"Is it worth starting Amazon FBA business, especially now?"
Anyone who wants to sell on Amazon will eventually think of this question: In our post-COVID world, this question is more important than ever. The Internet has spoken loudly about how costs are rising, and the most notable is , which is 8-9 times more shipping than the days before the pandemic.
This is not a small number. A full container shipped from China to the U.S. used to cost $3,000 to $4,000, but now it can range from $16,000 to over $24,000. This naturally leads to doubts about the feasibility (or even possibility) of investing in Amazon FBA and starting your own business on the platform in 2022. So, what is the answer?
In my opinion, now is a good time to enter the Amazon world .
Of course, this statement does come with a warning. While the potential money making on Amazon is the highest ever, getting started (and operating) is also more difficult than ever. Let’s review some of the pros and cons of starting an Amazon business in 2022, using this information, you can decide if this is right for your time and money. Even if I'm a half-cup wine person, we'll start with the shortcomings...
Disadvantages of starting Amazon's business in 2022
Let's take a look at the shortcomings first, because if you're not scared by these potential negative factors, then this bodes well for your potential success on Amazon.
Scam #1 – The upfront investment cost of starting an Amazon business is higher than ever.
As I mentioned earlier, shipping (and everything else) is getting more and more expensive.
2021 and 2020. Source: Freights Freight Index
Production costs rise, labor costs rise, sea freight costs rise, new tariffs exist, Amazon FBA fees rise, the requirements of using 3PL (third-party logistics) or Amazon preparation services increase your costs, and PPC costs rise.
Everything is just more costly. And because everything is more expensive, it improves the initial investment you need to start selling seriously on Amazon.
If you don’t have the capital to start, you basically cannot start. You either have to save more or start small.
silver lining anything that costs more is usually bad, you have to remember that this is a difficulty everyone is sharing together. Most sellers choose to raise prices to compensate for the increased operating costs . As long as your profit margin is effective, you can still succeed.
In addition, there are some ways to start small and reduce your initial investment and risks.
like:
Negotiate smaller MOQ (minimum order quantity)
Test very small batches (10-50) domestic products
Starting from Amazon, adopt lower investment strategies such as retail arbitrage Creativity and thinking outside the box will really help you improve your competitiveness , so please always keep this in mind.
scam #2 – Running an Amazon business is more complex and time-consuming than ever
is also a side effect of the pandemic, and the benefits of people's previous Amazon business have disappeared.
Shipping and logistics is more complex
Send products directly from your manufacturer to Amazon warehouse, which is the way sellers used to like and is no longer sustainable.
Amazon's product restrictions and rising shipping costs make this choice basically impossible. Nowadays, the standard way to manage inventory on Amazon is to send it to 3PL or Amazon Preparation Services. They then send the product in small batches to Amazon warehouses.
no longer has "passive income"
Due to the high cost, you will strive for profit per %. Amazon no longer has a "one-and-all" approach.It requires a lot of attention and numerical operations. As PPC costs get higher and higher, you will have to really optimize your activity and even look for other sources of traffic to drive your list. With more active sellers, you will have to work hard on branding and information and have the absolute best list to stand out.
no longer easy to sell private label
Buy 1,000 thermally insulated stainless steel cups on alibaba.com and put your logo on it is no longer feasible.
In today's Amazon world, you need innovation to enter the product category.
This requires research, understanding your niche, finding manufacturers and strong brands that can implement your product ideas.
silver lining
Honestly, almost everything you should do against this scam.
If you have planned to sell innovative products in your category, this should not be a deterrent.
creates something better than your competitors and you will see success.
scam #3 – Competition from international sellers is fiercer than ever
Because it’s very easy to sell on Amazon, many manufacturers have started selling directly on the platform.
In fact, EcomCrew estimates that there may be as many as active Chinese sellers on Amazon at present.
These companies have many advantages over US sellers. Such as tax advantages, tariff advantages, lower labor costs and no middlemen get a share of the pie.
silver lining
You have to compete with companies that sell directly on Amazon, which seems daunting. These companies have a lot of cash to use and have fewer restrictions on running their business than you. Although it sounds bleak, it is not a desperate situation. The main weakness of these sellers is the brand. They don't know their product niche like the sellers who actually get it. They can’t innovate easily, nor can they provide language and rhythm that matches your audience.
You can create more unique and innovative products than these manufacturers-turned-to-sellers .
is also a manufacturer's seller who tends to focus on more commoditized products.
The secret to selling on Amazon today is branding, innovation and super positioning your niche.
If you can figure this out, then you are heading towards a successful business.
scam #4 – Aggregator Here
aggregator is not a real problem for individual sellers…but. Among the shortcomings on this list, this is not a real threat at the moment, but may be in the future. If the aggregator succeeds in what they are trying, the end result will basically be another obstacle for a small seller to get started, as it is difficult to compete with the aggregator’s size.
A glimmer of hope
Fortunately, that future has not arrived yet and may never come. So, if you manage to overcome your shortcomings and are not deterred, let's continue to discuss the advantages. Advantages of starting Amazon business in 2022
Pro #1 – Aggregator is here
etc. Isn’t this a scam? Indeed, while aggregators may create a more competitive e-commerce space that makes it harder for small companies to enter the market, it is good for them now. Their current strategy is to buy an Amazon account from sellers like you do! If Amazon sellers choose to go this path, their companies now have new exit strategies. Most importantly, these aggregators pay a much higher rate for your account than any transaction you could get before these aggregators exist. Seriously, you can earn 4-5 times your first 12 months of profit.
If you are an Amazon seller today or plan to start soon, then the reward for successful exit is higher than ever . Therefore, the current positives are very profitable when some people see the negative impact of the future.
Pro #2 – Online demand is higher than ever
The epidemic has brought a lot of harm and suffering, and many people have lost a lot. On the contrary, there will always be big winners in these situations. The biggest winner of the pandemic is the online business. The demand for e-commerce is definitely the highest ever and has just begun.
By 2022, e-commerce spending is estimated to be US$1 trillion . While the inventory problem is blamed on the supply chain, it is also due to the absolutely crazy level of demand. Never have you ever grown your online business faster, and if you consider future exits, you can achieve extremely profitable sales across your business.
Pro #3 – Online Sales are now greatly optimized
Create a seller account on Amazon and start selling is still as simple as usual.
There are more options for freight and infrastructure, and it is better suited for small sellers who want to ship a portion of the container (LCC or LCC) or a single container (Full or Full) as a logistics and FBA preparation service, it will retain your products and fulfill them at a relatively low price.
has a large number of software, guides, videos, courses, funding options, contractors, agencies and resources to help you get started selling online.
Every aspects of your business can be outsourced and automated so that you don’t need to touch your products or hire an employee.
Granted, if you want to enter the e-commerce world right now, there is no more support, guidance and infrastructure to help you on the road to success.
Put them together With all this in mind, is Amazon FBA worth it in 2022? Answer the original question in more detail: Yes, the 2022 Amazon FBA is definitely worth it. While the game costs have increased, the potential profits and generous returns are much higher.
So go out and start selling!
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