How to move up the ladder in Amazon FBA business?

Amazon FBA seller distribution in sales

In 2021, over 60,000 sellers on Amazon achieved $1 million in sales. This represents a significant increase from the past three years.

According to the data analysis conducted by Marketplace Pulse, around 350,000 sellers sold over $100,000 in 2021, while around 60,000 sellers sold over $1 million. Over 3,000 sellers had over $10 million in sales in 2021. Collectively, 3rd party sellers had $390 billion in sales.

Number of Amazon Sellers by Annual Sales
Seller distribution

The number of sellers with higher revenue who are able to achieve more than $100,000 has increased faster than those with less. In 2018, around 200,000 sellers sold over $100,000, while around 24,000 sellers had more than $1 million in sales. 890 sellers had sales more than $10 million.

Despite the number of sellers on Amazon, less than a few percent of them have achieved $1 million in sales. This is normal, as all open marketplaces have power-law distributions. The key to success is finding a niche and building a sustainable business on Amazon.com.

Economy of scale is your friend in Amazon FBA business

The bigger the business, the less fragile it will become. You will start to build a moat like economy of scale. It will not be a moat as wide as Apple’s. But it is enough to defend your peer competitor in your niche. With larger sales, you would have bigger bargaining power with your supplier to buy cheaper product. You can arrage your supply chain better so that you have less chance to stock out. You will also have bigger budget for advertisement so that you brand name appears more in front of consumers.

As your business grow, you can start to hire people with specialty in certain area. Just look at those Amazon aggregators, they have expert in every function from supply chain, product design, sourcing, operation to advertisement. They are currently the largest sellers who has over $1 billion in sales.

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