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Finding someone unfamiliar with Amazon is quite unimaginable. With its global reach and massive user base, it’s THE platform that can allow businesses and entrepreneurs to thrive online. But because of its popularity, the challenge is not just finding products to sell on Amazon but also standing out amidst the millions of sellers on the site. The exact number of Amazon sellers is constantly changing. As of 2023, there are over 2.4 million sellers, with over a million from the US.
With its extensive seller base worldwide, new Amazon sellers may face fierce competition. However, you can stay competitive and navigate through the platform using the right seller tools like SmartRepricer, InventoryLab, and TacticalArbitrage. But first and foremost, understanding Amazon numbers is crucial.
Evaluating the current number of active Amazon sellers shows the marketplace’s vast scale. Amazon provides diverse selling options, including first-party (1P) vendor sales. First-party vendors sell to Amazon directly via Amazon Vendor Central. In this method, vendors send inventory to Amazon, letting the platform handle pricing and display “ships from and sold by Amazon.com” on listings. Advantages of 1P sales include wholesale purchases, priority selling, and building brand trust through Amazon’s esteemed seller status.
Selling your products directly to Amazon as a first-party vendor has some notable drawbacks. One primary concern is the inability to engage with your customers directly, and you also have restricted control over how you price your products. Opting for Vendor Central means you might experience a lack of insight into the sales process and a diminished sense of ownership over your brand. Additionally, there’s the risk of facing lower profit margins and the potential of selling your products below the Minimum Advertised Price (MAP) guidelines, all due to the wholesale arrangement with Amazon.
Conversely, Amazon enables third-party (3P) sales, letting individuals and professionals join its marketplace. 3P sellers manage orders through Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM). Products can be displayed as “sold by MERCHANT and Fulfilled by Amazon.” At times, it will also note that the transaction is fulfilled by the merchant.
A study reveals that 89% of Amazon sellers are profitable, with more than half of these earning profit margins above 15%, showcasing the potential for success. Third-party sales offer sellers a strategy to address certain drawbacks of first-party sales, such as enhanced margins with improved pricing control, more favorable payment terms, and reduced dependence on the Amazon relationship. In Q3 2023, 60% of paid units were sold by 3P sellers.
Amazon employs 1P and 3P models to provide customers with diverse products at competitive prices. Generally, Amazon 1P suits high-volume and branded items, while Amazon 3P is ideal for unique or niche products not commonly found in traditional retail channels.
Once a modest online bookstore, Amazon is now a global powerhouse with 2.3 billion web visits in April 2023. And that traction shows in various ways. For instance, consumer data indicated a clear preference for Amazon during the 2023 Black Friday period - with six out of ten shoppers choosing it for its best deals, with significant market share in the US and the UK. Shipping nearly 16 million packages daily, Amazon reinforces its dominance in eCommerce through a vast product selection and competitive pricing.
Undoubtedly, Amazon stands out as the global choice for customers, meeting various needs, from advanced tech gadgets to essential household appliances. The eCommerce platform has also ventured into finance, self-publishing programs, and over-the-top platforms. And so, while many moving parts help make your Amazon venture a success, penetrating the market is doable.
For new Amazon sellers, especially, the figures are promising:
It’s worth noting that not everyone achieves equal levels of success. Specifically, 22% of sellers make less than $500/month, and 3% are uncertain about their monthly sales. That being said, starting an Amazon, even just as a side hustle, is a great way to earn passive income.
Every day, about 3,700 new sellers become part of Amazon. The top three countries with the highest number of Amazon new sellers are:
With this continuous growth, Amazon’s popularity is soaring, providing an opportunity to reach a broader audience. However, it’s also crucial to acknowledge the increased competition. Using Amazon seller resources is a definite plus to thrive in this environment.
Amazon marketplace numbers vary across countries. Let’s look into the specifics:
Amazon enjoys popularity across various European nations, too. According to Statista, the following countries trail closely behind the US and UK in terms of active sellers:
In addition, Spain, Japan, Canada, and Mexico comprise the top ten countries with the highest active sellers. Across the globe, Amazon faces tough competition in Asia. Rivals like Alibaba, AliExpress, Lazada Marketplace, and Shopee dominate the Asian market.
Amazon has 30+ product categories for third-party sellers. While many categories don’t need approval, others require Amazon’s consent before listing a product.
Let’s explore the top Amazon product categories:
Here are the top 10 product categories listed by sellers on Amazon US:
Here are the top-selling categories on Amazon UK:
Various factors contribute to their uniqueness when navigating through Amazon’s diverse categories. Let’s delve into these critical differentiators:
The skills necessary for successful selling vary based on the category of your chosen product. Group A categories demand a seasoned approach, while Group B is more beginner-friendly.
