Are you curious about how much money you can make selling on Amazon? You’re not alone—running an online business through e-commerce platforms like Amazon is an increasingly common and profitable enterprise.
The popularity of selling on Amazon also means fierce competition, but I’m here to help you get started with your research. I’ve got the inside scoop on the average earnings, lifetime profits, and typical profit margins for Amazon sellers. Plus, I will break down some top-earning strategies, including selling methods and options for fulfillment.
Becoming an Amazon seller is a great way to start or grow your business. Using the tips and tricks from this article, you can become a successful seller and watch your profits soar. Let’s get started!
Average Earnings For Amazon Sellers
To better understand how much money you can make selling on Amazon, I’ve broken down data collected by Jungle Scout. The study was conducted based on the responses from thousands of experienced Amazon sellers.
Using the Jungle Scout survey for reference, I’ll address the following questions
Let’s get into it!
Monthly Sales And Profits
According to the data from Jungle Scout, Amazon sellers have average monthly sales ranging from under $500 to more than $250,000.
While this is a broad scope, 44% of sellers rake in between $1,000 and $25,000 a month. These monthly statistics mean that almost half of Amazon sellers are looking at annual sales of up to $300,000.
Many sellers also use Amazon as a side-hustle or supplemental income, as evidenced by the 17% of sellers who make under $500 in sales a month.
Overall, the percentages are pretty well distributed, and there are opportunities to make decent annual sales on Amazon. However, this data does not account for business costs, like sourcing products and fulfillment fees, which can eat up a lot of profit.
Therefore, it’s crucial that we take a look at the profit margins for selling on Amazon. In the next section, I’ll review this data so you can get a better idea of how much profit a healthy Amazon business can bring in.
Profit Margins For Amazon Sellers
Profit margins indicate what percentage of total sales have resulted in a profit. For instance, if you sell a product for $20 that you sourced for $15, the gross profit margin is 25% ($5 profit divided by $20).
Although 8% of sellers stated they are not currently profitable, the Jungle Scout statistics show relatively high-profit margins for most of those surveyed. According to Shopify, an optimal gross profit margin is around 42.45% for online retail.
About half of the sellers on Amazon have a profit margin between 16-50%; on the low end, a profit margin of 1-5% applies to 6% of sellers while the highest end (51%-100% profit margin) applies to 3% of sellers.
Now that you have a better idea of what to expect when it comes to monthly sales and profits, let’s take a look at the data accumulated for lifetime sales—how much Amazon sellers have made throughout the entirety of their business.
Lifetime Sales And Profits
The survey looked into lifetime sales for Amazon sellers, which shows that 16% of sellers have made $100,000-500,000 in the duration of their time on Amazon.
However, let’s not forget that we have to account for the costs of running a business, so here’s a look at the average Amazon sellers’ profit throughout their careers.
In terms of lifetime profits, 42% of sellers have made a profit of under $25,000. Only 6% broke a million dollars, which means that while there are exceptions, selling on Amazon isn’t a guaranteed get-rich-quick scheme.
However, if you use the profits for supplemental income or as a side-hustle, most sellers make a decent chunk of change. And there is always the example of exceptional super sellers, who have made millions of dollars, for inspiration!
Now that you know the averages for monthly sales and profits, profit margins, and lifetime earnings, you may be wondering how long it takes to become profitable on Amazon and how much money you need to get started.
Let’s look at this part of the survey.
How Much Does It Cost To Sell On Amazon?
The more money you're able to put into your venture initially, the more likely you are to succeed when you start selling. According to the Jungle Scout data, 40% of sellers spent between $500 and $5,000 on beginning costs.
These initial costs can be intimidating to new sellers—the good news is that getting your business off the ground for a lower price is also doable since 18% of new sellers spent less than $500 on starting costs.
Business costs generally go towards the following:
Later on, we will get into the prices of fulfillment and Amazon fees, which will help paint a better picture of your initial costs as a beginner selling on Amazon.
