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On the surface, running an Amazon FBA business sounds like a dream come true.
Amazon sells over 4,000 products per minute and raked in $470 billion in 2021, up $82.8 billion from 2020.1
In other words, the pie is growing. And if you can grab a tiny slice of that pay, you’re set.
Add in the fact that you can work on your own terms from anywhere in the world, and it starts sounding too good to be true.
But is it?
Nowadays, competition on Amazon is fiercer than ever. Knockoffs regularly flood the market. And Amazon regularly suspends accounts without warning or reason.
This begs the question — is Amazon FBA worth it still?
Let’s look at the data to find out.
Table of Contents
What is Amazon FBA?
Amazon FBA is a unique business model. FBA stands for Fulfillment by Amazon, and you’d be hard-pressed to find anything else like it.
Here is the basic business model, broken down into its simplest form:
- Find a product you want to sell.
- Contact a manufacturer who makes it.
- Add your logo and any desired modifications.
- Sign up for Amazon FBA and create an account.
- Ship your inventory to different Amazon warehouses.
- Set up your listings and ads, and let Amazon handle the rest.
The awesome thing about Amazon FBA is you don’t have to worry about storing inventory in your garage, taking orders, packing, shipping, or returns.
Amazon does all that for you (for a fee, of course). So armed with your laptop, you can run your business from anywhere, making it one of the best travel jobs on earth.
Is Amazon FBA worth it in 2022?
Is Amazon FBA still worth it? I mean, it’s been around for so long, surely the market is saturated and people are tired of these cheap chintzy products from China…right? Well, yes and no.
Seller competition has increased on Amazon, but demand has increased even more. As a new seller, you can’t expect to replace your full-time income overnight. But statistically speaking, if you follow a proven plan and stick to it, Amazon FBA is worth it.
Here’s what I mean.
The number of Amazon Prime users has exploded by 53.4 million people over the past five years. And that’s just in the United States. Globally, we’re well past the 200-million user mark.
Each year, millions more shoppers join, which means more potential customers for you.2
Sure, there are more sellers than there were five years ago. But all you need is a small slice of the ever-growing pie to make a comfortable living.
This is especially true if you sell products in growing niches.
For example, thanks to the pandemic, people are spending more time at home. That means business is booming for many sellers offering home improvement, cooking, and self-care products.
That said, it’s not all lollipops and butterflies. These days, selling on Amazon can be brutal. To decide if Amazon FBA is worth it to you, you have to weigh the pros and the cons.
Amazon FBA pros and cons
Starting an Amazon FBA business can be life-changing, but you have to be realistic.
Here’s what you can expect, and what kind of people are likely to enjoy it as a side-hustle (or even a full-time job).
Amazon FBA pros
1. You can do this from anywhere
Do you ever find yourself staring out of your cramped cubicle, dreaming of a laptop lifestyle where you could earn money from the beaches of Thailand?
I know I did.
And with an Amazon FBA business, it’s possible. With Amazon’s fulfillment services, you never have to touch your inventory. Everything is handled online, so you can make a living wherever your heart desires.
2. You never have to answer to your boss again
Is this what you see every day at your job? A micromanager on a mission to make your life miserable?
If so, Amazon FBA will be a delightful change of pace. When you start your own business, you call the shots. You decide when to work, where to work, and what to work on.
No more brown-nosing. No more begging for vacation days. No more crossing your fingers for a measly 5% raise.
Being your own boss isn’t always easy, but the freedom is priceless.
3. You learn valuable new skills
Communication with your supplier and Amazon is key to keeping your business running like a well-oiled machine. And as you attempt to grow your brand, you naturally sharpen your marketing skills.
But it doesn’t end there.
You will come to know the importance of photography and how it relates to Amazon products. Search engine optimization, or SEO, will be one of your best friends. And there’s a good chance that PPC (pay-per-click) advertising will be another one.
All of these skills can be transferred to additional income streams if you ever decide the Amazon biz isn’t for you.
Amazon FBA cons
1. Startup costs
Compared to other business models like drop servicing, Amazon has some steep startup costs.
Namely, you’ll need the upfront cash to buy your first shipment of inventory, which could run you several thousand dollars. If all goes well, you should recoup these costs in sales, which will fund your next round of inventory.
Fronting the money isn’t so bad if you’re 100% sure your product will fly off the shelves. But there’s always a risk that you choose a dud and get stuck with your inventory.
