Today, we will be discussing How Much Money Can You Make Selling On Amazon, how to become an amazon seller and how to earn money from amazon. New Amazon sellers are earning between $26,000-$810,000 per year in profits. What does it take to start selling on Amazon, and what can new sellers do to ensure they’re profitable in 2020? Jungle Scout’s latest report has the data.
The majority of Amazon sellers (80%) say they sell on Amazon for the freedom the income provides. They’re looking for a new job or to “be their own boss.” Many are looking for extra money to support their kids or to pay off debt or even to travel the world.
how to earn money from amazon
Whatever the reason for selling on Amazon, it’s the primary income stream for many.
And in 2020, selling on Amazon is still undeniably a viable way to make money. In fact, 61% of sellers said their profits increased in 2019, and 92% are planning to continue selling on Amazon in 2020.
So just how much can you expect to make selling on Amazon in 2020?
The team an all-in-one platform for selling on Amazon — recently surveyed* thousands of Amazon sellers so you can learn all you need to know about getting started selling on Amazon from those who are doing it.
What we’ll reveal:
Now, on to the data!
1. how much money can you make selling on amazon?
Though there are a number of different methods for selling on Amazon, most common is Amazon’s Fulfillment by Amazon (FBA) program.
Like any other business, selling on Amazon will involve some expenses and fees on the seller’s part, but what makes Amazon FBA so appealing is that it simplifies that for sellers.
In short, you choose a product, get it to Amazon’s warehouses, set up your Amazon listing, and Amazon takes care of the rest. And you start seeing sales and profits.
What are the average monthly sales for Amazon sellers?
Most Amazon sellers make at least $1,000 per month in sales, and some super-sellers make upwards of $250,000 each month in sales — that amounts to $3 million in annual sales!
- About half (50.7%) of Amazon sellers make from $1,000-$25,000/month, which could mean annual sales from $12,000-$300,000.
- One in five (20%) make $25,000-$250,000/month, amounting to annual sales between $300,000 and $3,000,000; another 3.3% make more than $250,000 in monthly sales.
- Only 23.8% of sellers make under $1,000/month in sales, and 2.1% don’t know their monthly sales.
Further, since selling on Amazon has only become a viable way of building an e-commerce business in the past few years, most Amazon sellers are relatively new to the game.
But that hasn’t limited their sales.
The majority of Amazon sellers (50.3%) have reached lifetime sales of more than $100,000:
- Lifetime sales $100,000-500,000: 20.5%
- $500,001-1,000,000: 8.3%
- $1,000,001-5,000,000: 11%
- $5,000,001-10,000,000: 3.2%
- $10,000,001-50,000,000: 4.3%
- More than $50,000,000: 3%
While sales are often a strong measure of a healthy Amazon business, they don’t paint a complete picture of what money an Amazon seller takes home. So let’s turn to profits.
How much do Amazon sellers profit?
The higher the profit margin, the better, but small companies often struggle to achieve profitability at all in their first few years.
Contrastingly, Amazon sellers see relatively high profit margins.
- Two-thirds of sellers (67.2%) see profit margins higher than 10%.
- Better still, 36% see profit margins above 20%.
- On the other hand, 8.4% said their businesses are not yet profitable, and 5.3% did not know.
While profits change based on factors including sales volume and business expenses throughout the year, sellers weighed in on their total lifetime profits since they started their Amazon businesses.
How much money have Amazon sellers made over time?
A large number of Amazon sellers (43.2%) have seen lifetime profits of more than $25,000 — not bad for what many start as a “side hustle” — and 6% are millionaires from their Amazon businesses alone.
- Lifetime profits under $25,000: 38.2%
- $25,000-50,000: 13.3%
- $50,001-100,000: 8.4%
- $100,001-500,000: 12.2%
- $500,001-1,000,000: 3.5%
- $1,000,001-5,000,000: 2.7%
- $5,000,000-10,000,000: 1.4%
- More than $10,000,000: 2%
6% of Amazon seller are millionaires from their Amazon businesses alone
And for many Amazon sellers, those profits turn quickly.
2. How long does it take to become profitable on Amazon?
Across all respondents, the majority (67%) said they were profitable within the first year selling.
