The best way to understand Amazon is through numbers. In 2018, Amazon generated $258.22 billion in e-commerce sales in the United States, a 30% increase over 2017.
let’s take a glance at Amazon FBA
How to Sell on Amazon – The Ultimate Guide
To put Amazon’s size in perspective – Leviathan Online Shopping holds 49.1% of the online retail market and 5% of the total US retail market (online and offline). Amazon’s single market represents $175 billion, and 50% of total sales in the Amazon market in the United States come from third-party suppliers.
Well, you will have to share $87.5 billion with more than 6 million third-party suppliers in total. This figure may seem daunting at first glance, but fortunately it does not reflect the real competition you will face. The number of active sellers – i.e. sellers who have a list of products, not just people with registered Amazon supplier accounts – is about 2.15 million. Only a quarter (570,000 vendors) have at least one test per month on their list. Realistically, only these vendors are the ones you should take care of.
What is the size of these active suppliers (with at least one list reviewed each month)? Quarterly revenues (or $140,000) are more than $100,000 per year, while revenues over $20,000 are more than $1 million per year. According to the last source, I have 12% of all active sellers annual business income ranging from $250,000 to $500,000, 9% between $500,000 and $1, and 8% between $1 and $2 million.
However, profit margins pay bills and not revenues. 75% of Amazon sellers use Amazon FBA – which is the main reason why it is the Amazon FBA guide – and their average profit margins are somewhere between 20-30%. For one-fifth of the dominant BAF sellers, this figure is 32-50%.
Now, you may have understood the size of the Amazon market. There is certainly enough money for all those who are willing to work for him, with that in mind, we will explore the Amazon FBA model in detail, with all the advantages and disadvantages.