Why 95% of New Amazon Sellers Fail Within the First Year – And How Not to Be One of Them (2024)

FAQs

Why do most Amazon sellers fail? ›

Simply put, poor product selection is one of the most common reasons why Amazon sellers fail. To avoid this, it's important to do your research and find a product that customers want to buy, but also isn't already sold by dozens or hundreds of other sellers.

With millions of customers browsing through products every day, it's no wonder that many entrepreneurs are attracted to selling on Amazon's Fulfilled by Amazon (FBA) program. However, despite the potential for success, a staggering 90% of Amazon sellers fail in 2023.

Thinking about selling on Amazon with their Fulfillment by Amazon (FBA) service? You might be curious about how many sellers actually find success. TrueProfit found that about 46% of Amazon sellers have a success rate between 11% to 25%. Even better, 64% of them start making a profit within their first year.

Small companies often struggle to achieve profitability in their first few years, but Amazon SMB sellers see healthy profit margins. Over half of sellers (57%) see profit margins higher than 10%. Better still, 28% see profit margins above 20%. On the other hand, 13% said their businesses are not yet profitable.

Purchase Directly From the Brand or Manufacturer

Whenever possible, buy directly from the brand or manufacturer of the product, rather than a random re-seller of the product. If you are purchasing a product from a reseller, you could potentially be purchasing counterfeit, expired, or damaged products.

There are several reasons why your Amazon product might not be selling. These include getting your pricing strategy wrong, not optimizing with relevant keywords, using images that are not appealing, and more. Take a close look at the different factors and find out what's not working for your business.

Failing to meet specific standards set for certain categories or brands can cause your approval application to be rejected. Example: As a new seller with an order defect rate of 4% wanting to sell Baby products, you won't get approved.

Yes, Amazon is competitive. It takes a decent amount of time and money to start, and contrary to popular belief, it isn't a set-it-and-forget-it type of venture. Navigating an Amazon FBA business requires learning, perseverance, and hard work. But is selling on Amazon worth it?

How many Amazon sellers are millionaires. As of 2021, an impressive 60,000+ Amazon sellers have achieved $1 million+ in sales worldwide, marking a remarkable 100%+ growth over the past three years.

What is the most profitable Amazon business? ›

Amazon Web Services

It's also Amazon's most profitable business by far, according to EMARKETER's The Power of Amazon in 2023 report. AWS represents a small share of Amazon's net sales, but it has grown from 12% in 2020 to 16% in 2022, per Amazon's 2022 earnings.

More than 60% of sales in the Amazon store come from independent sellers—most of which are small and medium-sized businesses. In 2023, US-based sellers sold more than 4.5 billion items—an average of 8,600 items every minute. In 2023, US-based sellers averaged more than $250,000 in annual sales.

Starting your own business on Amazon can be exciting and rewarding! And the best part is, new sellers on average are earning a whopping $30,000 in annual profits.

A lot of people are finding success on it. It's fairly straightforward and requires less time and money than many other ways to sell products, like starting a brick and mortar store. It takes work though.

Amazon pays sellers every two weeks, on the 1st and 16th day of each month. However, there is a seven-day holding period for all payments. That means Amazon will hold your payment for 7 days after the order has been delivered to give the buyer time to inspect the order and request a refund if necessary.

Amazon has restricted categories, products, and brands. You must go through an approval process to get ungated in order to sell these products, if you even qualify to sell them at all. The specific requirements to get ungated vary depending on the category, product, or brand you want to get ungated for.