Do you want to know how much an Amazon seller salary actually is? In the grand scheme, Amazon certainly makes a pretty penny. But what happens if we take a closer look? What does a seller actually earn? Is it really profitable to sell on Amazon?
How Much Do Amazon Sellers Make?
If we asked you to name two jobs or side hustles that have become more popular over the years, what would you say? For us, we’d probably say content creation and online selling. Social media, with their social selling features, has given many the opportunity to start in eCommerce. However, though these platforms are quite successful in the eCommerce space, none really hold a candle to the giant – Amazon.
Amazon revealed that in the Fourth Quarter of 2023, their net sales reached $574.8 billion. That’s a growth of 12% over the previous year. Suffice to say that it’s an incredibly successful marketplace. But how lucrative is it, really, to be an Amazon seller?
Average monthly sales for Amazon sellers
A recent JungleScout survey of over 700 respondents (Amazon sellers) might be surprising to many. It revealed how much of a range there is in monthly sales revenue on the marketplace. 1% of surveyed sellers indicated a revenue of over $250,000. Though that is an incredible minority, it does show how much potential there is on Amazon. More than half (56%) of sellers admitted to earning below $10,000. Realistically though, most Amazon sellers, especially those just starting out, see around $1000 in monthly sales. That’s a huge gap.
Factors influencing the profit potential for Amazon sellers
With such a wide range of earning potential, what can affect your margins and subsequent Amazon seller salary? We talked about these last year and we still believe these are the main things to consider:
- Product Selection and Niche Market Analysis
- Pricing Strategy and Competitiveness
- Amazon Fees and Expenses
- Inventory Management and Fulfillment Costs
- Customer Service and Product Reviews
- Marketplace Trends and Seasonality
You can learn more detials about these factors in our post, How Much Profit Can an Amazon Seller Make in 2023? One thing we would add is Amazon Seller Reviews and Feedback. These reviews tell Amazon the kind of customer experience people are having. Too many negative reviews and unsolved issues lead to poorer performance on the platform, or worse, account suspension.
Timeframe for Profitability on Amazon
The JungleScout survey is actually quite encouraging for those thinking about becoming Amazon sellers. It showed 89% of Amazon sellers as profitable, which is a nice majority. You may have also already heard that most Amazon sellers are profitable within a year, some even seeing green as early as 3 months in. But how much time and money really goes into starting your selling journey on the platform?
Required investment to start selling on Amazon
Selling Fees
When starting any business, there’s always an initial investment. That can be capital used to rent a space, purchase equipment and materials. This principle applies even in online business ventures. Part of that investment in this case includes Amazon selling fees.
- Account Fees/Selling Plans – There are two plans: Individual and Professional. Individual plan holders must pay $0.99 per item sold. Professional plan holders pay $39.99 as a monthly subscription to keep selling. Each one has its advantages with the latter having more tools and services included in the subscription.
- Referral Fees – This is charged per item depending on product category. It’s either a minimum fee or percentage amount.
- Closing fees – This applies to media items and it is a per item fee.
- FBA Fees – If you decide to have your orders Fulfilled by Amazon, there are certain fees associated. For instance, you need to pay a per unit fee based on the weight, dimensions, and category of the product. You also have to pay for storage, long-term storage, and inventory disposal fees.
Other Expenses
Aside from Amazon-specific fees, there are other expenses to consider:
- Inventory Acquisition – This is how much you spend to source your product stock. This can be through arbitrage, third-party suppliers, handmade products, etc.
- FBM Fees and other selling model fees – Though FBA is the more popular choice when selling on Amazon, some sellers take care of fulfillment themselves. This Fulfilled by Merchant model means that you need to pay for packaging, shipping, delivery, return shipping, etc. Aside from FBM, there’s also dropshipping and private labeling which come with their own unique costs.
Some see these fees as a barrier to entry, while others see them as the ticket price to access opportunity. Still, some see these fees and remain hesitant because of the risks. Any venture has its risks, though. When it comes to selling online, one obvious worry is ending up with a bunch of inventory you can’t sell. However, there are a lot of resources, tools, and forums out there to help you mitigate these. Sometimes you need to have good timing and know how to identify market trends as they emerge. It’s mostly about finding a niche, knowing your target audience, and putting in the work. If you are careful, you can carve out a very nice Amazon seller salary for yourself.