- Profits within 3 months: 22%
- Profits within 3-6 months: 22%
- Profits within 6 months-1 year: 23%
- Profits within 1-2 years: 13%
- Profits within more than 2 years: 3%
Even newer Amazon sellers (1-2 years of experience) still pulled in some strong profits in 2018 and 2019, and the majority (63%) were profitable within their first year:
- Profits within 3 months: 16%
- Profits within 3-6 months: 23%
- Profits within 6 months-1 year: 24%
So, how do you get started selling on Amazon? We asked sellers how much money and time they invested to get their businesses up and running.
How much money do you need to start selling on Amazon?
One of the biggest hurdles for people starting to sell on Amazon is the idea that it will cost them too much money. As with many things, what you put in impacts what you get out.
But that doesn’t have to mean cash — it can mean time, the necessary data to inform your decisions, or simply the will to succeed.
In fact, nearly one third (32%) of the most successful Amazon sellers spent no more than $500 — if any — to start the businesses they are still operating more than five years later.
Overall, most sellers (60%) spent less than $5,000 to get started selling on Amazon, and (29%) spent less than $1,000.
- Sellers spent less than $500: 17%
- $500-1,000: 12%
- $1,001-2,500: 13%
- $2,501-5,000: 18%
- $5,001-10,000: 21%
- More than $10,000: 21%
What is that money spent on? Typically, initial costs include sourcing your product (including samples), Amazon fees, and promotions. (Read more about how much it costs to sell on Amazon here.)
Interestingly, you don’t need to spend a lot of money to be successful selling on Amazon, and often starting small correlates to greater success.
Sellers who spent less than $500 starting their Amazon businesses:
- … got their listings live on Amazon before higher spenders; 67% were actively selling within 6 weeks, compared to at most 51% from higher spenders in that time frame.
- … were profitable before those who invested more; 46% of lower-spend sellers reported being profitable in fewer than 3 months, compared to at most 30% of higher spenders in that time frame.
- … have solid profit margins; 67% said they had profit margins higher than 10%, and 23% had profit margins higher than 25%.
How much time do you need to start selling on Amazon?
Overall, Amazon sellers don’t need to spend a lot of time on their Amazon businesses. Most (57%) spend fewer than 20 hours per week doing so, and 13% spend just over 30 minutes each day.
- Fewer than 4 hours per week: 13%
- 4-10 hours: 24%
- 11-20 hours: 20%
- 21-30 hours: 15%
- 31-40 hours: 10%
- 41-50 hours: 9%
- 51-60 hours: 3%
- More than 60 hours: 6%
In fact, you’re likely to give more time to get your business off the ground in its early stages; after they find products to sell and create their niche, many sellers simply maintain their businesses and let the income roll in.
For new sellers (with 1-2 years of experience), most (64%) spent up to 20 hours per week on their Amazon businesses, compared to 37% of sellers with more than five years of experience.
3. Will selling on Amazon be profitable in 2020?
By all known indicators, yes, selling on Amazon will be profitable in 2020.
Nearly all sellers (92%) said they plan to continue selling on Amazon in 2020, and 72% are optimistic that selling on Amazon will be a viable way to make money online in the future.
Amazon is an industry unto itself, and it’s irrevocably tied into so many other industries that the opportunity for sellers to find a profitable niche to sell in is massive.
This goes for new sellers, too. The majority of Amazon sellers (55%) have been selling for just 1 to 2 years, and 67% of them earn more than $1,000 in monthly sales — some much more.
While some new sellers (12%) are not yet profitable, most are already taking big Amazon money home — or using it to invest further in their businesses:
- Amazon seller with a profit margin less than 10%: 21%
- Profit margin 11-20%: 30%
- Profit margin 21-50%: 30%
- Profit margin 50+%: 3%
What does that amount to in dollars? Let’s just say it’s enough to be considered much more than “side hustle money.”
How new sellers could start making $26K a year on Amazon:
New Amazon sellers (with 1-2 years of experience) are making an average* of $12,180.50 in sales each month — or $146,166 in sales per year.
Considering the same group’s average profit margin, 17.5%, new sellers are averaging $2,131.59 per month or $25,579.05 in annual profits.
And for the one-third of new sellers with profit margins of 21% and higher, they could be taking home monthly profits from $2,500/month to five figures and beyond.
New Amazon sellers are earning an average profit of nearly $26K per year.
A handful of new sellers are fortunate enough to be raking in incredibly high sales — upwards of $250,000 per month — $3 million per year. While these “super sellers” are outliers from the average seller, they’re certainly aspirational. How much are they profiting from selling on Amazon?
