There has always been a required cost to sell on Amazon. And the logical question is to evaluate the situation before you’re presented with business expenses like this and ask, “Is selling on Amazon worth it?”

The answer to this question depends much more on you than it does on Amazon. If your business is set up in a way that jives with the unique Amazon process, and you have strategies in place that will allow you to thrive on the platform, you’ll find that it is 100% worth the costs to sell on Amazon.

But if your business model isn’t compatible with Amazon or you find the fees keep stacking up, your results will be markedly different. In fact, after a few months of trying, you might look at other entrepreneurs and ask enviously, “How can you make money selling on Amazon?”

The secret to success on Amazon is knowledge, so this guide will introduce the different ways you can sell on the platform and advanced strategies for maximizing your profits.

Short on Time? Is Selling on Amazon Worth It?

Yes.

If you want to scale an ecommerce business to make three figures in revenue, then you’re going to need to play the Amazon game. However, the amount of competition on the platform and the cuts Amazon takes from your bottom line are forcing e-commerce founders to rethink sacrificing their independence to the behemoth corporation.

We suggest you start your ecommerce brand separately from Amazon, ideally for 6-12 months, until it makes financial sense to join the platform. 

Table of Contents

Amazon Isn’t Just Another Ecommerce Platform

Is Amazon Too Saturated/a>

Pros and Cons of Selling on Amazon

How Much Does It Cost to Start Selling?

Amazon FBA Fees

How Should You Proceed With Selling on Amazon?

How Do I Stop People Ripping Off My Idea?

FAQs

Is Selling on Amazon Worth It?

Amazon Isn’t Just Another Ecommerce Platform

Let’s start out by looking at what makes Amazon different from every other platform on earth. First, it’s the only one we can think of that’s named after a rainforest. More importantly, it towers over the competition. These statistics should help you get a feel for the scale we’re talking about:

• More than 300 million active customers use Amazon in 180 countries
• Third-party sales are growing 52% year over year
• 230 million customers subscribe to Amazon Prime worldwide, with 165 million in the US aloneAmazon’s app is twice as popular as Walmart’s second-ranked mobile shopping app
• 89% of online shoppers say they’re most likely to buy from Amazon
• America’s small- and medium-sized businesses sell 4,000 items a minute on the site
• Amazon generated $574 billion in revenue in 2023

As you can imagine, business owners around the world are lining up to sell on Amazon. In fact, almost 2 million sellers are currently enrolled, with many more on the way.

The fact that you’ll be bumping elbows with millions of rival sellers on Amazon is certainly a relevant factor. Competition is fierce on the platform so it’s never enough to simply be adequate. If you want to stand out from the crowd, you’ll need to have a plan and then effectively execute your plan.

Is Amazon Too Saturated?

There is no denying that the Amazon marketplace has become more saturated year on year. In fact, it is estimated that there are almost 10 million sellers in total, with 2 million actively selling at any given time.

Looking at those numbers, it’s easy to see why you might think it is too saturated!

However, with over 310 million active users on the platform, it is almost impossible to ignore your potential Amazon audience. Sure, there are 5x as many sellers to compete with as a decade ago, but there is still plenty of opportunity for the product and marketing approach.

Pros and Cons of Selling on Amazon

Okay, so now we know that Amazon is the king of unlocking mass markets. But what are the pros and cons of being on the platform?

Pros of Selling on Amazon

• Prime Members: Access to 150 million loyal Prime members who will instinctively order on Amazon.
• Amazon FBA: Fulfillment by Amazon takes out the pains of logistics, stocking, and shipping.
• Untapped Potential: Amazon isn’t going away anytime soon. The more Amazon grows, so too will your opportunities.
• Consumer Expectation: Customers are going to assume your products are an Amazon as much as they’d assume you are on Instagram.

Cons of Selling on Amazon

• Independence: By selling on Amazon, you’re relinquishing a level of control over your products, packaging, and processing (especially if you are a FBA seller).
• Competition: You’re not only competing with sellers in your category, but you’re also at the beck and call of Amazon’s algorithm.
• Social Shift: Jeff Bezos’ obsession with space and concerns about Amazon warehouse working conditions have shifted the public’s love affair with the smile company. If your brand is centered around ethical practices, selling on Amazon could hurt your social proof.
• High Return Rates: Amazon’s business model made returning products so easy that you might see a higher return rate on products if sold on Amazon.
• Fees: Read more about the cost of utilizing Amazon FBA below, and calculate the value of being on the platform.

Don’t Skip: What to Sell on Amazon

How Much Does It Cost to Start Selling on Amazon?

Regardless of what you are selling or how many units you plan to sell, you will need to pay for an Amazon account to start selling on the site.

The two options available to you are the Individual Seller Account or a Professional Seller Account.

The Individual plan costs $0.99 per item sold, whereas the Professional Seller Account has a set rate of $39.99. So once you start selling more than 40 units per month, you can make the switch as it is more economically efficient.

