Selling on Amazon, is the platform becoming too saturated?
I’ve always liked juicy topics like these, so let’s get right into it.
(Disclaimer: my intention for this post is not to go into TOO much detail as far as stats and numbers. I just want to give you an idea of the current state of things so you can stay informed.)
If you’re a prospective Amazon seller, or if you’re already selling products and want to scale your business further or diversify your product line, chances are you have asked yourself this question. (And for good reason, too!) Because saturation is an expected eventuality in any marketplace.
But Amazon isn’t just any marketplace.
Unless you’ve been sleeping under a rock, you should know that for the past few years, Amazon has been pretty much taking over the world.
Okay, that’s a bit dramatic. But if you think of all the steps Amazon has taken to disrupt all of these different markets (like the Whole Foods acquisition, for example, or how Amazon’s Alexa is considered the most innovative hardware product of 2016 and 2017, surpassing the Apple Watch and Apple Airpods), it leads to one very important sign …
Amazon’s ever-increasing market cap.
In the past two years, Amazon has gone from an almost $140 billion market cap to over $473 billion as of this month, August 2017. With that high-level and steady increase happening each year, it’s breaking all kinds of records! And by 2020, it’s projected that Amazon will become the first $1 TRILLION DOLLAR COMPANY!
What does this mean for sellers? Well for starters, about half of Amazon’s sales come from third-party seller storefronts. And obviously, that’s a pretty significant margin.
If Amazon’s market cap currently resides at $473 billion, and third-party sellers account for about half of that, just imagine how different your life would be if you shared even 0.0001% of those profits?? It’s pretty insane.
It’s safe to say that third-party Amazon Sellers are an essential driving force in Amazon’s market value. And with the cap increasing each year, the opportunity for sellers is growing exponentially with it.
Currently, there are about 3-million Amazon sellers worldwide. Sounds like a lot, right? Perhaps.
But is it too many? Not a chance.
Those 3-million sellers are what’s driving half of Amazon’s market cap. And as Amazon’s profitability continues to expand, it makes room for more sellers to join the party.
However, let me be clear: just because a marketplace doesn’t saturate, doesn’t mean that product niches don’t either. But that’s something else entirely.
As you may already know, selecting a product category when starting an Amazon business is a whole other ballgame. And I offer lots of guidance on what I do to select top-selling product niches to start selling in.
But that aside, what I want you to understand is that the opportunity to jump in the game is far from over. The annual growth revenue of Amazon’s third-party seller base is growing at a rate that’s surpassing both eBay and Shopify!
And want to know another thing that makes the opportunity to sell on Amazon different from eBay or Shopify?
Three letters: F-B-A.
The Fulfillment By Amazon (FBA) service that Amazon offers to its third-party sellers has driven the company’s overall growth, as well as the growth of its sellers. FBA is a service that allows sellers to leverage Amazon’s warehouse, their customer service, and makes their products eligible for Prime and Super Saver shipping.
Of course, Amazon takes a bigger cut for using their facilities and resources. But if you weigh that against not having to do your own warehousing, shipping, and customer service, most sellers believe that it’s a worthwhile tradeoff. A large population of sellers happen to operate 100% with FBA.
With Amazon leading the way in global eCommerce, and with the unprecedented amount of growth that is still to come, Amazon is still very much the best place to sell online. As its market cap continues to grow, so will the opportunity for third-party sellers to jump in and continue to drive a whopping half of the value of that market cap.
So is Amazon saturated? In short, nope. Product niches may get saturated, but the Amazon marketplace remains a wellspring of opportunity.
And as long as it keeps growing, it’s making room for more and more entrepreneurs to create potentially life-changing businesses through their platform. If you are ever in a place where your fears and doubts are preventing you from taking chances like that, just be sure to arm yourself with the knowledge and information you need to take that next step. It’s all out there for you, so get it!
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