Group A categories include apps and games, automotive parts and accessories, industrial and scientific products, and musical instruments, which almost half of sellers with advanced expertise prefer. Group B examples are toys and games, books, electronics, and appliances, chosen by about 27% of new sellers as their starting point.
These are the various business models available for sellers on Amazon:
On average, sellers have the potential to earn between $1,000 and $25,000 from each category. However, it’s essential to note that categories like handmade, books, and cell & accessories typically yield monthly sales under $1,000. Conversely, categories such as Musical Instruments, Computers, and Industrial & Scientific have the potential to generate over $50,000 for sellers.
Regarding profitability, profit margins can range significantly, spanning from 16% to 32%. Despite the slightly higher costs associated with raw materials and time investments, handmade products emerge as the most lucrative, boasting a 32% profit margin. Here’s a breakdown of the top five Amazon categories ranked by average profit margin:
Amazon provides sellers with these fulfillment methods:
Setting up your Amazon seller account is quite easy, even for first-timers. But the real challenge is choosing the right product category to maximize your sales. Research is vital, covering product selection, competitor analysis, understanding customer preferences, and crafting effective advertising strategies. Here are essential tips for your product selection journey:
Dig into the all of the costs — manufacturing, shipping, advertising, and storage fees. Choose products where your selling price comfortably covers all costs, ensuring a robust profit margin. It’s like discovering golden nuggets and optimizing your return on investment while delivering fair value to customers.
Embrace the collective wisdom of customer feedback. Immerse yourself in product reviews, not just the glowing accolades but the detailed critiques. These reviews are invaluable mines of information. Identify recurring pain points, missing features, and desired improvements. Use this insight to refine your product, turning customer feedback into a strategic advantage.
Bear in mind Amazon’s storage is finite, impacting shipping costs. Prioritize compact, lightweight products without compromising quality. Streamline packaging, explore lighter materials, and consider collapsible or modular designs. A trim product means lighter wallets for both you and your customers.
While FBA can be influential, not every product syncs with its rhythm. Evaluate compatibility before committing. FBA excels with fast, standardized items. If your product demands special handling, has slow turnover, or faces uncertain demand, FBA might not be the best fit. Weigh the advantages and disadvantages, explore alternative fulfillment options, and strategically decide on a seamless, efficient operation.
Facing Amazon’s brands is confronting a formidable foe. Their vast resources and preferential treatment in the marketplace make them formidable rivals. Choose products in distinct niches, offering unique functionalities or targeting specific demographics.
Entering a saturated Amazon category means advertising costs soar, visibility diminishes, and standing out can be challenging. If venturing into these crowded shores, craft a solid strategy. Introduce a game-changing twist, foster a loyal community, or deploy targeted marketing to claim your spot.
Adhering to a set of criteria makes judging potential products more manageable and systematic. Here are some examples to consider:
If you’re already an experienced Amazon seller, unlocking new avenues for income growth is always possible. Here are advanced tips to elevate your business:
Make the most of Amazon analytics tools to discover profitable niche expansions. Refine product listings meticulously by optimizing keywords, titles, descriptions, and pricing. Proactively anticipate inventory needs to avoid stockouts.
Enhance efficiency with automation tools incorporating dynamic repricing based on competitor rates and demand fluctuations. Streamline inventory management through automated reorder points and purchase orders. Optimize customer service with auto-responders and chatbots.
To reach more customers, it’s a good idea to offer a variety of products. Identify related or complementary products aligned with your niche. Stay ahead of industry trends through thorough market research.
Expand your business beyond Amazon by creating a website to have more control over your brand, prices, and customer relationships. Check out other online marketplaces like eBay or Etsy, or use social media eCommerce platforms to reach more people.
Cultivate loyalty through strategic initiatives, including enticing loyalty programs and exclusive discounts. Provide personalized product recommendations based on individual purchase history. Offer prompt and proactive customer service to enhance overall satisfaction.
Cultivate a culture of ongoing experimentation, validating new product ideas through controlled experiments. Polish marketing campaigns for optimal performance and implement pricing strategies to balance conversions and profitability.
Maintain vigilance by staying informed about industry dynamics. Monitor Amazon ecosystem changes, keep up with emerging trends and technologies like voice search optimization, and analyze competitor activities to enhance your competitive edge.
Remember, as we pointed out above, 89% of Amazon sellers are profitable, with more than half earning profit margins higher than 15%. Starting small is a prudent approach, as success on Amazon hinges on factors like product selection, gradual scaling, effective advertising, streamlined operations, reinvestment, adaptability to eCommerce shifts, financial understanding, and patience. Your recipe for success in a marketplace teeming with competitors involves blending hard work, uniqueness, and leveraging the best Amazon resources.
Threecolts is a platform dedicated to equipping Amazon sellers with the necessary tools and knowledge to succeed in their businesses, whether they operate as private-label enterprises or are first-time sellers.
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