Time investment needed to begin selling on Amazon
There are two stages to this you need to consider. The first stage is the setup. Setting up your account really doesn’t take all that long. It’s product research and logistics (if not FBA) that you’ll spend most of your time on. You can spend tens of hours in this stage depending on how thorough you want to be. You also need to factor in the time it takes to create optimized product detail pages. For sellers with a few products, this shouldn’t take too long. Access to the right tools and information can significantly speed up the setup process. The second stage is actually running and maintaining your store. It’s worth noting that the beginning stages might cost more hours as you figure things out. Once you get the hang of it though, most Amazon sellers claim to spend 20 hours a week or less on their stores.
Is Selling on Amazon Profitable in 2024?
Assessment of profitability in the current market
Amazon seems like a big ocean with many fish. Despite that, 92% of those fish are “golden”, seeing 15 to over 20 percent in profit margins. This shows that there’s still a lot of opportunity and money to be made on the platform. You do still need to invest that time, effort, and cash to not only stay afloat but also beat out the competition. The amount you invest can proportionally impact your Amazon seller salary.
Opportunities for new sellers to generate income on Amazon
It’s not as simple as researching the most profitable product categories and selling items that fit the classification. These places are swarming with sharks who have deeper pockets, more experience, and understand the platform and their audience better. That being said, there can be a place within these categories for the upstarts. There are always niche markets to look into. Even if you have plans to diversify your product offerings down the line, you should first narrow down your customer base. Spreading yourself too thin could spell disaster. It’s like buying every property you land on on your first go around the Monopoly board. Take it from experience. You run out of money fast and it becomes much harder to expand the way you want to. Remember, competition is always around the corner looking to get a piece of the action.
Strategies from Top Performers on Getting a Nice Amazon Seller Salary
Achieving rapid success in the marketplace
Some sellers say that starting as soon as possible is the way to go. Getting started gets much more difficult as the years go by and more people get on the platform. Remember, there’s room to grow as you go. Very few people have everything figured out before starting. While it’s important to educate yourself beforehand, don’t let fear of failure stop you from taking those first steps.
Importance of putting in efforts for long-term payoff
Direct your efforts with knowledge:
- Spend time learning about the platform.
- Put to heart Amazon seller policies, guidelines, and their Terms of Service.
- Consider learning some SEO and PPC.
- Come up with SOPs on how to handle your customer service.
- Find the best way to optimize your product listings.
- Know the benefits and drawbacks of FBA vs FBM and other selling models.
Recommendations for finding the right resources and tools
Use other apps to help you with product research like the Seller Assistant App and seller scanner apps. It’s also a good idea to invest in the tools and software you need to gather and analyze your seller metrics data. After all, in order to make data-driven decisions, you need to first know the data. If you need actionable help,and guidance from real sellers and Amazon representatives, consider joining a seller forum. It’s a great place for community learning and staying updated on the ever-changing platform.
Frequently Asked Questions
Factors influencing the average income of Amazon sellers
It boils down to your time investment and commitment. We believe anyone can be profitable on the platform. However, you need to put in the hours to research products, niches, trends, etc. The better you know the platform and your audience, the better you will perform. Of course, the amount of money you put in matters. However, the more time you spend on research, the more efficiently you spend. The more you save on costs, the bigger the Amazon seller salary payout.
Requirements to start selling on Amazon
After selecting your selling plan, you need to give Amazon some information for your account setup. This includes:
- Chargeable credit card (international)
- A government-issued ID
- Phone number
- Banking info and routing number
- Tax info
After that, you’re ready to configure your account, adjust settings, list your products, and even enroll your brand.
What Is EcomBalance?
EcomBalance is a monthly bookkeeping service specialized for eCommerce companies selling on Amazon, Shopify, Ebay, Etsy, WooCommerce, & other eCommerce channels.
We take monthly bookkeeping off your plate and deliver you your financial statements by the 15th or 20th of each month.
You’ll have your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement ready for analysis each month so you and your business partners can make better business decisions.
Interested in learning more? Schedule a call with our CEO, Nathan Hirsch.
And here’s some free resources:
- Monthly Finance Meeting Agenda
- 9 Steps to Master Your Ecommerce Bookkeeping Checklist
- The Ultimate Guide on Finding an Ecommerce Virtual Bookkeeping Service
- What Is a Profit and Loss Statement?
- How to Read & Interpret a Cash Flow Statement
- How to Read a Balance Sheet & Truly Understand It
Conclusion
An Amazon seller salary is not an easy calculation to make. There are several factors to consider like which niche you invest into or what fulfillment option you choose. Ultimately, the more armed you are with knowledge and fearlessness, the greater your potential to earn.
