sales to only Amazon visitors, try driving external traffic from a variety of sources.
Use some of the tactics in this article to help you increase traffic to your Amazon product listings.
International sellers – foreign exchange services
For international sellers like myself, it is possible to lose a lot of money when the cash flow is transferred back to the domestic bank account.
Using the services of a currency exchange to solve this problem will save you money on transfer fees and will surely find you the best exchange offices that