When it comes to the other costs associated with selling on Amazon, that varies from person to person. With a larger budget, you can outsource more, hire support staff, and promote on a wider scale.

However, if you don’t have the funds available for this, you will need to invest more time in getting everything up to scratch.

To Pay Amazon FBA Fees or to Not Pay Amazon FBA Fees

There are many different ways you can approach your Amazon sales operations, but they can be boiled down to 2 different categories:

1. You’re a Fulfillment by Merchant (FBM) seller
2. You’re a Fulfillment by Amazon (FBA) seller

If you take the Amazon FBM route, you’ll handle things just as you would if you were selling on your own website. This means that you’re in charge of maintaining an inventory and then shipping products to customers when they make purchases.

The second option is to be an Amazon FBA seller, which means that all you need to do is send your products to Amazon. Once these shipments have been received, Amazon will take them from there, handling inventory management and shipments to customers.

It’s important to point out that while Amazon FBA shares characteristics with the traditional dropship model, there are crucial differences. For example, with dropshipping, you never touch the product. It stays in the drop shipper’s warehouse until a purchase is made and the product is shipped to the customer.

With Amazon FBA, you are responsible for procuring the product. As the owner of the product, it’s your duty to send it to Amazon so that they can handle all of the back-end functions that occur after a purchase has been made.

The 6 Types of Amazon FBA Fees

Another key difference between dropshipping and Amazon FBA is how the fees are handled. If you partner with a drop shipper, they might just charge you a single fee per sale. But Amazon takes a multi-layered approach, which warrants a closer look at the different kinds of FBA fees.

1. Monthly Inventory Storage Fees: As the name suggests, you’ll be charged a fee each month that your products reside in Amazon’s fulfillment centers. The cost is based on the volume of your inventory.
2. Returns Processing Fees: Customers are more motivated to make purchases when the return shipping is free. However, someone has to pay for the shipping in case of a return, and Amazon isn’t going to do it. Thus, if your products come with free return shipping, you’ll be on the hook for this fee any time one of your customers returns a purchase.
3. Fulfillment Fees: These are the Amazon FBA fees that most resemble typical dropshipping fees. Whenever a sale is made, you’ll be charged per unit to cover the locating, packing, and shipping of it to the customer. Additionally, these fees cover customer service and the handling of any returns.
4. Long-Term Storage Fees: Given the scale of its operations, Amazon prioritizes efficiency. Therefore, it will charge you additional fees if your products stay in its fulfillment centers for more than a year.
5. Removal and Disposal Fees: Let’s say that some of your products aren’t selling. Rather than pay the long-term storage fees, you can have Amazon either ship them back to you or dispose of them. Regardless of which option you choose, a charge will apply.
6. Unplanned Service Fees: As long as you keep your inventory organized, you’ll never need to worry about this final fee. But if you were to send Amazon some of your products and they weren’t packaged properly or lacked necessary labels, you would get dinged with these punitive measures.

What Can I Sell on Amazon FBA?

Amazon FBA can unleash your product offering potential, but make sure you understand what you can sell on the platform and which products need approval.

Categories Not Required for Approval

• Cellphones and accessories
• Home and garden products
• Office products
• Organic food
• Beauty
• Books
• Health
• Outdoors
• Amazon Device Accessories
• Baby products
• Collectible coins
• Major appliances
• Music
• Software
• Sports
• Amazon Kindle
• Electronics
• Mail
• Video games
• Computer
• Streaming media players

There are potential exceptions to these categories, so review the Amazon selling guidelines for each category.

Categories Required for Approval 

• Postage stamps
• Collectible Coins
• Fine Art
• Holiday Selling Requirements in Toys & Games
• Jewelry
• Made in Italy
• Music & DVD
• Services
• Sports Collectibles
• Streaming Media Players
• Video, DVD, & Blu-ray
• Watches
• Hoverboards and Personal Electronic Mobility (E-Mobility) Devices
• Sony PlayStation Requirements in Video Games

Visit Amazon Seller Central to request approval if you’re interested in any of these categories.

Is Amazon FBA Worth It?

That depends on whether or not you can reliably deliver a great product to Amazon that will consistently sell. When your products are moving off the shelves at a good pace, you’ll only need to worry about the monthly inventory storage fees, fulfillment fees, and returns processing fees. This means the cost to sell on Amazon is quite low, given the opportunity to list your products on the world’s largest ecommerce site.

The other 3 fees (long-term storage fees, removal and disposal fees, and unplanned service fees) only come into play when your sales lag or your operations aren’t running smoothly. But we all know that running a small business is full of unpredictable obstacles. So you can’t necessarily assume that you’ll never run into these additional fees.

Alongside fees, there are a few potential downsides that multi-million dollar ecommerce expert Ezra Firestone warns of.

