🚀 Is Amazon FBA Dead? The Truth About Market Saturation and Increased Competition
If you're an entrepreneur looking to start an Amazon FBA business, you may be wondering if the gold rush has already passed. With all the talk about market saturation and increased competition, it's easy to think that the Amazon FBA ship has already sailed. But what if I told you that there's still room for you to make a decent profit in today's saturated market? In this article, we'll explore the pros and cons of starting an Amazon FBA business, as well as strategies and tips to help you succeed in this competitive landscape.
Table of Contents
1. Introduction
2. Reasons Why Some People Argue Against Starting an Amazon FBA Business
1. Market Saturation
2. Increased Competition
3. Rising Cost of Amazon PPC and Increased Complexity
4. Higher Barrier to Entry
5. Customer Loyalty
3. Reasons Why You Should Start an Amazon FBA Business
1. High Chance of Profitability in the First Year
4. Strategies and Tips for Success on Amazon FBA
1. Niche Down
2. Validate the Demand of Your Product
3. Optimize Your Listing from Day One
4. Master the Honeymoon Phase
5. Focus on Reviews
6. Utilize Amazon PPC Wisely
7. Leverage Data and Make Data-Driven Decisions
5. The Amazon Growth Toolbox
6. Conclusion
Reasons Why Some People Argue Against Starting an Amazon FBA Business
Market Saturation
One of the biggest reasons why some people argue against starting an Amazon FBA business is market saturation. There are a lot of competitors going into every single niche on Amazon, and what's even worse is that a lot of them are Chinese manufacturers. The same manufacturer that is manufacturing your products is now going direct to consumer, launching their own Amazon stores, and competing against you. There's no way that you're going to win on price.
Increased Competition
Not only are all of these people taking courses and starting FBA businesses, but on top of that, after COVID-19 hit, a lot of brands started coming onto Amazon. Before COVID-19, brands would come and consult with me and ask if Amazon is the right fit for them. A lot of them all of the time said no, Amazon's not the right move. They think it's going to depreciate their value and make their brand not look as premium. But after COVID-19 hit, literally all of those same people hit me up to help them get on Amazon. I'm not talking about regular brands; I'm talking about massive, massive brands. There's a lot of PE and VC-backed brands that are all coming in. All of these massive retail brands are also coming in to Amazon, so competition is getting fiercer, and all of these people have a lot more money than your usual seller.
Rising Cost of Amazon PPC and Increased Complexity
When I started back in 2018, Amazon PPC was way simpler than it is now. Now it's incredibly complex, and not only is it complex, but you have to be super tight with your PPC because you can't afford to waste money on any keyword. So you have to have a really good system, you have to have sophistication, and you have to be able to use the platform. On top of all of that, CPCs are going up because there's more and more people bidding and more people paying way more money to be on top of the search.
Higher Barrier to Entry
Amazon is making it more and more difficult for sellers to come on to Amazon, and honestly, this is for a good reason. Everyone and anyone was coming on to Amazon, and they were polluting the marketplace. They were bad sellers, and they don't belong there. So Amazon is making it more and more difficult. That is good news and bad news for us. Good news is it's going to keep out all of the riff-raff, but bad news is it makes it harder for us to get started. Now there's a lot more seller verification. They actually have to send a postcard, like a mail card, to your house or to your office so that you can get it and you can put that code in the computer to validate that you actually have a real location. And not only that, you also have to do a Zoom call with them. They have to validate who you are. You have to show your driver's license right on the call. They're now asking for a lot more invoices, certificate of analysis. They're asking for real pictures and real images of the product, and you need really good photographs for you to actually get listed on Amazon. And honestly, there's a lot of other compliant stuff I'm not even mentioning, like insurance and other things like that.
Customer Loyalty
A lot of the shoppers on Amazon are very loyal to the brands that they've been shopping with and that they trust. New sellers have to start from scratch and they have to earn that trust and claw their way up until shoppers actually trust them. In this case, reviews are more and more important, and usually, shoppers are not buying products with low reviews. Now that the average review is 10,000-15,000 reviews, you have to have at least 500 reviews to kind of be considered as a decent product.
Reasons Why You Should Start an Amazon FBA Business
High Chance of Profitability in the First Year
According to a survey conducted by Jungle Scout, out of the thousands of sellers that they surveyed, 68% of them turned a profit in the first year. 15% of sellers made a profit in the first 3 months, 25% of sellers made a profit in the first 3 to 6 months, 28% of those sellers made a profit between 6 months and 1 year, and 14% more made a profit between 1 and 2 years. On the other hand, 90% of traditional startups fail in the first year, and only 40% of those startups ever turn a profit ever. And the ones that do turn a profit, it takes an average of 3 to 4 years for them to turn a profit. Compare that with an Amazon FBA business, and you'll see that there's a very high chance for you to become profitable in the first year.
