Everything to Know about Amazon Marketplace Sellers
Amazon marketplace sellers are diverse, spanning many countries, age groups, and reasons for participating.
What follows is a summary of demographic and psychographic data about sellers, relying mostly on the Jungle Scout report, “The State of the Amazon Seller 2020,” which was based on interviews in late 2019 with 1,046 experienced Amazon sellers worldwide. Other data is from ecommerce intelligence firm Marketplace Pulse.
While 9.6 million third-party sellers are registered with the Amazon marketplaces, only 2.6 million are active, according to Marketplace Pulse. Selling on Amazon is the sole income source for 21 percent of marketplace merchants, but 37 percent have full-time jobs outside of Amazon.
- Fifty-two percent of sellers reside in the U.S.; 8 percent are in China; 7 percent reside in the U.K.; 5 percent live in Canada.
- Many sellers operate in multiple Amazon marketplaces. Chinese sellers are moving aggressively into marketplaces in Europe as well as in the United States.
- California has more merchants than any other state at 18 percent of the total for all sellers, globally.
- Seventy percent of marketplace sellers are male.
- Fifty-seven percent of sellers are between ages 25 and 44, and 35 percent are over age 45.
- Female sellers are older than male sellers.
- Fifty-four percent of sellers have a bachelor’s degree, and 23 percent have a master’s degree.
- Men spend more time managing their Amazon business than women.
- Most Amazon sellers (57 percent) devote less than 20 hours per week to managing their Amazon business.
- Men are more likely to use the private label business model than women.
- Home and kitchen goods are the most popular product categories for sellers, followed by (i) toys and games and (ii) sports and outdoor goods.
Sixty-six percent of respondents use Fulfillment by Amazon exclusively, while 29 percent use both FBA and Fulfillment by Merchant. Six percent use FBM exclusively. FBA sellers concentrate on private label sales, while FBM merchants mainly resell other brands. FBA sellers spend more launching their Amazon businesses than FBM sellers. However, FBM sellers have many more product listings than FBA sellers.
As of Dec. 2019, FBM sellers have higher profit margins and greater lifetime profits than FBA sellers.
Handmade goods have the highest profit margin, with 28 percent of these sellers achieving margins above 25 percent.
Thirty-six percent of Amazon marketplace merchants have fewer than six products listed. Conversely, 15 percent have more than 250 products for sale on the marketplace. These merchants are often aggregators who have bought out smaller marketplace sellers.
In 2020, third-party marketplace merchants sold $295 billion worth of products, according to Marketplace Pulse. Third-party sales grew 47.5 percent, up $95 billion from 2019. Amazon’s own sales (“first-party” sales) grew by $45 billion, from $135 billion to $180 billion, a growth of 33.3 percent.
Revenues and profits. Seventy-five percent of Amazon marketplace sellers earn more than $1,000 a month in revenue. Thirty-nine percent have sales in excess of $10,000 a month.
Two-thirds of sellers achieve profit margins of more than 10 percent, and 36 percent have profit margins greater than 20 percent. Only 8 percent of sellers stated that they had not achieved profitability. Sixty-seven percent of sellers were profitable within a year of selling on the marketplace, and 80 percent were profitable within two years.
Fifty-nine percent of survey respondents spent less than $5,000 to launch their Amazon business, and that includes the cost of inventory, fees, and promotion. Twenty-eight percent spent less than $1,000. However, 21 percent devoted more than $10,000 to start-up costs.
Partnering with Amazon
Survey respondents seem happy with their Amazon relationship, as 92 percent stated they would continue to sell via the marketplace. Amazon’s dominance means the path to profitability is sometimes easier than selling through their own websites.
However, being dependent on Amazon involves significant risk. Amazon can compete with third-party sellers with its own private label brands that are sold at lower prices.
Fifty-eight percent of Jungle Scout survey respondents said that Amazon had made it more difficult for them to compete in their product category in 2019. Fifty-three percent complained that Amazon is directly competing with them. An astounding 76 percent of sellers expressed concern that Amazon would shut down their accounts or listings without reason.
Nevertheless, Amazon dominates ecommerce, and third-party merchants seem willing to tolerate the risk.
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