Amazon FBA is dead in 2024. The business has changed substantially over the years. It reached a point where it’s not worth the effort or investment for most people. New e-commerce sellers face high competition, account suspensions, and increasing Amazon fees. It's almost impossible for them to start and scale an Amazon FBA business. They also need to tackle counterfeit products and fake customer reviews. Plus, stricter Amazon policies and higher fulfillment costs.
After selling retail arbitrage for nearly a decade, an Amazon FBA seller on Reddit admits that his days with Amazon are numbered. This is due to decreasing profit margins. The seller notes that it’s only worth it for those who make over $500K in revenue yearly. However, only around 7% of Amazon sellers actually achieve this milestone, according to Jungle Scout's 2024 State of the Amazon Seller report.
Low margins aren’t the only thing that may drive Amazon resellers out of business soon. Amazon has continuously gated more products over the years. Only legitimate wholesalers can qualify to resell many branded products on Amazon. Even legitimate wholesalers aren’t guaranteed the ability to resell. An Amazon wholesaler on Reddit couldn't even get ungated to sell a brand they had been selling for years. Amazon stranded over $500K of their inventory at the Amazon warehouse.
Another Amazon FBA seller who was earning six figures in revenue quit. This is because of high FBA fees, especially FBA storage fees.
If it wasn’t already bad enough, Amazon has just started administering another type of storage fee. Since April 1, 2024, Amazon has started charging a low-inventory-level fee. They are charging FBA sellers an extra fee for keeping low inventory levels relative to unit sales.
The high competition on Amazon has already led to higher costs for running Amazon PPC ads. This is basically required for any Amazon private label seller who wants to get sales. Many sellers report barely breaking even with Amazon PPC ads. Some even got negative on their Amazon Ad spend.
Another rising threat is the high competition from major businesses. They have extensive financial means and can push small businesses out of the market. You compete against leading brands, Chinese manufacturers, and even Amazon itself.
Local lead generation is an online business model to consider for those looking for less competition. It entails creating websites that attract customers for local service businesses. Then, you can sell the leads to real businesses for $500 to $3,000 monthly. Unlike Amazon, you don't need to compete against millions of other sellers. You only compete against small businesses in a specific geographic location.
In the following article, we'll discuss why Amazon FBA is dying. We'll also tackle the top 6 reasons sellers leave Amazon FBA. You'll get to uncover real testimonies from people who quit. And, discover some of the major hurdles you'll need to overcome if you want to achieve success on the platform in 2024.
6 Top Reasons Why Sellers Leave Amazon FBA
Amazon FBA Reviews Debunked: Dead vs Alive
There are many Amazon FBA review articles and videos claiming that Amazon FBA is not dead or dying. Most of these reviews focus on statistics of seller population growth or the total value of e-commerce sales. The increase in new sellers on Amazon FBA has remained constant since 2016. However, many sellers have left or are now inactive.
Amazon has 9.7 million sellers worldwide. But, only 1.9 million are active. In 2021, research show that 72% of new sellers never listed any product. Many of these new sellers created accounts but never participated. This means that any claim that Amazon is still a good business model to start in 2024 is not entirely true for everyone. Seller success is not based on continuous seller growth without considering seller activity.
Let’s scrutinize some reviews of Amazon FBA sellers and course creators. Here they try to explain why Amazon FBA is not dead.
In his video review, Camron James defended that Amazon FBA is not in a decline. This is because e-commerce sales are increasing. However, the percentage of e-commerce sales to total retail sales has been low. In 2021, the total value of e-commerce sales in the U.S. amounted to $870 billion. Yet, this was only 10% of the total retail sales in the United States. Camron claims that these statistics mean there are huge opportunities awaiting new sellers.
However, the e-commerce report he presented is not specific to Amazon FBA. Rather, it pertains to the entire e-commerce industry. This does not take into account other rising platforms (such as Shopify, which is now 50% as large as Amazon).
In another video review, FBA Blueprint creator Adam Heist explains how Amazon FBA is dead. But, in a sense that it’s not the same as it was in the first decade of the 2000s to around 2015. Adam mentions how Amazon FBA after 2015 is very well alive. However, selling on Amazon has become more challenging and complicated.
Adam concludes that success as an Amazon FBA seller is still possible. But the old paths to success have now been closed. And, tougher roads with new opportunities are now open. According to him, success with Amazon FBA in 2024 means using more time and resources compared to years before.
Real Testimonies of Amazon FBA Sellers Who Quit
Many Amazon FBA sellers quit for various reasons. It's because of complex sales tax compliance, branding limitations, or stricter seller requirements. This Redditor started off selling around 1.3k units monthly in 2023. In 2024, he only sold up to 2 items daily. This was due to the increase in Chinese manufacturers engaging with Amazon FBA. He also mentioned that these manufacturers slashed their product prices by 40%. In the end, he decided to quit and go back to his 9-5.
In another Reddit post, this user commented on how he quit Amazon FBA in 2022. This was because of the increase in Amazon's fees. Apart from these changes, Amazon charged $1 per media item sold. This took a significant chunk of his potential earnings. He also voiced his disappointment in Amazon's faulty site inventory and product data.
Some Amazon FBA sellers have already made a sizable amount of money before they quit. Many reviews online say that selling on this platform was profitable in previous years. But, its low barrier to entry made the industry saturated. You can't make a profit unless you have the lowest price or the perfect seller rating.
