9 Data-Backed Reasons to Sell on Amazon in 2021 (#9 Is Our Fave)
Amazon is famous for being the world’s largest online store. It controls almost 50% of the global eCommerce market. It managed to generate over 2.5 billion combined desktop and mobile visits during May 2020. Its customer base can’t cease from growing, making it by far the most visited eCommerce platform in the United States, surpassing both Walmart and eBay.
Not every business can or needs to advertise on Amazon, but if you’re considering this method, this article is for you. In it, we will break down the top nine advantages of Amazon selling that can help you set your online business apart from the rest. We'll also provide pro tips along the way to help ensure you get the highest ROI.
9 reasons to sell on Amazon in 2021 (if you can)
Remember, not all companies have the capacity to sell on Amazon at this time. Some businesses are facing economic hardship, aren’t able to migrate to digital selling yet, or don't yet have a digital foundation set up. This is okay. This article can help you identify whether selling on Amazon is right for you.
1. Amazon remains resilient to COVID-19
Amazon has been the leading performer through the course of this ongoing pandemic. With the lockdown forming new customer habits and trends, the company’s dominance has remarkably increased. Amazon has witnessed a boost of 60% in its consumer spending between May and July, when compared to the same period last year, and scored almost a 200% jump for its market cap line, which is over $1.75 trillion in September 2020, against $900 billion at the beginning of COVID-19’s influence in mid-March. Talk about resiliency!
Adding to the promising numbers that prove Amazon will provide good opportunities for new online sellers in the future, analysts at Wall Street company UBS wrote that many of the consumers that are shifting to online shopping, may not return to in-store shopping when the current pandemic state is over. The firm also forecasts that 100,000 brick-and-mortar retail stores will shut down in the next five years and that e-commerce will make up one-quarter of total retail sales by 2025.
While this is devastating news for local and brick-and-mortar businesses, the fact that eCommerce is thriving allows for a new outlet to try, and the good news is, there are easy tools out there for local businesses to shift to online or ecommerce transactions.
2. Amazon Q2 2020 revenue results
At the time of writing this post, their second-quarter revenue results for 2020 demonstrate yet another advantage for successfully selling on Amazon. Even taking into account COVID-19’s economic repercussions, they exceeded all predictions with a total net sales of nearly $88.9B, against the $81.5B that was anticipated (Statista). This number exceeds the $87.4B generated in the holiday season quarter of 2019.
Third-party sales also expanded 52% year-over-year amid this quarter, which enabled marketplace sellers to hit “record sales,” beating the increase in Amazon’s first-party sales, which grew 48% year-over-year. (First-party products include inventory owned by Amazon, consisting of the company’s private-label goods and items it has purchased from brands and retailers).
These statistics provide more evidence that the pandemic has shifted consumer behavior to online and that you can benefit by adapting your businesses to these new trends. that the pandemic has that the recent pandemic had mostly a positive impact on Amazon, and this impact is there to stay!
We at DataHawk also studied the evolution of all the Amazon sellers’ sales, including brands and retailers using our tool for a given period of January to July 2020. The results displayed a visible impact on sales during March and May 2020.
For instance, there was an increase in profit of 18.5% between February and March 2020, and one of 33% between April 2020 and May 2020, which shows that COVID-19 didn’t ruin businesses on Amazon; but, in fact, boosted their sales in Q2 2020.
3. More shoppers are turning online for everyday items
Online shopping enables consumers to compare and review more than one store and product at once. It gives them an accurate idea of the quality of your product, price, and customer service. Consumers can conduct fast product searches and check the available reviews by simple navigation, without having to travel from store to store or aisle to aisle.
The speed, contactless benefit, convenience, and dependability are hence paramount to today’s shoppers, which are estimated to represent nearly 230 million online shoppers in the United States in 2021 (Statista).
The pandemic has indeed brought up new shopping habits and online purchasing trends that may see permanent adoption. It has also heavily increased the growth of e-commerce, with more consumers interacting less with physical stores. According to an Adobe report released recently, May’s overall online spending reached $82.5 billion, a 7% boost year-over-year.
With countries imposing severe lockdown measures, shoppers had no choice but to purchase online, especially for groceries. Hence, the ecommerce giant was the most popular platform for these consumers, with six out of every ten doing their online grocery shopping on Amazon, which has boosted demand on the marketplace by as many as 50 times.
This increase is definitely not temporary, as it’s leading to a consumer mindset shift. A recent survey conducted by Mckinsey & Company of U.S consumer sentiment during the pandemic showed that shoppers’ intent to continue purchasing online post-COVID-19 has been growing. More consumers are willing to make at least a portion of their acquisitions online. Others plan to shift completely online, across all surveyed categories, including apparel, books, groceries, at-home entertainment, and more.
This means that you have to conduct product research on Amazon, check what shoppers want today and make it happen for both them and you. There are some great Amazon analytics tools out there that enable sellers to build their eCommerce business accordingly, gain insights, increase sales, and eventually succeed.
