Is Selling on Amazon Still Profitable in 2022?

Photo by Christian Wiediger on Unsplash

Whether you’re a small business considering your first sales or an established brand questioning the how to sell more online, Amazon might still be your answer.

In 2021, US e-commerce grew by over 14%, and that surge isn’t predicted to slow down soon. Amazon reported an even higher growth for their own selling metrics: a whopping 22% increase in net sales. 

The rise of accessible internet and technology, coupled with the impacts of the pandemic, has fundamentally changed how Americans shop. For most shoppers, gone are the days of waiting for the weekly grocery store visit or shopping mall trip to pick up items on their shopping list. Now, from daily necessities to holiday shopping, customers consult the internet. Online shopping is what the people want, and Amazon is overwhelmingly where they want it. 

Let’s break down what your business stands to gain and lose by making the move onto Amazon:

1) Gain Shoppers

Businesses that don’t sell on Amazon miss out on reaching potential buyers. Major brands like Peleton have shifted to the platform for that same reason.

Peloton’s Chief Commercial Officer Kevin Cornil’s explained the expansion with one reason every business can relate to: “We want to meet consumers where they are, and they are shopping on Amazon.”

Amazon has 300 million active users flocking to the site for all their shopping needs. In 2022, it’s expected to take in more than 5x the digital sales as its closest competitor, Walmart.

Here’s what this means for sellers on Amazon: they get instant access to the largest number of potential buyers. Simply by selling on Amazon, you have the chance to reach the widest amount of customers. For brands who opt to only sell directly from their own website instead, they must fight thousands of other web results just to get on their customers’ radars.

This fight takes a strong and costly marketing strategy, and that’s just to get potential buyers to find their website. It takes even more money and effort to secure their purchase. 

Plus, studies show that 74% of shoppers don’t start in the Google search bar — they start their product searches directly on Amazon. That means they might never learn your product exists because they’re purchasing the alternative they could find on their preferred platform.

2) Gain Credibility

After 28 years, Amazon has grown a reputation for reliability. Its popularity and consistency inspire trust in its customers, and new sellers like you can reap the benefits.

Poll the people in your own life: where do they shop? If they’re buying a new product from a new brand for the first time, would they feel more comfortable shopping directly from the seller’s website, or from Amazon instead?

Naturally, customers wary of online shopping feel safer purchasing from a household name like Amazon rather than directly from a small business’s website. Smaller, unknown businesses can make their customers feel more comfortable by using a credible, popular selling platform backed by decades of built trust. 

Amazon also has a large and ever-growing affiliate system, which can offer serious benefits to merchants like you.

In this age of social media, customers seek product suggestions through influencers on apps like TikTok, Instagram, and Pinterest. Some influencers specialize in household products like cleaners and dishware, while others specialize in more niche categories, like snacks or school supplies.

Whatever the product you sell, there’s an influencer talking about it to a massive audience, and these influencers serve as Amazon affiliates and drive sales for merchants to new heights. When affiliates rave about your products, more people seek out your brand and make purchases, believing in your credibility through the recommendation of Amazon affiliates they trust.

This is free advertising that organically grows your earnings in a way entirely unique to Amazon. 

3) Lose Added Effort

FBA, or Fulfillment by Amazon, lets sellers utilize Amazon’s warehouses for all storing, packing, and shipping demands. This eliminates the need for individual businesses to fund warehouse space or packaging for their products, allowing sellers the freedom to scale faster and reach more customers.

For small businesses just getting their product through the door, this saves you from converting your basement to a makeshift shipping haven. For growing businesses, FBA alleviates the pain points that come with sourcing shipping and packaging fulfillment, providing a stress-free and money-saving solution so you can serve more customers more quickly without worry. 

FBA also handles all customer service interactions, like changing addresses or processing refunds. This effort is invaluable. Businesses selling directly through their website must factor in the cost and labor of this crucial upkeep, which can easily bog down a small team. By selling through Amazon, you can count on trusted, reliable customer service to take care of your customers and take the burden off your shoulders.

Amazon also provides cheaper, faster, and more reliable shipping to shoppers. In fact, its 2-day shipping is one of its major selling points for consumers. Good customer service and fast shipping make customers happy, and happy customers become repeat customers. FBA lets you optimize consumer experience without adding extra tasks to your own to-do list. 

Bottom Line

In 2022, 40% of all e-commerce sales will take place on Amazon. Businesses that don’t take advantage of the potential that Amazon offers are at a serious disadvantage.

Of course, the journey onto Amazon isn’t effortless. As an Amazon seller, you must strategize in order to succeed. You’ll still need solid PPC marketing and design skills to make your products competitive, and you’ll need to learn the ins and outs of Amazon in order to properly manage your account.

This will take money, time, and effort, but after the cost-benefit analysis that we’ve explored in this article, you can feel safe knowing your energy will pay off. 

Luckily, you don’t have to approach your Amazon journey alone.

At Tiny Mammoth, we tackle your Amazon success through 3 key factors: account management, creative design, and PPC advertising. Working with an agency like ours provides critical expertise to help businesses at any stage thrive on Amazon. 

In our next article, we’ll explore the benefits of working with an agency and help you evaluate the best choice for your business. If you’re ready to take the plunge and expand onto Amazon, reach out to us today for a free consultation.

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