Considering the weighted average of the profit margin range among this particular group, 27%, these new super sellers are averaging $67,500 per month or $810,000 in annual profits.
Even more extraordinary, nearly 40% of these super sellers cited profit margins of 26% and above; 8% with profit margins above 100%. These folks are indeed Amazon millionaires.
*Weighted average calculated based on reported sales by midpoint of range, and capped at the high-end range ($250K) to prevent arbitrary projection.
4. Tips from successful Amazon sellers for a profitable 2020
Countless have tried their hands at selling on Amazon. So what can you learn from those who’ve had distinct, measured success? Some of their top tips:
- 80% of sellers wish they had started selling on Amazon sooner.
- Of the most successful sellers who have been selling on Amazon for more than five years, most (53.1%) got started and had a live product listing within 6 weeks.
What Amazon sellers say:
- “Just jump in now. Perfection is the enemy of profit.”
- “I wish I knew how important it was to start sooner. The barrier to quick trajectory seems to be higher over time.”
- “I wish I had known where to start and where to get good information.”
Put in the effort — it will pay off.
- 69% of sellers maintain that selling on Amazon takes some effort and is not a “get-rich-quick strategy.”
- Most sellers are still evolving their Amazon businesses and 54% plan to add new products in the coming year.
What Amazon sellers say:
- “I wish I knew how important it is to listen to people that have done it already.”
- “You need to be patient for things to start working.”
Find the right resources and tools.
- The primary factors sellers said contribute to their success selling on Amazon are having the time to commit to their business and having the necessary tools and information to help them.
What Amazon sellers say:
- “I wish I knew the right way to launch without burning a ton of money.”
- “I wish I knew about product research for finding ideal products.”
- “I wish I knew about the tools for selling on Amazon.”
- “I wish I knew which metrics are most important to keep track of.
How to Make Money Selling on Amazon: 5 Tips for New Sellers
Tip #1: Understand How Amazon Works
We know joining the world’s largest eCommerce storefront can be intimidating, especially for beginners. But if you want to know how to make money selling on Amazon, you have to understand how to sell on Amazon in the first place.
Many third-party sellers list products on the platform and sell them for a profit. Some buy these products directly from a manufacturer, while others buy up products at retail stores for a discount. Every Amazon sellers looks for market demand and then offers a product to compete for shopper purchases.
In order for people to find the products that they list on the platform, sellers use SEO tactics to improve their products’ search ranking. Most sellers use keyword placement, sponsored ads, and targeted sales to boost their search ranking on the site. For shipping, many sellers use Amazon’s FBA program to ship their product. It guarantees 2-day delivery to shoppers, and provides a competitive advantage over other products.
Familiarize yourself with its policies and learn the steps to get started and all fees associated with selling before even making your first move. Did you know there’s also taxes to be dealt with? Do your research, don’t just jump in as it’s very easy to make an expensive mistake.
Learn the ins and outs of the Amazon platform or you’re going to be operating at a disadvantage right from the start. Understand how the process works and the different types of selling and fulfillment options available to you — will you be doing self fulfillment or Fulfillment by Amazon? Use all resources available to you to learn as much as you can.
Tip #2: Find the Right Product
There may be hundreds of millions of products for sale on Amazon, but how many are actually making any money? Choose products that will move, not just sit stagnant and end up costing you money. Consider the following before you choose a product to sell on Amazon:
Knowledge of the Niche: While you may be tempted to pick some new-age electronic device or an Amazon bestseller, stop to take into account your familiarity with the product and its intended buying pool. If you don’t know anything at all about it, do you really want to be tying your potential profit to it?
The Market: It’s simple supply and demand, really. Will there be enough interested buyers to make selling the product worthwhile? Although this can be hard to judge at times, more obscure items usually don’t move enough to result in a healthy profit. For sustained profitability, explore markets that are always strong, like sports & outdoors, baby items, tools, or office supplies. Make sure there’s enough volume to meet your desired income goals.
Fads: Keep in touch with trends to see what the latest-and-greatest item is and capitalize on it, just like Brock Johnson did with solar eclipse glasses back in the summer of 2017. Fidget spinners are another great example of a fad that went viral and made some sellers a lot of money. But remember, fads die off just as quickly as they came up, so timing and inventory management are crucial. For those that ordered way too many fidget spinners and engaged in price wars with Chinese competitors, the result wasn’t so lucrative.
