Is Amazon FBA Worth It? - FBA Pros and Cons
If you’re thinking about becoming an Amazon seller in 2023, you might ask yourself “Is Amazon FBA worth it?” Let’s have a look at the pros and cons of this business so you can make an informed decision.
What is Amazon FBA (Fulfillment by Amazon)?
Fulfillment by Amazon enables third-party sellers (so, people like you!) to outsource their packing, shipping, and handling to Amazon. This service allows you to sell your products, and Amazon will take care of all shipping, returns, and refunds (if needed).
They also offer product storage in their warehouses. Plus, Amazon will take care of all the logistics so you can concentrate on selling. Amazon will either store and sell your product or they can handle all sales. Just make sure that there is always enough stock. They will take care of everything else.
You pay a small fee to Amazon for doing all of that for you. But many of the fees get charged after you make a sale. Meaning, you don’t have to worry about paying upfront. Plus, the Amazon fees are worth it when you consider that you can benefit from Amazon's customer service and fulfillment networks (aka millions of customers who trust Amazon and want to buy prime delivery, and more.)
Starting an Amazon FBA business: What you need to know
Consider these factors when you are considering starting an Amazon FBA Business.
Time & Effort
First of all, consider if you’re able to handle the workload that comes with starting an FBA business. Especially if you’re transitioning from a full-time career to Amazon FBA, the workload is a factor to consider. You need to determine if you can dedicate time each day to your FBA business. Thankfully, 1-2 hours a day is often enough to get started.
Next, also consider how long it takes until you’ll see a return on your time invested. Some sellers take up to two years to become profitable. But some of our most dedicated and motivated BJK University students break even after 3 months.
As you can see, It is not the same for all sellers. Some may need to wait a little longer before they start making money. But in general, with dedication and hard work, you can see a quick return on your investment. Especially when you compare your FBA business to most traditional businesses out there.
Another factor to consider is how much time this business takes once it’s set up and running. You'll have to spend some time managing your business if you want it to run smoothly. But it doesn't need to be much. Most sellers spend around 10h a week on their business.
FBA Start-up Cost
When you try to determine if Amazon FBA is worth it for you, also look at the cost involved. This is a real business, and starting a business isn’t free. That’s why it’s important to go in with realistic expectations.
So, let's talk about money. The biggest upfront costs you’ll have are getting education and buying inventory. You really want to budget enough for both and not be cheap.
When it comes to education, some people think they can just skip this step. But a third of Amazon sellers report that they need more training, and a quarter are confused about how the selling process works on the platform. Not knowing what you’re doing can cost you more money and time. So, always invest in your skills and learn before you get started.
When it comes to inventory, don’t just buy random products. Do proper product research. A good course should teach you how to do this step by step because this is the foundation of your business.
Once you buy inventory and start selling, there are some smaller FBA fees. Such as storage fees. But most of them are only due after you make some sales.
It's important to keep in mind that Amazon does not charge fees based on what your product costs, but rather based on the size and weight of your items. Selling items with low price tags might not be as profitable. Select the items that you list (or do not list) carefully.
You don’t want to go into this business without knowing what your potential profit could be. Now, how much you’ll really make is highly individual. It depends on your product, time investment and so much more. But let’s look at some BJK University students to show you what’s possible.
After a lot of careful testing, BJKU Student Keisuke sold 250 units within a month.
9 months after launch, Rommel reached $10k.
And Obaida made $1k within the first week.
Again, this is not a promise that you’ll achieve the same results - or any results for that matter. But it goes to show what’s possible for those who invest in themselves, stay committed, and do the work.
Nearly every day some self-proclaimed online guru pronounced Amazon as “dead” or “oversaturated”. So, when asking if Amazon FBA is worth it in 2023, we also want to take a look at that.
The thing is, most people believe it’s too late to get into Amazon because there are a lot more sellers on the platform compared to a few years ago. But what they forget about is that there are also more buyers than ever before!
According to statistics, there are currently 9.7 million Amazon sellers globally 1.9 million active ones) selling on the platform. Sound like a lot? Well, the Amazon app has over 197 million monthly active users. And 89% of us consumers are more likely to buy products from Amazon than from any other e-commerce site.
So, yes, competition has gone up compared to the past but so has the opportunity. You just need to know how to pick your niche and how to differentiate your product.
Is Amazon FBA worth the investment?
Is it worth it to become an Amazon seller in 2023? Overall, we'd say yes! Selling on Amazon is a good option if you want to earn some extra cash and are willing to do the work. Do your research before you start so that you understand what you are getting into. And definitely get proper education before you invest any money in products or inventory. If you want our help to get started, you can discover more about that here.