According to Jungle Scout, 13% made $1250 to $2500 in net profit per month. And 22% made $2500 to $6250 net profit per month.
So how much money can average sellers make on Amazon FBA? Roughly $3500 net profit per month.
However, if you can avoid the common Amazon FBA mistakes such as failing to reinvest back into the business to launch more products. These sellers in the average percentile could grow their business to 6 figures and beyond.
Many people quit even after couple successful product launches when they understand just how competitive Amazon FBA is getting and that a seller needs to continually launch new products to to survive, let alone grow.
Can Amazon FBA Make You Rich?
Yes, but it's difficult. Only 6% of Amazon sellers are millionaires. Meanwhile, 38% of Amazon sellers have received lifetime profits of over $25,000.
These sellers don’t take all of their sales home. 68% of them have profit margins higher than 10%. 36% have profit margins higher than 20%.
Getting rich with Amazon FBA is never a guaranteed even with few successful product launches, because other competitors can put you out of business quickly.
To reach high levels of success, you need to manage a team and be aggressive in reinvesting back into the business and scaling dozens and dozens of products.
You need to become an excellent manager of people just as much as having your finger on the pulse of the ecommerce world. Build connections with suppliers, know what's trending & how to innovate on branding & design to gain competitive advantages.
All these skills only come with tons of experience, therefore Amazon FBA is not a get rich quick, far from it.
How Long Does It Take to Become Profitable with Amazon FBA?
Only 64% of sellers were profitable within their first year of selling. 20% were profitable within their first 3 months.
58% of beginners were profitable their first year, too. 14% were profitable in their first three months.
Do not expect immediate profitability. Prepare to be in the red for sometime.
What is a Good Profit Margin for Amazon FBA?
The average profit margin for Amazon FBA is 10%-20%. This means that the average Amazon FBA seller can take home between $100 to $5000 each month. Aim for 10%-20%.
Are you okay with only keeping 10% of what you worked so hard for?
A 10% profit margin means 90% is deducted by Amazon Fees, product cost and advertising fees. These expenses are a necessary part of the Amazon FBA business. This is one of the downside of Amazon FBA. Since you're using their platform, they will always be the one that's most profitable in the equation. They can also raise their fees at will and there's nothing that sellers can do about it.
How Much Money Do You Need to Start Selling On Amazon?
You need at least $5,000+ to get started selling on Amazon FBA, and I would still consider that on the low end.
Some gurus try to claim that you can start with $3000 but in 2023 its highly unlikely that $3K is sufficient.
Again, competition is going up every year. With more competition means more PPC fees to get enough reviews to rank your site.
22% of sellers spent over $10K on their initial investment according to JungleScout. This investment comprises these costs:
- Test products: ~$500 to $1000.
- Inventory costs after testing: ~$0.25 to $2.00 per pound.
- Product photography: ~$550 to $1300.
- Advertising: Average CPC on Amazon is $0.89. To make an impression on buyers, this grows into hundreds (and even thousands) of dollars.
Without reviews, you will not rank, if you do not rank, you do not have a business.Can you start Amazon FBA with no money? No. Of course, you can start an account for free. Sell items you already own. You'd still pay for shipping products, etc. This isn’t really Amazon FBA. If you want to unlock the full potential of this business model, save up some money and make sure you're okay with not seeing any return for 1-2 years.
What Percentage Does Amazon FBA Take?
Amazon FBA takes 15% of your product’s selling price.
Besides this percentage, you’ll have to pay Amazon:
- Monthly subscription fees: $39.99 if you sell 40+ orders. $0.99 per sold product if you sell less than 40.
- Amazon FBA storage fees: $0.75 per cubic foot from January to September. $2.40 per cubic foot from October to December for standard products.
- Referral fees: 6% to 20% depending on the product. See all product categories and their referral fees here.
- Fulfillment fees (for the packing and shipping of your order): $2.35 per product to $138.11 per product.
Common question we hear from people on the fence about this business is: Is Amazon FBA profitable?
And people ask that because they figure this business has gotten more competitive over the years and it has.
Especially since 2-3 years ago, there's been a huge rise in big distributors, suppliers & brands doing FBA themselves. Which is cutting out the 3rd party sellers in a lot of product categories because it's nearly impossible to compete with these entities that can operate on razor slim margins.
Ultimately, what you find out is that Amazon doesn't care about creating a business opportunity platform for stay at home moms and dads. All they care about is providing the best experience for the customers. Which means they don't care if a big corporation sells their products or an individual 3rd party seller.
This is a real business with proper competition and you should ask yourself some real questions.
- Do you have the initial investment necessary to make Amazon FBA worthwhile?
- Are you ready to not see any return on investment for 2+ years because you need to reinvest any profit to launch more products?
- Can you dedicate ongoing time and effort to this business model and know it'll never be fully passive?
- Do you have the skills to compete against a global market? Are you willing to fail repeatedly and learn?
- Are you prepared to take risks on a continual basis? (product launches are never guaranteed to succeed, there is a lot of trial & error)
Begin your Amazon FBA journey by conducting thorough research. Learn all you can before making your investment. Look into other business models, too. Decide which is best for you and the lifestyle you want.
If you have read this far, then you're quite serious about starting a business.
Amazon FBA is still a great opportunity. Local lead generation is another amazing business worth looking into. Check out this article: Amazon FBA vs. Local Lead Generation and see which business is a better fit for you.