Competition: Check out similar products on Amazon and see who your competitors are. Competing against national brands typically isn’t advisable as brand recognition and loyalty still rings true even on Amazon. Chances are you aren’t going to outsell a big, nationally recognized brand. This isn’t always the case, but the risk is very high.
Your initial manual research will eliminate many products, but there’s still going to be a huge product pool to choose from. How do you keep narrowing it down?
Amazon Product Finders
Automated product finders are beneficial to use because not only do they streamline the process, they also give you great product insights. These research tools allow you to see competitor prices, monthly sales and more. Get everything you need to make informed selling decisions and find profitable products much faster.
The Viral Launch Product Discovery tool can help you find a multitude of high-potential products that meet your unique wants and needs. After inputting criteria like your desired monthly sales, selling price, review count, and monthly revenue, it provides you with a comprehensive list of products, keywords, brands and categories that match your search parameters. See your sales potential before you even get started!
Learn more about what Product Discovery can do and find profitable Amazon products.
For beginners, it’s best to start small with one or two products and maximize your profit potential by adding more as you go and gain steam. Selling on Amazon is a cash game, as money is often tied up in inventory. Don’t spread yourself too thin.
It’s also important to:
Take advantage of the holidays, Cyber Monday and Prime Day specifically
Check Amazon FBA’s list of categories and products requiring approval to be sure your product isn’t restricted or requiring additional fees, performance checks or qualifications
Find the right (i.e. reliable) supplier
Differentiate your product whenever possible — while keeping a competitive price — in a crowded market
Amazon is an eCommerce giant that continues to grow in size and popularity, as evidenced by the numbers in its 2017 Annual Report. Online shoppers aren’t going anywhere anytime soon — there is a huge marketplace of buyers available, and that means ample opportunities for sales.
Set yourself up to succeed by analyzing the market and determining all barriers to entry. Selecting the right product for you helps minimize risk and eliminate pain points before they end up hurting your bottom line.
Tip #3: Have a Solid Business Plan
As you continue to discover how to make money selling on Amazon, it’s beneficial to establish your own business goals right from the start. Is this a side hustle or a full-time venture into online retail? Your business plan will make your profit margin that much more important.
Similarly, are you going to be a one-hit wonder, or are you in this for the long haul? Since you’re likely going to sell multiple items once you get the selling bug, be sure your business is scalable so you can grow with the market and not be left behind.
Knowing why you’re selling and what you want to accomplish will likely change your approach. Take a good hard look at your plan and be sure all business partners are on the same page right from the start.
Understanding your selling model is equally important. There are several different approaches, all with their own fans and critics.
Popular Amazon Selling Methods
Some of the most popular ways to sell on Amazon are:
- Retail Arbitrage: Purchase a product for a low price at a discounted rate from a retail store, boutique or wholesaler and resell it for a higher price
- Wholesale: Buy items directly from the manufacturer and resell under the manufacturer’s brand
- Private Label: Purchase products directly from the manufacturer and sell them under your own brand
- Merch By Amazon: Apply for the program to be able to upload a design and sell your product like you would on Etsy
You’ll also want to dig deeper into the pros and cons of FBA vs. FBM. With FBA, you’ll qualify for Amazon Prime shipping, be able to win the Buy Box more often, and not have to worry about fulfilling your own orders.
On the other hand, you’re held responsible for paying FBA fees, and it can be more difficult to track your inventory. With FBM, you’re directly in control over your inventory but held responsible for its delivery. Determine your method to simplify the selling process and focus on developing a successful and scalable business model.
Tip #4: Optimize Your Listing
When new sellers are figuring out how to make money selling on Amazon, many often believe it’s only the product that matters. But in fact, there’s so much more in play here.
Since online shopping takes away the physical experiences, like touch, smell and ability to pull something right up to your face for closer inspection, your listing copy and photos need to display and describe the product in great detail to bridge the gap.
Both are extremely important for selling success and are key ways to hit your desired sales targets. After all, you only get paid when someone buys something! And that makes listing optimization and using the right Amazon keywords crucial.
Professional Listing Optimization
Professional copywriting and photography services help new and experienced sellers alike. Putting your listing copy and photos in the hands of experts like those at Viral Launch not only minimizes the work for you, it ensures your listing will be optimized in a way that maximizes your ranking and purchasing potential.
Viral Launch also offers seller software like Keyword Research, a data driven Amazon keyword tool that determines relevant, high-ranking keywords for your product and category.