4. Distinct changes in consumer’s preferences
Recent studies showed that people are not only changing by shifting to online shopping, but that the kinds of products they are looking to purchase are changing as well.. Amazon categories like “Health, Household & Baby Care,” “Grocery & Gourmet Food,” “Pet Supplies,” “Baby,” and “Beauty & Personal Care” are gaining in popularity, with an apparent change in pricing.
There has also been a clear decrease in electronic and clothing purchases, as more consumers are now moving into a virtual workspace and stopping non-necessary consumption. The data collected from the Mckinsey survey shows that U.S consumers are spending less on apparel and electronics categories now and more on household supplies and groceries.
Once again, you must understand the key factors influencing consumers’ preferences and affecting their purchasing decisions in online shopping to set the perfect strategy that would suit and help you grow your Amazon business.
But the faster you get yourself in the Amazon business, the quicker you learn what your audience exactly is searching for, and the ultimate ways to earn yourself a nice piece of the pie.
5. The opportunity to make more money
It is hard to say how much Amazon sellers make. However, according to Smallbiztrends, new sellers on Amazon earn between $26,000 and $810,000 per year in profits. These sellers are either individuals, small businesses, or large corporations and famous brands, and 67% of them claim they are profitable within their first year of selling.
The overall number of active sellers on Amazon is up to 2.5 million sellers on its marketplace. Around 25,000 sellers generate more than $1 million in sales on Amazon, and 200,000 sellers record more than $100,000 in sales. In fact, third-party sellers account for more than 50% of all Amazon sales.
All of these numbers combined show that you have very high chances of making good revenue on this platform as a new seller. And the good thing about starting your ecommerce business is that Amazon covers nearly all commerce segments. So basically, anybody can do it and earn money out of it. All you need from your side is the right product, supplier, creative marketing efforts, and time & energy.
6. Amazon does the legwork
A vital element that defines whether your new business would fail or succeed is whether it has the chance to gain customers and attract potential ones. It’s quite hard to earn this advantage from the very beginning, especially if you’re operating in a competitive market. However, it’s a different story with Amazon.
Customers trust Amazon, and they represent more than 89% choosing to purchase from Amazon than any other ecommerce platform.
All you have to do is bring the products customers would purchase, and Amazon will handle the rest.
7. Amazon Prime members
Amazon Prime members are famous for their high spending, and with more than 150 million active members across the globe, they are considered the best shoppers and the most loyal. They generally spend more than $1,000 a year on Amazon and pay $119 annually to access this marketplace’s Prime benefits.
Prime membership benefits typically include:
- Free same day, 1-day, or 2-day shipping
- Unlimited photo storage
- Unlimited access to Prime Music and Prime Video streaming services
- Unlimited access to free ebooks
- Discounts at Whole foods
- Prime-special prices and exclusive deals
Amazon Prime buyers are more committed than non-members. 20% of them state that they shop on Amazon a few times per week, and 7% say that they do so on a daily basis. This might be another important reason for you to start selling on Amazon marketplace, and an extra incentive to fulfill with Amazon, or at least make the products you want to sell Prime-eligible.
8. Amazon facilities for clients
Amazon encourages sellers to start or shift their ecommerce business to its marketplace, which unlocks
- Faster deliveries.
- Easy refunds and returns.
- Prime membership facilities in case they are subscribed to it.
With Amazon in charge of managing customer inquiries, even for third-party sellers, your customers can get better satisfaction and you can spend less time answering emails, sending refunds, worrying about shipping, making the packaging, having to go repeatedly to the post office, and more time making money and focusing on enhancing your ecommerce business.
9. Amazon is planning on adding 100,000 new small businesses in 2021
Amazon is planning to expand its seller platform by adding 100,000 new small businesses in the coming year, a 20% increase over the half-million that currently sell there. The ecommerce giant will also spend $18B to help small- and medium-sized businesses grow sales and reach more customers. It has also announced on the virtual Amazon Accelerate summit that it has already released more than 135 tools and services this year to move forward with its plan of helping sellers manage their Amazon businesses.
What does this mean for you? An increased, made simple, and awaiting opportunity for you to take over. So go for it!
You can reap the benefits of selling on Amazon
Starting to sell on Amazon doesn't require years of experience or concrete knowledge on everything related to business and ecommerce trends. All it actually takes is persistence and commitment, and the mistakes you’ll make are merely a way for you to learn fast, gain a competitive edge, and bloom on this marketplace.
Also, don’t be scared of joining late. In fact, this is the best time to join. With more options offered by Amazon, such as brand protection and marketing tools, more ways to start selling on the platform, and the new shopping habits brought by the pandemic, you have higher chances of succeeding.
So what are you waiting for? Take advantage of the above nine opportunities and start selling on Amazon now!
About the author
Wafaa Essoufi is the Content Manager at DataHawk, an all-in-one analytics software platform for Amazon sellers, brands, and agencies. You can check him out on Linkedin.