Are you wondering how much Amazon sellers make? It’s a valid question – after all, you want to understand the earning potential of a business before you start. In this article, we’ll give you an idea of how much you can make as an Amazon seller and the top strategies for increasing your earning potential.
Amazon sellers make an average of $30,000 in profit per year, but that figure varies widely in practice. Some earn no profit at all if they are beginners, while established sellers can make millions of dollars. It all depends on the scale of your Amazon business and the amount of funds you’re constantly reinvesting.
Factors That Affect Earnings
Now let’s turn our attention to the top factors that contribute to how much you can make as an Amazon seller. Taking these factors into account will help you make the right decisions along the way.
Product Niche
The niche you select to work on will have a big impact on your earning potential. In some niches, no matter how hard you try, you cannot scale past a specific monthly earnings amount. That’s because there is a limited amount of income you can make from specific niches.
Therefore, to ensure that you can increase your earning potential, you need to look at the competitor’s sales history. You can do this with tools like Jungle Scout and Helium 10, and their accuracy is trustworthy.
Amount to Invest
Amazon FBA can be a cash hungry business since the more you invest, the more money you can make. That’s because if you have more products to sell, then your revenue and profitability are increased.
Therefore, the Amazon sellers that make the most money in the first year are those that have large amounts of money to invest. However, even Amazon sellers on a low budget can grow to any level of revenue with enough time. It might take longer to reach than those sellers with a bigger starting budget.
Product Profitability
It’s difficult to make a lot of money as an Amazon seller if the profit margin is low. Ideally, you should aim for profitability of 25%, but closer to 40% is the preferred rate. With a bigger margin, you’ll make more money, and there is additional room for error.
Hence, it’s important to use the Amazon profit calculator to determine the product profitability before you launch a product or even speak with suppliers. However, the profitability is only an estimate since you’ll need to factor in a bunch of costs.
Number of Products
To be one of the more successful Amazon sellers in any niche, you may need to increase the number of products you have in inventory. More products equals more sales and stability. Therefore, when one product begins to slow down, another may increase in sales.
Amazon has so many product categories that adding more products to sell is possible for any business type. You simply need to put time into product research to find options in high-demand and low-competition niches.
How To Increase Your Earnings Potential
Now let’s examine the different things that you can do to increase your chances of making money. Implement these tips one at a time, and you can take your Amazon business to another level.
Amazon PPC
Generating sales on Amazon is all about increasing the number of people that see your product listing. You can do this with Amazon PPC, which is their in-house advertising platform. However, you need to make sure that your product listing is profitable despite the costs that you have to pour into the e-commerce platform.
Also, Amazon PPC is important for product launches since it can boost organic rankings. That’s because Amazon rewards listings that can generate more sales. However, you’ll need to spend time figuring out how to increase the profitability of each PPC campaign.
Reinvest The Profit
Do you want to increase the chances of your Amazon business scaling instead of being stagnant? Then you need to reinvest all profits back into the business. Therefore, you can improve the quality of the product listings and order bigger batches.
Hence, your digital product shelves can constantly stay in stock, so the monthly revenue numbers can improve. This is especially important during the holiday period when you can sell significantly more products.
Use Amazon Sellers Software
You can take advantage of the software solutions like Jungle Scout, ZonGuru, and Helium 10 to increase the quality of all aspects of your business. For example, you can look at the business dashboard to look at the different product listing profitability to figure out the ones that are not pulling their weight.
Hence, you can figure out how to improve each product listing and increase the conversion rate. This allows you to improve the revenue and profitability of your Amazon business.
Secure Funding Sources
You can order a bigger batch of products by securing more funding sources. For example, you can get a loan from a bank or ask friends and family. However, don’t rush to get funding from day 1. You first need to develop a proof of concept by looking for a profitable product.
How Much Do Amazon Sellers Make Final Thoughts
To conclude, Amazon sellers earn a large range, and it all depends on the factors mentioned in this article. For example, sellers that only have a few products and have small funding may struggle to compete with more ambitious sellers.
However, the beauty of the Amazon business model is that every seller can make improvements. There’s always a solution or pivot to make for growing your business to the next level.
For example, you can register your Amazon business as an LLC. This provides advantages such as allowing you to secure a bank loan and receive liability protection. Consider using the services at Business Anywhere to register your Amazon business today.