Strategies and Tips for Success on Amazon FBA
Niche Down
You want to find a sub-niche of a sub-niche, something very, very, very specific that you can make a significant impact in. Something where you can create a solution to a problem that's better than everyone else's solution. Usually, I like to look at myself as my own target audience. For example, when I created MMA Nutrition, I was an MMA fighter. I was using electrolytes, but I was on keto, so I wanted keto electrolytes, and nothing on the market had no sugar. This is back in 2018. Literally, nothing on the market had no sugar. They all had sugar because sugar helps absorb electrolytes. But what a lot of brands didn't explore is amino acids also helped with absorption. So I could create a keto electrolyte product, one with electrolytes and no sugar, with just aminos, and I could create a solution to a problem that's better than everyone else. It was almost a blue ocean because everyone had sugar, and I was the only one that did it.
Validate the Demand of Your Product
Make sure that there's enough search volume, people are looking for that product, and then when you type in that keyword and you look at the competitors, make sure that they're making decent revenue. The average revenue shouldn't be $15,000 a month; it should be $100, $150, $200 because that means there's a lot of demand. Also, look at keyword trends both on Google and on Amazon. Make sure that it's trending up or at least flat, but it's not trending down.
Optimize Your Listing from Day One
Once you have a product and a niche, make sure that you have an optimized and perfect listing from day one. Your listing should be the best out there. So you should be able to go and look at every single competitor's listings, and when you build your listing, make it way better than everyone else. Literally, it's so easy to get better images, better brand story, better A+ content, better SEO, better everything, so you don't really have an excuse.
Master the Honeymoon Phase
This is the most critical period of your product launch on Amazon. This is the first 30 to 45 days when you launch a product. Amazon doesn't know anything about you. It gives you an unfair advantage on the market. So you want to sell as many units as possible because once you build that momentum, your organic rank is going to go up, and you're going to stay up there. The second that you run out of stock or if you start slow, you're never going to get up to the top.
Focus on Reviews
Reviews matter more than anything else. If there's one thing that I would advise you guys to do, it's to go look at all the products, all the very successful products. How many reviews do they have? You think they have hundreds of thousands, if not millions, of dollars in sales every single month because they have a low amount of reviews or a high amount of reviews. Reviews matter so much on Amazon. I've seen so many shitty products make it to the top just because they have so many reviews.
Utilize Amazon PPC Wisely
You have to be super, super lean. You have to have a system. You cannot afford to let keywords spend money, not make sales. You can't even afford to have a half-baked plan because it's incredibly difficult and competitive on Amazon PPC. So you have to stay sharp.
Leverage Data and Make Data-Driven Decisions
This is so critical. So many people overlook this step. They launch on Amazon, they're looking at campaign manager, they're looking at business reports, they don't have a good structure, they don't have data that tells them the story that helps them take action in a very structured and optimized way. What you want to do is make sure you're gathering all the data, displaying it in front of you in a very easy-to-understand format, and taking decisions based on that data. And if you feel like you're unable to make decisions quickly enough, you probably need better data or better data presentation.
The Amazon Growth Toolbox
As you navigate through these strategies, the right tools can make all of the difference. That's why I created the Amazon Growth Toolbox, which is basically a database of every single macro, every single sheet, every single template, every single guide, every single resource ever that I've ever come up with. Five years of experience distilled into this one database. Everything I've made for my team, for my own brands, for client brands, everything that you can think of, all in one place. And I'm literally giving lifetime free access. All you have to do is go into the link in the description, sign up, and you'll get it. And it stays up to date, so anytime I create any new tools or resources, they all get put back into the Amazon Growth Toolbox.
Conclusion
In conclusion, is Amazon FBA dead? No, it's not. It's still alive, growing, and thriving, and there is room for you. You just have to be competitive, and you have to go in there with the willingness to adapt and to overcome anything. And if you do, you will succeed on Amazon. Amazon has created an insane life for me. If tomorrow Trivium completely went away, all of my other businesses went away, and all I had was MMA Nutrition, I could literally retire and live forever. I can travel, I can do whatever I want. I can go to Italy, I can go to France, I can go anywhere. Literally, all I have to do is check my Amazon PPC campaign, stay in stock, get some reviews. It's pretty much passive income. I can have one employee work on this. So I think Amazon is an incredible opportunity if you take the time to do it right.
