“Isn’t Amazon too saturated?!” This has quickly become a common question within our Facebook group. It’s not a bad question to ask but it easily misses so many important factors that come into play when answering such a question.

 

Rather than leaving new sellers in complete suspense, we thought it would be a really good idea to answer it directly and break down the important factors to keep in mind while either starting or growing your wholesale Amazon business.

 

Variable #1 – Too Many Products Being Added to Amazon Each Day

 

The simple answer to the question is no, it’s not saturated at all. In fact, we believe it’s shifting even more towards our favor as sellers.

 

As of January 2018, Amazon is moving roughly 562,382,292 products through its doors. Not all of which are sold by Amazon, but by 3rd party sellers like us.

 

Compared to 2017 (*398,040,250), Amazon added 164,342,042 SKUs to its site, growing at a rate of 70.7%.

 

Although Amazon seems to have the deepest of pockets, they are limited to capital expenses like any other company. They seem to have shifted focus more on acquisitions than actually carrying new products themselves. Does that mean Amazon will shift to a 100% 3rd party marketplace? No, not at all but it does indicate that the percentage of products Amazon carries itself will lower as the company grows and adds new products.

 

That means even more opportunity for 3rd party sellers and a potential gap in the market that can prove large in the next few years.

 

Variable #2 – Lower Barrier to Entry, Higher Barrier to Success

 

For the most part, we see HUGE numbers of new people jumping into Facebook groups and trying to become a seller but that’s not the number you should care about.

 

Similar to an industry like Real Estate, it’s not that difficult to get started, but quite difficult to succeed. There seems to be a common trait amongst similar industries where a large number of people ‘start’ but only 5-10% actually stick with it longer than a year, with many stopping entirely after just a few weeks.

 

Although it seems competition is quite large, it’s actually the opposite and something we see inside our own Facebook Group as we routinely add 20+ new members per day.

 

Seth Godin wrote a fantastic book called The Dip: A Little Book That Teaches You When to Quit (and When to Stick) that describes how every business is exciting and easy at first, but then incredibly hard, taking a dip as you do the real work but then becomes successful. The hardest thing for business owners to do is survive that dip.

Keep in mind; However low the barrier to entry is, the higher the barrier to success is.

 

Variable #3 – Not Much Competition at The Top

 

Similar to Variable #2, there really isn’t much competition at the top. One could argue there’s still a large number of sellers active over the $10,000 a month range and that would be true but again it’s not the face value of that statement that matters.

 

What actually matters is the difference between sellers who do six-figures and those who do seven-plus annually.

 

Selling on Amazon is pretty capital intensive as we purchase new inventory once or twice a month. Once you’ve become effective at adding new, profitable suppliers each month, you quickly run out of capital to spend on new inventory.

 

This presents a potential crossroads for many sellers; raise outside capital or grow at a much slower pace.

 

Many will choose the latter and there’s nothing wrong with that. Because of this variable, it further supports our view on competition selling on Amazon.

 

There are a few things you can do to increase your odds of success. Heres the ones we strongly suggest:

 

  1. Expect The Dip and keep going through it keeping in mind that success is on the other side.
  2. Whenever you feel selling on Amazon is too saturated or it’s too late, look at the math.
  3. Aim for the top – it’s much easier to succeed when you’re playing a different game than others.

 

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