Amazon is one of the biggest e-commerce platforms in the world, but third-party sellers count for the majority of sales on the platform. Anyone can register for an Amazon Seller Central account, create a product listing and start selling with the help of the FBA service.
It’s a potentially lucrative business model, but it has become increasingly more difficult each year because of saturation. After all, more people are looking for a way out of the rate race than ever before. So is starting an Amazon FBA business still worth it in 2023? Read to the end of the article to find out!
What is an Amazon FBA Business?
FBA (Fulfillment by Amazon) is a service offered by Amazon that takes care of sending the product to customers once they buy. In practice, you send a large batch of products to an Amazon warehouse, and when customers buy from your product page, the employees at the location will pick, pack and send the product to the customer.
In fact, many sellers send products straight from the supplier to the Amazon warehouse directly without ever laying eyes on the products. Therefore, this business model is scalable and accessible for solo entrepreneurs.
Why Opening an Amazon FBA Business is Harder in 2023
The Amazon FBA business model is becoming an increasingly tougher nut to crack because of stiff competition from other sellers. Any niche has its fair share of sellers trying to take the biggest slice of the market. Therefore, it’s becoming harder to find an untapped niche where you will be left alone to enjoy most of the sales.
Furthermore, sellers on average are more sophisticated than ever before. Many third-party sellers had lousy product pictures and poorly written descriptions a decade ago. This gave you a chance to enter the market and improve product listings to attract customers. Nowadays, most sellers understand the value of a great product listing, which means you won’t stand out by just getting the basics right.
Finally, Amazon has increased the fees for using the FBA service, which reduces the profit margin. Also, you are most likely getting the products delivered from China, so transportation costs are a big expense. Generally, shipping costs have increased over the last few years because of socioeconomic factors.
Benefits of an Amazon FBA Business
However, the Amazon FBA business model is still alive and well because of its numerous benefits. Even with the challenges in 2023, these reasons are why many new entrepreneurs are still trying to start an Amazon FBA business:
Accessible: there are no significant entry restrictions to register an Amazon Seller Central Account and pass the verification checks. Firstly, you need to be in an accepted country and provide documents such as proof of residence and bank account statements.
Next, you’ll need money to invest in the business. You can get started with as little as around $500, but having a budget of $4,000-$5,000 makes it easier to ensure you can quickly scale.
Large sales volume: Amazon is the e-commerce king, and that’s not going to change anytime soon. Therefore, you can expect a lot of traffic and interest in your products. You’re essentially piggybacking off the trust and traffic generation that Amazon provides.
Scalable: the Amazon FBA business model allows you to start small and scale at your own pace. There are no limits to how big you can grow, and 7 to 9 figure sellers use this business model. It’s a numbers game, so as you launch more products and reinvest profits, the size of your business will grow.
Ideas for Improving Amazon FBA Success
To turn the odds of success in your favor, you can deploy multiple proven techniques that even work in 2023. Here is a summary of the top ones to get you started:
- Product tuning: don’t just copy the successful products you already see selling on Amazon. Use them for inspiration, and think of how you can improve them. Then communicate with suppliers to implement those changes and put a new unique product into the marketplace.
- Reinvest the profits: some sellers are eager to quit their full-time job and start paying themselves with profits from the first batch of successful sales. However, that will stun your scalability, which is where the power of this business model lies. Be patient and reinvest your profits until your business has the chance to grow.
- Course or mentor: there is no need to reinvent the wheel or learn everything from your own mistakes. Instead, leverage the success of others by taking a course or hiring a mentor. However, do your due diligence to find educational material worthy of your time and money.
- Treat it as a business: if you treat Amazon FBA as a casual hobby, then it will never become anything else. From the start, you should have a plan to scale, do taxes, and even register as a real business.
- Product selection: it’s important to find the right products, otherwise everything else you do will be in vain. Tools such as Jungle Scout and Helium 10 provide the product research tools you need to find products with a high sales volume and low competition.
Final Thoughts
In conclusion, it’s worth starting an Amazon FBA business in 2023 because there is still a lot of opportunity. That’s especially true in the North American market, where many people buy from Amazon instead of going to the local mall. Also, you can release new products never seen before on Amazon to tap into new markets.
However, you need to treat the venture as a real business to have the best chance of success. The services on our website help Amazon FBA sellers, including business formation, registered agent service and virtual mailbox.
