Amazon FBA success rate is 25% of Amazon sellers had monthly net profit of $1250 to $6250 and 20% had net profit of $6000 and up. Did these sellers' success last? 20% of Amazon FBA sellers produced lifetime profit of $100,000 or more.
According to Jungle Scout's survey, 15% of Amazon FBA sellers built a business with $6,000 to $25,000 in monthly net profit. And 5% of sellers did more than $25K per month in profit.
That's 20% of sellers with a net profit of $6000 per month or higher. Out of which, some are brands & direct suppliers, not the regular 3rd party seller like me or you.
So although 40% of sellers have shown to produce some profits with the business, only 20% could maintain a stable business to produce at least $100K in profits in their FBA career.
Let's look at a few more stats on the success rate of Amazon FBA.
What is the Amazon FBA Success Rate for New Businesses?
Besides the numbers above, 47% of sellers who invested $10,000 turned a profit between 6 months and 2 years.
How Much Does the Average Amazon Seller Make?
Average Amazon FBA sales might be a more useful indicator of success.
20% of Amazon sellers made $1K-$5K per month in sales.
But, 17% made less than $500.
New Amazon sellers can earn between $26,000 and $810,000 annually, but those are sales numbers. They tell us nothing about what these sellers are actually taking home. For that, we have to look at profit margins.
2021 Amazon FBA Profit Margin
68% of Amazon sellers enjoyed a profit margin above 10%.
19% had an impressive 26-50% profit margin.
8% did not become profitable at all in 2021.
So, when you consider the Amazon FBA success rate, remember: it’s not all about the sales. You also need to consider your initial investment, advertising, and Amazon FBA fees.
These fees alone take 15% of your product’s selling price.One Amazon seller shared a breakdown of all the costs that come out of his 1 million in sales, showing that he only got to keep about $300K. But these aren't numbers you'll see as you begin your journey.
A beginner's profit, in their first month of selling, might look more like this:
This seller made $7,285 in revenue (remember: revenue isn't profit.) Here are his other costs.
but if you deduct all the expenses as shown above, his actual profit was: $2,461.
The following month, he adjusted, and profit grew by $349. In the third month, profit was $3442. His initial investment, however, was over $12,000. With this growth, it would take him a few more months to break even on his initial investment.
Comparing Amazon Success Rate with Other Businesses
Simple display of why internet businesses kick ass.
Start up cost
10% become 6 figure sellers, around 25% make $1000 to $6000 net profit per month.
20% succeed long term. (60% fail within 1 year, 80% fail within 5 years)
Amazon FBA beats getting into the restaurant business in everyway.
How does Amazon FBA compare with another online business like local lead generation?
Local Lead Generation
Start up cost
Roughly 35% make at least $1000 per month or more
Rough estimate, 40% simply because the business is less competitive than Amazon FBA
Being able to profit from Amazon's large user base is a great opportunity, but I will always love local lead generation because you have such high profit margins since you're not dealing with physical products. It's less hassle too.
What I love about Amazon FBA is that if you build an exceptional brand, you can sell it (exit) for 3-5 multiple of annual revenue. Which is crunching time in a major way.
You can go here to read more about it: Amazon FBA vs. Local Lead Generation
So, Is Amazon FBA Still Profitable in 2022?
Yes, but it is getting more competitive. 4000 new sellers are on the platform every day. Here are some factors that's been causing some sellers to not be profitable & quit FBA.
Read this article: is Amazon FBA still profitable in 2022 to get the full list of factors that cause FBA sellers to lose their profit margins & quit.
As of 2021, there were 9.7 million Amazon sellers. 1.9 million actively sold.
Your focus is to stay profitable long-term.
How Long Does It Take for Amazon FBA Beginners to Become Profitable?
Be prepared to wait at least 6-18 months, and maybe even as long as 2 years.
Jungle Scout's survey found that 58% of new sellers were profitable within 12 months, and most of these new sellers (27%) did not make a profit until after the initial 6 months.
However, this number depends many factors. For example, 39% of sellers spent less than 10 hr/week on their biz, while only 9% spend 31-40 hours. Those that spend more time on this business will find success more quickly.
It also depends on how well your product is received. If you choose the wrong product, or don't have the expertise to back up your research, you could lose your entire investment.
Amazon FBA is just like any other business: there will always be risk, and it might take a long time to become profitable.
Why Do Some Fail at Amazon FBA?
1. They don’t choose the right business plan. Make sure you choose the right business plan for you. Sellers base their businesses off of wholesale, private label, and retail arbitrage strategies. Each has their own advantages and disadvantages. Check out our guides to inform your decision (linked above).
2. They jump in without researching their product. Brainstorm products and research them well, so you don’t spend your initial investment money on a product that is a guaranteed flop.
3. They offer poor customer service and get critical reviews. Choose high-quality products and help customers with issues. Amazon will rank your product higher for it.
4. They expect too much. Many Amazon FBA gurus promise overnight success. They tout high numbers without being honest about profit margins. Be realistic with yourself. Amazon FBA will take time, effort, and investment.
5. Expecting lower initial investment. The biggest issue could be that most people underestimate just how much investment it will take to succeed with FBA. Most gurus paint the picture that all you need is $5K to launch a product, however that's if everything goes perfectly. Most sellers admit to failing multiple launches before they succeeded.
The right amount should be closer to $15K as a start-up cost for FBA. In this article, we take a much closer look at why most people fail their FBA business.
When you consider all the statistics regarding sellers that turn profit and how long they stay profitable in their FBA business.
20% of FBA sellers produced a net profit of $6250 per month and up.
Out of that, 20% about half are non 3rd party sellers, so these are brands and direct suppliers you can't really compete with.
So that leaves 10% success rate of sellers that make net $6000 and up (6-figure income).
Out of which, an even smaller percentage actually stay profitable for 5 years or longer.
One of the best ways to ensure your FBA business succeed is to invest in an in-depth course. Look at our top Amazon FBA course list. The courses on this list provide much more in-depth tips & tricks than most of what you find on YouTube.
My Online Business Portfolio in 2022
Amazon FBA: $15K NET per month (After 50% split with a partner)
Local Lead Generation: $52K NET per month
Amazon FBA is a great business model but like all businesses it has its challenges, particularly how competitive it's becoming as more big brands & suppliers began selling on FBA themselves 2-3 years ago.
Another business model I've had a lot of success with is local lead generation. It's simple and less competitive. It might be a better fit for some people.
Click here to learn all about it: Local Lead Generation vs. Amazon FBA