In Travis Marziani's YouTube video Why I Quit Amazon FBA, he interviewed Michael. This Amazon FBA seller quit even after earning around $20 million in product sales. He mentioned the high costs on Amazon as the main reason. You need to pay FBA pick and pack fees, a 15% sales fee, and PPC ad costs. Michael also pointed out that this industry has 4K new sellers joining daily. Apart from these, you also risk getting your account suspended. Plus, there are black hat sellers who make fake reviews and do other illegal things.
How Difficult is It To Achieve Success With Amazon FBA in 2024?
It is significantly difficult to achieve success with Amazon FBA in 2024. This is because of the presence of Chinese manufacturers in the market. Amazon FBA Wholesalers have to compete prices with the other suppliers. In 2015, for example, you can just order bulk products from Alibaba. Then, you can have them shipped from China to Amazon warehouses to sell them on the platform. In 2021, 75% of Amazon sellers were based in China. This shows the heightened difficulty of making stable sales in Amazon FBA in 2024 and beyond.
The influx of Chinese merchants also created “knockoff” products flooding the marketplace. These items were mixed with authentic ones, creating a quality problem. However, Amazon still relies on Chinese suppliers for affordable and diverse products. This issue has led many big Western brands to pull out from Amazon.
The situation became more complicated when Amazon caught several big sellers. They were later banned from using “unacceptable business practices”. These sellers manipulate reviews by paying real customers to leave positive ones. They send fake orders with excellent reviews via “zombie accounts”. These accounts look real because of IP address manipulation. They use virtual credit card numbers and overseas addresses.
Amazon FBA sellers fail because of the influx of new products into the platform. This has saturated the catalogs. Amazon only shows a limited number of items per page. And with the flow of products added daily, most products are never sold. Unique products put up on Amazon will also get copied by other sellers easily.
What is Amazon doing about these problems? Amazon has responded by adding stricter requirements. This includes brand registries, safety testing, and insurance liability for new merchants. While this is good for Amazon, it adds more barriers for new sellers.
Is Amazon FBA Still Worth the Investment?
Yes, Amazon FBA is still worth the investment for people who can spend time and effort to grow their business. It is just more difficult than how it used to be. It is possible to achieve success with Amazon FBA in 2024, whether you are a new or old Amazon seller. Those looking for a get-rich-quick online business will only be disappointed. Having the right product, marketing, sourcing, and selling strategies is key.
If you're an old seller, you need to invest more time and money into increasing product advertising. You can take full advantage of Amazon’s vast customer base. If you are a new seller trying to get into Amazon FBA, you may have a harder time compared to those who entered years ago. The high competition requires you to put more time into your product. And, higher starting costs are also a big risk. In fact, 58% of sellers spent less than $5k to get started on Amazon, while only 28% spent less than $1k.
Note that these are just the initial investment and do not necessarily equate to success. The more you invest, the higher the risk. Yet, you have a higher chance of earning more and scaling your business. Profit turnover also takes time. 20% of sellers turned a profit within 3 months. 17% of sellers took 3-6 months to turn a profit. And, 23% of sellers turned a profit within 6 months to a year.
Travis Marziani, who made his fortune with Amazon FBA, explained why he quit and the difficulties of joining in 2024. Marziani made $794,561.47 on Amazon just by selling his own private label products. However, he found it difficult to maintain his monthly sales due to market saturation, China-based sellers, and high Amazon fees. He explained that success is still possible by shelling out more time and money.
People are still making money from Amazon FBA. According to Jungle Scout, 40% of Amazon FBA sellers make around $1K-$25K monthly. Many Redditors also mentioned earning around $500-$1,000 monthly in sales. Others claim that the boom in e-commerce is a sign of enormous opportunities for new sellers. But, you still need to consider the increase in advertising, outsourcing, and fulfillment costs.
Local Lead Generation: Choosing a Thriving Online Business in 2024
Amazon FBA is a lucrative venture when you have less competition. But, local lead generation offers a thriving online business in 2024 because of its localized niches. In Amazon FBA, you only make small profits. This is because sellers globally are competing with the lowest prices possible. Plus, there's a big risk of getting suspended anytime. You can lose all your hard-earned money in a snap.
With Amazon FBA's increasing difficulty, you should consider other business models with more opportunities and fewer risks. Local lead generation doesn’t need much time and money to make significant income. You earn around 80%-95% in profit margins. Plus, you don't depend on a third-party platform. This gives you freedom and peace of mind knowing you don't lose all your earnings with a single violation.
In local lead generation, you have fewer competitors. Its localized niches allow you to target a specific customer segment. The more niches you target, the higher your potential income will be. You just need to build a site for each local service. Then, you rank these sites organically on search engines. Once they rank on Google, you can sit back and let the free leads flow in. Local businesses will pay for the leads they get from these websites. Once you set it up, you don’t have to put much time and effort into maintaining it. You can earn up to $50K or more monthly.
Build an online business with a true passive income model. With local lead gen, you don’t have to worry about creating products or high competition on a global scale.
I still think it's worth it to sell on Amazon FBA. In the same way people are leaving Amazon FBA, people are leaving Ebay too. The huge swarm of buyer traffic that Amazon provides is insurmountable. I think most people just need to re-evaluate their income goals.