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There are many tales about people achieving success on Amazon. Some people have made thousands of dollars while others have made millions. I’ve been making money through Kindle Direct Publishing, Amazon’s self-publishing book division, for years. Also, I generate income as an affiliate marketer through Amazon Associates. I would like to sell products and leverage Fulfillment by Amazon (FBA), but I’m not there yet. In this post, I’ll review the top ways to make money on Amazon and considerations for each.
Ways to Make Money on Amazon
Selling Products: Fulfillment by Amazon (FBA)
Amazon is an online department store and marketplace with plenty of product categories including consumer electronics, apparel, health, beauty, food, and beverages. It has localized sites for many countries including Canada, England, Germany, Japan, and India. In the United States, Amazon has a 49 percent share of all online retail spend and 5 percent of all retail sales. In second place is eBay with a meager 7 percent of online retail spend.
Amazon’s marketplace consists of many third-party sellers. Third-Party sellers account for two-thirds of Amazon’s sales. More than 300,000 U.S. small and medium-sized businesses sell on the site, and nearly 20 percent generate more than $1 million in sales.
Amazon makes the process of selling on its platform straightforward, and you can sell items in various product categories. Separately, Amazon Handmade is for handmade, hand-altered, or hand assembled products.
Merchants can sell to consumers and businesses. Sellers can ship products themselves or let Amazon pick, pack, ship, handle customer service, and process returns through Fulfillment by Amazon (FBA). Also, FBA will do the same for merchants who sell on their sites, for example, a seller with a Shopify store.
Amazon has two seller/merchant plans. The Professional seller plan cost $39.99 monthly plus per-item selling fees, which vary by category. The Individual seller plan is for users who intend to sell fewer than 40 items a month. There is no monthly fee. Instead, you pay $0.99 per item sold plus other selling fees.
Aspiring sellers must find products that will sell well. As Amazon has matured, first and early mover advantages have become critical. For example, choosing to sell batteries won’t cut it since the marketplace is saturated with battery suppliers. Alternatively, selling a product that’s far better than what’s available for a premium or discount is a viable route to take. Software apps are available to help sellers find potentially profitable products. For instance, Jungle Scout enables you to find your first product, stay ahead of competitors, and scale to an enterprise level. Also, it has many excellent resources for beginners.
The second challenge for many sellers concerns capital. Online retail can be a capital-intensive business unless you use a drop ship model. However, there are many ways to obtain financing including a personal or business loan, credit line, or P2P loan.
There are pros and cons to selling on Amazon, and Amazon is expanding its private label business. Merchant benefits are apparent as Amazon has millions of customers, and online retail sales have plenty of room to grow. On the other hand, Amazon dictates terms, competition is stiff, the marketplace is subject to fraudulent activities, various fees erode profits, and Amazon owns the customer experience.
Affiliate Marketing: Amazon Associates
The next best thing to selling products is promoting products for commissions. Affiliate marketing is a performance-based marketing activity. An affiliate promotes a product/service online and receives compensation for achieving a specific objective or action. A merchant or advertiser specifies the goal, which is usually a valid sale. For example, a merchant will pay the affiliate a 30 percent sales commission. Some merchants have pay per lead programs that pay for getting prospects and signups. Learn more about affiliate marketing.
Amazon Associates is Amazon’s affiliate marketing division. It’s free to join, and you get everything you need to succeed including links, banners, native shopping ads, and reporting. Featured promotions, bounties, and promo codes are available too. Affiliates can earn up to 10 percent on purchases and up to $25 for free trials and membership signups.
Amazon Associates offers affiliates a wide selection of products to promote, but a ten percent commission is small potatoes in affiliate marketing. You would need to convert $100,000 in sales to earn $1,000 to $10,000. The math doesn’t make sense. The program has a 24-hour conversion period, which is less than the industry standard of 30 days. Unlike selling products on Amazon, earning a full-time income from Amazon Associates is highly unlikely. Learn more about Amazon Associates in my review.
Selling Books: Kindle Direct Publishing & ACX
Amazon was one of the first disruptors in the book retail industry. It began as an online bookstore and challenged traditional bricks and mortar shops. Its Kindle e-readers, tablets, and cross-platform apps helped its publishing ecosystem to grow.
In 2007, Amazon launched Kindle Direct Publishing (KDP), a self-publishing platform for e-books and paperbacks. Books can be uploaded in minutes and made available for sale within 48 hours. KDP provides sales reporting, payment tracking, and advertising/promotional tools. The Audiobook Creation Exchange (ACX) is Amazon’s self-publishing portal for audiobooks. Authors can narrate their books and hire narrators. Authors can earn up to 70 percent of sales on KDP and up to 40 percent on ACX.
Amazon’s self-publishing network has all the makings of a lucrative business. Amazon states, “over a thousand independent authors surpassed $100,000 in royalties in 2017 through Kindle Direct Publishing.” Additionally, a book can lead to other opportunities like speaking and consulting assignments.
In 2012, I published my first book. More books followed, and royalties were flowing like a river from 2014 to 2016. I wasn’t making $100,000 annually, but more than enough. However, things have changed, and my revenues have decreased. What’s changed?
The golden age of self-publishing is behind us. Striking it rich as an author has always been a rare event, and it’s hard for the average writer to make a decent living from royalties alone. Perhaps more than 1,000 authors do make a fantastic living, but Amazon isn’t likely to disclose how many authors earn less than $100 monthly. The amount is in the thousands to millions globally.