We’ve established the average start-up costs, so let’s take a look at the time commitment it takes to become profitable running an Amazon business.
How Long Does It Take To Become Profitable On Amazon?
According to the survey, many people start selling on Amazon to be their own boss, which involves working the hours you want, when you want.
An average Amazon seller spends less time running their business than the average 40-hour workweek, making this line of work especially compelling. Most sellers (60%) spend less than 20 hours a week working on their Amazon business.
The time commitment of starting an Amazon business differs significantly depending on how much leg work you put in at the beginning to get your business off the ground—the average seller with 1-2 years of experience spends up to 20 hours a week. But as you can see, 39% of sellers spend less than ten hours weekly!
Keeping these time commitments in mind, let’s take a look at how long it takes average Amazon sellers to turn a profit.
The good news is that most people (60%) start to profit within the first year of selling on Amazon. While this may require some patience and the necessary funds to sustain yourself in the first few months, these statistics are promising compared to more traditional business models.
Now that you have a better idea of the costs and time commitment it takes to succeed with an Amazon business, let's get into the various selling strategies on Amazon. These methods should provide you with a better idea of getting into the market and creating a successful business.
Amazon Selling Methods
There are a few primary methods for selling on Amazon, each with its benefits and disadvantages. Below, I will outline how each works and the pros and cons of the methods.
Dropshipping is a business model where the seller doesn't store or ship their products. Instead, when the seller receives an order, they delegate the fulfillment process to third-party sellers.
The seller doesn't have to invest anything in inventory or worry about having enough storage space with dropshipping. Instead, the seller only pays for ads and marketing. Dropshipping can increase profit margins, depending on how much sellers charge compared to how much they pay their supplier for the cost of the product and fulfillment.
The downside to dropshipping is that you don't have control over inventory quality since customers will receive their products from a third-party supplier and not directly from you. This distance from the customer can make it more challenging to create a loyal customer base or build your brand name.
You can buy large quantities of the same product wholesale for a reduced bulk rate. You will purchase these items directly from third-party sellers, but list them and handle fulfillment yourself.
This process involves handling a lot of inventory, so make sure that your supplier is reliable and that you'll be able to move all your product. You may require additional storage space, so keep that in mind when calculating costs.
Retail arbitrage is the process of buying items locally—anywhere from big department stores like Walmart to neighborhood garage sales—and selling them for a profit online. This selling method can be a great side-hustle for those who want to work independently and are nifty at seeking out deals.
The motto for retail arbitrage is buying low and selling high, which means you can scope out bargains at local stores and sell products for a profit on Amazon. To compare costs, retailer arbitrageurs can use price tracking websites like Keepa.
However, this business model takes a lot of time and effort for the seller, which can deter them from moving as much inventory and making as much profit as possible.
Private Label Selling
You will manufacture and sell products under your brand name with private label selling. This enterprise involves significant planning and higher starting costs, but you also stand to increase your profit margin and develop your brand.
As an Amazon seller with your own brand, you will have the freedom to set your prices for whatever you want. You can also take advantage of Amazon’s brand registry that allows you to stop others from selling counterfeit versions of your product.
Once you've determined how you will source your products, it's essential to decide how you will fulfill your orders. There are two primary options on Amazon: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM).I'll take you through the differences between the two methods and outline the advantages and disadvantages so you can make the decision that is best for your business. For a more detailed comparison, be sure to check out my article on Amazon FBM vs. FBA.
Fulfillment By Amazon (FBA)
Fulfillment by Amazon (FBA) is preferred for most people selling on Amazon since 73% of Amazon sellers use the service.
Amazon FBA sellers use Amazon's fulfillment services. When a customer places an order, your inventory is automatically sent to an Amazon warehouse, where staff will store and pack the items. The products are then shipped out with Amazon's logo and branding.
An Amazon FBA business is less intensive to run since the seller delegates shipping and fulfillment to Amazon. Additionally, Amazon handles all customer support needs.