“You might not want to be on Amazon, but it happens to have 55 cents out of every dollar spent in America. So the buyers are there, people are spending money there, and it’s the easiest place to get a sale. But it also has many downsides. You don’t own the customer. Competitors may attack you, negatively review you, and take you down, not to mention the fact that Amazon’s bureaucracy is a nightmare. Of course, you still should play there. But if you play there without your own brand and marketing, you are in very dangerous territory.”

Our recommendation is to budget for the periodic extra fee so that you can navigate the ups and downs of entrepreneurship without getting caught off guard by costs. You should also hold off for a few months before becoming an Amazon seller to allow your brand to grow in reputation and for you to iron out any issues before joining the platform.

How Should You Proceed With Selling on Amazon?

The barrier to entry is quite low with Amazon, which is both a blessing and a curse. You’ll find that it’s not too difficult to get started, but this factor also means you’ll also encounter more competition than you would elsewhere.

There’s another element of the platform’s competitive landscape to be aware of: you might face off against Amazon itself. The company has its own private label, Amazon Retail, that sells a staggeringly vast array of products.

The issue isn’t simply that you might get outsold by Amazon Retail from time to time. For many sellers, it’s a daily occurrence. And things can get exceptionally difficult for these sellers because Amazon gathers more customer data in a single day than you could get in a lifetime. Armed with these insights, Amazon is able to set its prices with ruthless precision and then showcase its own products front and center.

Here are a couple of lessons to learn from this dilemma:

1. It’s wise to avoid going head-to-head with Amazon whenever possible
2. Using Amazon FBA helps to minimize the disadvantages

The first point is obvious. Whenever you compete with someone who also happens to own the game and can create the rules as they go, you will probably lose.

Let’s instead focus on the second lesson. If you take the FBA route, you’ll be able to participate in the wonderful world of Amazon Prime. Remember, there are 150 million loyal members in this program. So when your FBA products are included, you’re given a major boost.

By selling on Amazon FBA, you’ll also have the option of using Amazon Super Saver Shipping. So even if a customer isn’t a Prime member, they can still get free shipping if your product either meets the Super Saver Shipping threshold or is combined with other qualifying products.

Both Amazon Prime and Amazon Super Saver Shipping have been proven to bring great results to small business owners. These programs also connect you with customers in a way that is nearly impossible otherwise. Remember, when you sell on Amazon’s platform, you won’t have the same customer relationship management (CRM) abilities you would have if the sale had come through your own website. It’s a “one and done” thing, preventing you from reselling or building a long-term relationship.

So unless you feel extremely confident in your ability to advertise your products and then handle the shipping with precision, you should think long and hard about paying the Amazon FBA fees because of the advantages the program provides.

Keep Learning: Answer Your Top of Mind Amazon Seller Questions

How Do I Stop People Ripping Off My Idea?

Is there anything more stressful than a founder with an incredible product or service idea? When you feel like you’re sitting on a million-dollar idea, you can bet that there is someone out there who would steal it from you if they can.

If you do feel you want to keep your idea protected from others, there are a couple of options available to you:

• Patents: If your idea is a novel invention, consider applying for a patent. This gives you the exclusive right to use and commercialize your invention for a certain period.
• Trademarks: Registering a trademark can protect brand names, logos, and slogans associated with your idea.
• Copyrights: If your idea involves original works of authorship like written content, music, or software, copyright protection can prevent others from copying or distributing your work without permission.
• Trade Secrets: For business processes, formulas, or methods that are not publicly disclosed, maintaining them as trade secrets can provide protection as long as they remain confidential. (There’s a reason none of us know the Kernal’s combination of secret spices!)

Is Selling on Amazon Worth It? FAQs

Is Selling on Amazon Worth It? Time to Test and Learn.

Let’s review some of the primary benefits and drawbacks associated with selling on Amazon.

• Access to an international audience on a massive scale
• Seller resources and support
• Pre-built platform to sell from
• Reputation bolstered by Amazon’s name

If you sign up with Amazon FBA, you’ll likely see these additional benefits: more sales via Amazon Prime and Amazon Super Saver Shipping, no need to carry stock, and no need to ship to customers. The amount of time and energy you’ll save can more than make up for the Amazon FBA fees.

But it would be overzealous of us to recommend Amazon FBA to everyone. As mentioned earlier, this program only works if it aligns with your business model and you use strategies to keep your costs down. This scaled approach is essential to your success on Amazon. By adding products, watching the results, and then making individual decisions on how to handle fulfillment in the future, you’ll fine-tune your business operations and avoid major missteps.

If you’d like to get even more strategies for selling on Amazon and taking your ecommerce start-up to the next level, be sure to get your 7-day Foundr+ trial for just $1. The trial provides you with access to over 30 courses and more than 1000 lessons, brought to you by top instructors like 5x multimillionaire entrepreneur Gretta Van Riel.

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This article was updated with support from Graeme Whiles.