That’s why it’s more important than ever to choose your product wisely. As a noobie, there is a trick to guarantee you don’t lose money, which we’ll cover shortly.
2. The market is saturated
By saturated, I mean it’s chock full of people using the same tactics and strategies that have been used for nearly a decade.
If you want to find success with Amazon FBA, you need to be innovative. It’s not about hopping on the next short-lived trend. It’s about building a smart brand around ideas and ideals.
People want more products made in the USA. They want higher quality and more attractive packaging. They want their product now. They don’t want to wait a month.
Your product needs to have demand, but it doesn’t necessarily have to be “sexy’. There are many boring, mundane products that people buy every day. They have demand, but they’re often overlooked by competitors.
3. It requires front-loaded effort
Just like starting any type of new business, you have to put work in upfront with no guarantee that you’ll earn anything.
If you patiently and consistently follow a proven plan, the odds are in your favor. But if you’re used to working as an employee and promptly getting paid for every hour you put in, starting an Amazon business can feel a bit foreign.
No matter what any Amazon “guru” says online, starting a business is a grind. Yes, you can eventually set it up so you earn relatively passively. But to get it off the ground, you have to be willing to hustle.
How competitive is Amazon FBA?
Do you like pie? I love pie. But I don’t need the whole thing. Sharing is caring, after all.
This is how you should think about the Amazon FBA business model.
In 2021, there were roughly 1 million active third-party sellers worldwide. That’s a lot of competition. But there were also over 200 million prime accounts and nearly $470 billion in sales.1,3,4
To make a respectable $60,000 salary — a more-than-decent income in most places around the world — you’d only need to snatch 0.00001% of the Amazon pie.
So, yes, Amazon FBA competition is fierce. But the good news is, the pie is growing by tens of billions of dollars each year.
Amazon FBA review: Worth it, or nah?
So will it work for you? Will you make enough money to quit your day job or live anywhere in the world?
It’s certainly possible — even this late in the game.
And when you think about it, are you really late in the game?
Amazon currently operates in 13 countries, and there are 195 countries in the world. That means there’s plenty of room to grow (assuming Bezos can out-do his international competitors). If anything, we’re still early to the game.
That’s not to say this business is a cakewalk. Far from it.
Sellers fail every single day for many different reasons. But oftentimes, it’s because they aren’t following a winning Amazon strategy.
How to create a winning Amazon FBA strategy
Brand new sellers have to overcome pitfall after pitfall. If you’re just winging it, things probably won’t end well (speaking from experience).
Nowadays, the market is flooded with Amazon FBA courses claiming to offer the super-secret blueprint to e-Commerce riches. But the truth is, only a handful of these courses are worth half their salt.
One course that literally removes all risk for newbies is Marketplace Superheroes. They have an insane guarantee policy — that I explain in my full Marketplace Superheroes review — that essentially makes it impossible to choose a dud product.
They also teach a slightly unique strategy from what you see everywhere else on the web, and you can get a taste of it in their free Amazon FBA class.
Don’t get me wrong, it’s certainly possible to start a successful business without following a training program. Many people have done it in the past, and many will do it in the future.
But if you’re worried about making a costly mistake, then programs that offer these types of guarantees can help put your mind to rest.
This is coming from someone who tried to wing it on their own and lost $10k. Don’t be like me!
Mitch is your typical nomadic backpacker. Or at least, he was. But after stopping in Colombia to take “one week” of salsa lessons, his life took a sharp left turn. He met a cute Colombian girl in dance class, fell in love, and got married. Over half a decade has passed since he left his career to travel the world as a digital nomad, and he’s never looked back.
Nowadays, he’s the blogger behind Project Untethered—where he runs an awesome email newsletter and Youtube channel teaching adventure-craved wanderlusters how to escape the rat race, earn money from anywhere, and build an “untethered life”.
Mitch's Travel Recommendations:
Travel Planning Resources - Everything you need to plan your trip on one convenient page.
Safetywing Insurance - This cheap travel insurance has saved me over $15,000 in medical bills.
Booking.com - Book accommodation without adding your credit card (in case you need to cancel).
Skyscanner - Find cheap flights.
Trusted House Sitters - Take care of pets in exchange for free (sometimes luxury) accommodation.
Flexjobs - Find remote jobs without having to sift through crappy ones.
Skillshare - Free trial to take unlimited classes that teach digital nomad skills.
Anytime Mailbox - Virtual mail service that can handle your mail while you’re away.
Wise - Send and receive money abroad cheaply (great for freelancers).