Is Amazon FBA Saturated? Is It Too Late To Make Money?

amazon fba saturated woman

The internet has forever changed the way we are able to buy and sell products.  No longer are we confined to shops in a mall!  Amazon is the largest online shopping platform and they have taken the whole concept one step further through Amazon FBA.

But the question of the day is this:  Is Amazon FBA saturated? The short answer to this is:  No, Amazon FBA is not saturated.  According to statista.com “In the first quarter of 2019, 53% of paid units were sold by 3rd party sellers.”  This strongly indicates that there is no shortage of buyers. 

While it is true that there are more sellers on Amazon now, it must be noted that there are also more buyers too.  In addition, Amazon is opening new stores worldwide which also brings more buyers.  From this, we can see that there is definitely still a great demand from buyers that needs to be fulfilled.

Amazon FBA provides a great opportunity to sell online and generate an income.  So read on for more info about it.

What Is Amazon FBA?

Aside from selling their own products, Amazon also provides the opportunity for people to sell their products through the Amazon platform.

In this regard there are 2 main ways to sell through Amazon:

  • As a First-party seller
  • As a Third-party seller

First-Party Seller

First-party sellers send their inventory to Amazon who buys it as a wholesale purchase.  They, in turn, set their own price for the product, list it as an Amazon product and give preference to selling these products.  Potential buys feel they can trust the product because it’s sold by Amazon.

The downside of the deal is that Amazon sets the price they are willing to pay for wholesale purchase.  These buyers don’t make as much profit as they would if they sold as third-party sellers and set their own price.

Third-Party Seller

As a third-party seller, you send your inventory to Amazon but YOU set the price at which your product sells.  In terms of filling the order you have two options:

  • FBA (fulfillment by Amazon) – in which you send your inventory to be stored in an Amazon warehouse.  Amazon stores your products and when a customer buys your product, they pack and ship it to them and provide customer service for these products (service.amazon.com).
  • FBM (fulfillment by merchant) – in which the seller completely controls the process of shipping items and providing follow-up customer service.  Amazon is not involved in this process at all.

Whether you choose FBM or FBA, very much depends on the needs and targets of your business.

What Should You Sell On Amazon FBA?

As with any type of internet marketing, it can be tricky trying to figure out what product to sell.  Amazon has a very wide range of products which can also make it feel overwhelming.  So where do you start?

To get comprehensive training on Amazon FBA, I recommend checking out the Amazing Selling Machine course it teaches you everything you need to know to start.

But in the meantime,  consider the following ideas to help guide you when choosing products to sell on Amazon:

Read Amazon Reviews To Identify Gaps In The Market

By reading through some reviews on Amazon and hearing what customers are saying, you will be able to identify needs that you can fill. In whichever category you choose to look, always make sure you are looking at the best sellers.

Use JungleScout To Help Identify Potential Products To Sell

JungleScout is a brilliant tool that can help you identify what to sell on Amazon.  If you search a category it will show you the top-selling Amazon items and give you an idea of the estimated sales for items on Amazon.

It will also provide you with the average price for a category and indicate the number of reviews an item receives.

This is valuable information which will help steer you in choosing products to sell.

Food Related Products

This will always be a winner on Amazon, particularly in light of the fact that Amazon has AmazonFresh and Prime Pantry.  Food items are a hot seller on Amazon!

When considering selling food-related products on Amazon, always look for healthy options.  This is very popular and trendy.

To help guide you in this, you can look at Google Trends.  Google Trends indicates how often a search term is searched on google.  It provides data around keywords showing you how often they are searched and even geographical info related to the search.

With a little digging and research, you are bound to discover a food-related product you can sell.

There are various other ways to research and identify products you can sell on Amazon.  The suggestions above provide a solid start in your quest of finding the right product!

What Are The Advantages and Disadvantages Of Amazon FBA?

Let’s look now at the advantages of using the Amazon FBA option.

Advantages Of Amazon FBA

There are a vast number of advantages to signing up as an Amazon FBA.  These are as follows:

  1. Less Time-Consuming

The seller no longer has to be involved in the packaging, shipping and customer care follow-up for their products.  As a result, they save time.

  1. Free Shipping

As part of the fees the seller pays Amazon, the buyer receives free shipping.  There is also no extra charge for the Amazon Prime free two-day shipping option.

  1. Amazon Provides A Storage Facility

The cost of this is covered by the fee which Amazon charges the seller.  The benefit here is the seller doesn’t have to worry about storing the products at home or elsewhere.  The entire process once a buyer purchases a product is handled by Amazon.

  1. 24 hr Customer Support

This is a big one particularly when you note that Amazon will provide this customer support in the language of the marketplace.  When your product is purchased by a buyer from another country, this is truly priceless.