Books must compete with a growing list of substitutes and distractions concerning people’s time and money. Websites, blogs, online courses, YouTube, social media, and messaging apps are just some of the options individuals might choose over reading books.
Countless poorly written manuscripts are available on Amazon. Also, many authors publish books that haven’t been proofread or professionally edited. Lastly, scammers plague Amazon’s platform. The chances of making “$100,000 in royalties” decreases by the day.
Audiobook Narrator/Producer: ACX
Writing a book is very time consuming and comes with no guarantees. Alternatively, narrating a book is an intelligent, low-risk way to make money as an author. Earning passive income as a narrator is possible once you record a book and list it for sale. Audiobook sales continue to register double-digit gains while paperback and e-books sales remain flat. Also, nearly one in five Americans read audiobooks.
ACX outlines the steps to become a narrator. Narrators audition for audiobook projects, but the real opportunity is to contact bestselling authors who don’t offer audiobooks. If you email authors and discuss increasing their book revenues with audiobooks, you’re likely to get a few gigs. Regarding income, you can charge a production fee or agree to a 50/50 royalty split with the author. ACX has high production standards so you’ll want to ensure that you have excellent recording equipment and a soundproof space to record.
Print-On-Demand Apparel: Merch by Amazon
Print-on-demand (POD) is a production model in which products are made up receipt of customer purchase orders. Online POD marketplaces have been around since the 2000s. Well-known companies include Zazzle, CafePress, Teespring, and Vistaprint. Those companies print on various products including clothing, stationery, and accessories.
Merch by Amazon (Merch or MBA) is Amazon’s POD apparel division. Sellers pay no upfront investment fees or costs, and they can earn 10 to 20 percent per sale. Product options include:
- T-shirts – front and back
- Women’s v-neck t-shirt – front and back
- Baseball t-shirts – front and back
- Tank tops – front and back
- Long sleeve t-shirts – front and back
- Crewneck sweatshirt – front and back
- Pullover & Zip Hoodie – back only
Merch can work if you have a significant following to sell to, your designs become bestsellers, or influencers/marketers are promoting your goods. Without any of those components, you might get lucky and make a few dollars to hundreds monthly.
App Development: Amazon Developer Services & Technologies
Amazon is synonymous with online retail, but it’s a tech powerhouse too. It competes with Alphabet, Apple, and Microsoft in various sectors such as web and cloud services, consumer electronics, software apps, and games.
Tech and consumer electronic markets are lucrative and continue to expand. Therefore, tech-savvy individuals and developers can reap huge rewards. Amazon has five opportunities for developers to profit:
- Amazon Alexa
- Amazon Appstore
- Amazon Software + Games
- Amazon Dash Services
Professional Services: Amazon Services
Amazon Services is a freelance labor marketplace like TaskRabbit, Thumbtack, and HomeAdvisor. Professional assemblers, cleaners, handy people, electricians, and others can sell services to Amazon customers. With the selling services Amazon app, you can scan jobs in your area and choose the ones that fit your schedule. There are no upfront costs, but Amazon keeps a percentage, 15 to 20 percent, of each transaction.
Freelancers have reported making over $10,000 a month. However, skills, experience, and professions influence income prospects.
Delivery: Amazon Flex
Amazon Flex recruits drivers to deliver goods to customers. Amazon pays $18 to $25 per hour, and its signup pitch is, “Be your own boss, set your own schedule, and have more time to pursue your goals and dreams. Join us and put the power of Amazon behind you.”
Alana Semuels, a writer at The Atlantic, gave Amazon Flex a try. She detailed her experience, how much she made, and how much others earn, which is less than minimum wage in some cases.
Being the boss and setting your schedule sounds appealing, but they mean nothing if you’re barely making enough to pay your bills.
Microtasks: Mechanical Turk
Amazon Mechanical Turk (MTurk) is an online microtask marketplace. Employers can source freelancers for various types of small jobs like image/data processing, data verification, and surveys. The price buyers pay to freelancers is comprised of two components: the amount paid to workers plus 20 to 40 percent to MTurk.
When I logged onto MTurk, there were roughly 500 jobs posted. Although making $100 or more daily is possible, most buyers seek cheap labor. As one study finds, “In the US, accounting for all paid and unpaid work, Mechanical Turk workers made just $6.54 per hour on average, with a median of $5.63 per hour. That’s significantly lower than the minimum wage in most states, and lower than the federal minimum wage of $7.25 per hour.”
Chances of Making $10,000 Monthly
|Online retail||Mid to high||A good business plan and product can produce excellent income|
|Affiliate marketing||Low||Commission rate is too low|
|Self-publishing (fiction)||Low to mid||You need marketing savvy and a large subscriber base/many contacts to have a chance|
|Self-publishing (nonfiction)||Low||You need marketing savvy and a large subscriber base/many contacts to have a chance|
|Audiobook narrator||Low to mid||Audiobook sales are growing rapidly|
|Print-on-demand apparel||Low||Royalty is too low, and the POD market is saturated|
|App development||Mid to high||Tech, SaaS, and apps are a growing market|
|Professional services||Mid||Combined with other freelancer platforms, income prospects are satisfactory|
|Delivery||Low||Pay is too low|
|Microtasks||Low||Pay is too low|
Amazon offers plenty of ways to make money, but only two channels—e-commerce and app development—are potentially lucrative. The other opportunities are less likely to support your income goals.