Some benefits of FBA are that you won’t have to pay for extra warehouse costs or the labor involved with fulfilling orders. FBA listings are also prioritized over FBM listings, meaning they appear at the top of customer searches.
There's also less customer interaction required—which can be an advantage depending on your business strategy but also means there are fewer chances to build a loyal client base or add a personal touch.
Fulfillment By Merchant (FBM)
Fulfillment by Merchant means you are responsible for the fulfillment process, including storing, packaging, and shipping your products. You’ll also be responsible for interacting with customers and handling any returns if necessary.
FBM is a feasible option if you have sufficient experience selling online, as well as access to storage space. FBM is also preferable for sellers who sell heavy or bulky items. If your products are selling at a lower rate, this may also be a better option, so you don't have to pay continual listing fees on Amazon.
The drawbacks are that if you don’t already have the necessary connections and experience, you’ll have to put a lot more time and effort in than the average Amazon FBA seller. There are also potentially higher costs for warehousing fees and labor if you have to store and fulfill all your orders yourself.
To calculate the fees for your specific products, you can also use the Amazon Revenue Calculator. This tool can help give you a better idea if the perks that come with FBA are worth it or if fulfilling the orders yourself will be more cost-efficient.
So far, we’ve covered how to source your products and fulfill your orders, so let’s now dive into the top-earning strategies that will help your Amazon business thrive.
Successful sellers on Amazon utilize all their resources to sell and market their products. Below are a few suggestions that will help you make the best of your business once you start selling on Amazon.
Consider Overhead Costs
Getting the best deal possible on inventory is important, but make sure that you’re not spending more than you charge for your products. Most Amazon sellers charge 2-3 times what they purchased their inventory for.
The best way to maintain a high-profit margin is to keep your overhead costs low, whether that means dropshipping to avoid paying for storage fees or using Amazon FBA to outsource the fulfillment process.
Knowing what system works for your business may take trial and error at first, but don’t be afraid to try out different options for sourcing your products and fulfilling your orders.
Reinvest Your Profits
You may have had to invest some of your profits back into your business, whether it be by reinvesting in advertising or purchasing more inventory. When you make enough money on Amazon, you can start delegating tasks to third-party outsourcers and focus on growing your business.
For example, you might decide to hire an assistant who will clean up listings and handle orders, as well as a fulfillment center staff who can take care of packaging and shipping. The more you make, the more you can outsource tasks, and the less time you spend running your business.
Use Amazon Ads
This strategy will allow you to generate sales through Amazon’s sponsored products platform. You can purchase pay-per-click (PPC) advertisement campaigns directly from your Amazon seller account. These ads can provide you with several benefits, which include:
However, it is essential to remember that PPC fees are charged every time a customer clicks on your ad, so make sure you budget accordingly.
How Much Do Amazon Sellers Make? - FAQ
Yes! While many Amazon sellers use the platform as a side-hustle, it is entirely possible to turn selling on Amazon into a full-time job. Your income will depend on the amount of time and money you put in upfront, but 60% of sellers turn a profit within their first year. Only 8% of all surveyed sellers claimed they were not currently making a profit.
The average salary for new Amazon sellers is $42,000, according to Jungle Scout. This data applies to Amazon sellers who have been on the platform for 1-2 years. However, with experience, there are opportunities to make more money.
With so many Amazon sellers to compete against, many entrepreneurs may be concerned about whether selling on Amazon can be profitable. According to the data I reviewed, the great news is that the answer is yes!
While only a small number of Amazon sellers will become “super sellers,” most Amazon sellers will see a profit, making it a worthwhile pursuit if you are willing to put in the time and effort to start your business. And if you’re interested in other ways to supplement your income using Amazon, make sure to check out my guide on starting an Amazon side hustle.
Whether you want to be your own boss or add another income stream, Amazon is a fantastic way of making money. Now that you have a better idea of what to expect financially, you’re ready to start selling on Amazon today!