  1. Amazon Prime

By signing up for the Amazon FBA option all buyers of your products automatically qualify for Amazon Prime.

Amazon Prime is a subscription that allows its members certain benefits. You pay $119 per annum.  Some of these include:

  • Free 2 Day Shipping
  • Unlimited Video streaming
  • Free 2 hour delivery from Whole Food Stores in certain areas
  • Limited music streaming
  • One free e-book per month
  • Free books and magazines
  • Free audiobooks
  • Free games
  1. Higher Volume Of Sales

Despite having to pay FBA fees and commission, your sale rate increases.  This is because you have the Amazon logo backing your product which gives you credibility in the eyes of potential buyers.

  1. Rapid Delivery

Amazon has many fulfillment centers worldwide.  This ensures that there are no hold-ups when it comes to delivery.  Customers anywhere can expect to receive their Amazon delivery timeously and without delay.

  1. Non-Amazon Products Can Be Fulfilled Through FBA

This is a great benefit! You can sell your products through any channel you choose and still have them fulfilled through Amazon FBA.

By using TradeGecko you are able to use this system to automatically send your orders through to FBA.

  1. No Buying Packaging Material

When you consider the cost of packaging materials this is not a trivial benefit! It all adds up and having Amazon cover this as part of your FBA fees is a definite plus!

  1. You Can Win The Buy Box

This is a big one because it translates directly into making more sales.  But what exactly is the buy box?  The buy box is the box with the yellow “add to basket” button.  When the buyer clicks on this the purchase is made.

This concept was introduced because many sellers are selling the same products on Amazon.  In order to ensure that they offer the best service to their buyers and provide quick delivery and excellent follow-up service, Amazon introduced the concept of the buy box.

The way it works is like this: the seller who has an excellent track record in dealing with their customers and providing excellent service wins the buy box.  Obviously, by using FBA and having Amazon fulfil that, you will be in line to win the buy box.

This is a huge advantage as it will translate into increased sales.

Now that we have looked at the advantages of FBA, what are the disadvantages?

Disadvantages Of Amazon FBA

  1. FBA Fees

Although not too hectic, considering what you get in return, consideration must still be given to the fees charged for this option.

The FBA fulfillment fees are based on the size and type of product you are selling.  Once you have established this you look up the price on the fee tables listed by Amazon to determine the price you will pay. This is a flat fee.

Then you need to take into account that you will pay monthly storage fees.  These are calculated according to the daily volume of the space your stock will inhabit.  These fees change depending on the size of the product, type of product and the time of year.  The type of storage required is also taken into account (eg: drawers, shelves etc)

Fees are also charged for long-term storage, removing your inventory from the warehouse and returning back to you.  Fees are applied as well to items returned to Amazon.  (www.sellercentral.amazon.com)

  1. More Returns

With Amazon’s easy return policy there may be more returns of goods.

  1. Difficulty Tracking Inventory

With Amazon storing and dispatching your items, it may make it difficult keeping on top of your product availability.  Tracking what you may need to order, what you have and what’s leftover may prove challenging.

  1. Less Control

With Amazon handling and shipping your products, you have less control as they do it according to their own process and specifications.

A big problem that I have heard people talk about, is when your product get’s too successful, Amazon will request your supplier information and then go to them directly and create their own “Amazon Basics” brand and compete against you directly!

  1. Specific Requirements For Inventory

When you send your inventory to Amazon there are specific requirements you need to follow like labeling each product.

Now that we have investigated the advantages and disadvantages of FBA let’s look a little deeper into what’s expected of you as the seller with FBA.

Related Questions

What Are Your Responsibilities With Amazon FBA?

Amazon FBA provides a powerful platform for sellers.  However, there are certain responsibilities that the seller has as well.  These include the following:

The Product You Sell

Choose this with care because your main goal here is to find products that sell quickly so that you don’t pay heavy storage fees.

Your Inventory

You need to monitor your stock at all times to ensure that you have sufficient stock available.

Marketing Your Product

There are a ton of sellers on Amazon, and some of these will be selling the same product as you.  As a result, you need to continually be honing and refining your marketing and advertising strategy.  This is the very lifeline of your business so you need to tend it diligently and with care.

What Types Of Products Cannot Be Listed On Amazon?

It’s important to note that not all products can be sold on Amazon.  You need to consider whether the product you are interested in is legal or has restrictions around it, or breaks Amazon policy.

In particular, it’s vital to know that the following products are prohibited for sale on Amazon FBA:

  • Alcohol
  • Floating lanterns
  • Vehicle Tires
  • Gift cards/certificates
  • Products with price tags

Conclusion

Amazon FBA is not saturated.  On the contrary, it provides a very viable option for sellers wanting to build their business through Amazon.

The internet has moved business into a whole new realm! Amazon FBA is a great option for moving your business to that next level!

Leave a Comment: