I’ll never forget my first Christmas as a full-time online seller in 2013. By that point, I had already earned the majority of the $7918.04 in profits I made from Amazon that month.
Better yet, over $7000 of those profits came from FBA sales, and I was enjoying taking December 22-27 off to spend time with family.
I had just quit my accounting job to experiment with selling online full-time 3 months earlier in late September, and I never imagined I was going to see numbers that high so quickly. The fact that it was Q4 definitely helped, but my Amazon sales only continued to grow from there.
I’m writing this in late September 2021, nearly a decade since making that life-changing decision. My business now sells millions each year on Amazon and has unlocked benefits I hadn’t even counted on back then.
I get a lot of questions from people wondering ‘how much can you make on Amazon’ and if the things I did to build my business would still work now.
The short answers to those questions are that you can make a lot of money on Amazon and that the strategies I used to start from scratch still work very well. The guide below will go into more detail.
How much money do Amazon sellers make?
In Jeff Bezos’ 2020 letter to shareholders, he stated,
“We have an internal team (the Selling Partner Services team) that works to answer that question. They estimate that, in 2020, third-party seller profits from selling on Amazon were between $25 billion and $39 billion, and to be conservative here I’ll go with $25 billion.”
A third-party seller is anyone selling on Amazon other than Amazon itself. These can be big brands or independent sellers like you and me who offer new, used, refurbished, or collectible goods on the Amazon marketplace. Third-party sellers make up over one-half of Amazon’s marketplace.
As a whole, third-party sellers are earning billions of dollars by using Amazon. But that doesn’t tell the whole story. Those billions in profits are being split by millions of sellers. There are third-party sellers who are making millions a year, and there are others who aren’t making any money at all.
In fact, some sellers lose money!
How much do I make on Amazon?
So now let’s take a look at my business.
We sold $6,507,690 worth of products on Amazon in 2019. 2019 is the most recent data I could easily get for the purposes of this post.
In an average month, we sell over $450k in products. That number goes up considerably during Q4 though.
There are many people who earn a lot more than us, and there are many who earn less. The big range in potential outcomes has a lot to do with your goals and the strategies you employ.
My goal was to fully replace my accounting job, so I worked hard to scale my business to the level it is at today.
How much does the average seller make?
In a 2019 letter to shareholders, Jeff Bezos said “ said Amazon’s third-party sellers are “kicking our first party butt” and that average annual third-party sales were about $90,000.
Remember that the average in annual sales is not the same as profit. While everyone will have a different profit margin, let’s assume that the average profit margin is 30%.
This would mean that the third-party sellers on Amazon average about $27,000 a year in profits.
Keep in mind, this means that there are a lot of people that make both more and less than that number. In my experience, it is very possible to get above-average results by applying the right strategies at the right time.
How do you get above average results on Amazon?
Selling on Amazon is not a guaranteed road to riches. There is work to do, and if you want to make money, you must run your business like a business.
Selling and being successful on Amazon is not a get-rich-quick scheme. There will always be the outlier who is telling you differently, but the norm is that a consistent and steady business strategy is necessary for success.
In my opinion, getting above-average results on Amazon largely comes from consistently making simple decisions that can be difficult in the moment. The reality is that selling on Amazon successfully is not rocket science, there are proven methods that work if you follow them.
Now let’s talk about a couple of specifics.
The first is sourcing consistently and ideally for a minimum number of hours each week. Deciding to source inventory 10 hours per week is an easy decision, but it can be more challenging when you aren’t finding as much inventory as you’d hoped. But if you stick out these times and stay with your processes, good results will follow.
The second is reinvesting as much of your profits as possible into more inventory. The more you reinvest into inventory, the faster your business will grow.
Again, this a simple concept, but spending the money on a beer with friends can seem more appealing in the moment. If you set a goal to reinvest all profits back into your business for 6 months, you will be way farther along compared to taking money out along the way. I know it’s not always possible to reinvest all profits, but the more you can do, the better off you will be.
The third is being willing to make mistakes. When getting started with any new venture, there are a ton of unknowns. There will be many times where you’re faced with a choice to buy an item to resell or leave it behind.
In the early days, as long as it’s comfortably within your available capital, I recommend buying it to test it out. Not all of these items will be profitable, but some will, and it will lead to knowing what to do in the future.
Being able to act based on first-hand experience leads to much better decisions in the future. Allowing yourself the possibility to be wrong from time to time can open opportunities for your business you’d never find if you didn’t try it out.
I’m telling you this because I remember how much time I would spend in the early days agonizing over decisions because I was worried I might lose money. If you are worried about mistakes, spend as much time learning from other people’s mistakes as possible, then make the best decisions you can in the moment. Don’t try to be perfect.
Learning from mistakes is one of the main ideas behind this site. I’ve been experimenting and trying new strategies for years, then passing on what I learn to my subscribers and students. You’ll find tons of free content along these lines here on the blog, and the best way to make sure you don’t miss anything new is to subscribe to my free eCommerce Insiders group.
If you’re interested in really accelerating your results, the Complete Arbitrage Playbook will show you how to earn your first $1000 selling online then build a business that will increase your income and free your time. It is based on my experience doing the same.
Does this actually lead to better results?
There are no guarantees, but in my experience people who apply the things I talked about above do often come away with better results than the “average” that we looked at above.
We offer a variety of training programs to help people start a successful online selling business, ranging from free courses to a top-flight coaching program that gives my clients full behind-the-scenes access to my business, including an in-person conference at my warehouse where we literally walk people through every process we apply.
Among the people who have gone the distance and made it to the coaching level, achieving millions in sales has been the normal outcome within just a couple years. Since these programs are reliably generating results that far exceed “average”, I feel pretty good about recommending them as a way to get started or as a path to follow.
Next Steps…
Step 1: Any questions?
Use the comment section below if you have any questions or would like to share anything.
Step 2: Ready to unlock “above-average” earnings on Amazon?
If you are interested in starting down the path to above-average Amazon earnings, I recommend checking out this free program on the Fundamentals of a Successful Online Selling Business. In it we’ll take a close look at the principles and strategies that go into earning more money and gaining control over your schedule by selling things online.
Step 3: Additional reading…
Here are some other posts you may enjoy: