This debate has been a never-ending topic for many years within the Amazon reseller community. Is Amazon Online Arbitrage too saturated to be profitable?
These are valid concerns, if the Amazon OA niche is saturated, a new seller may think their best bet at getting a piece of the action is by taking someone else’s share, which eventually leads to price wars and a race to the bottom. This could become a problem for both old and new sellers, as price tanking eats away all the profit.
To find out if Amazon Online Arbitrage is oversaturated, let's dive into some statistics.
Marketplace Pulse reports that there are almost ten million registered seller accounts on Amazon with 51% (3.2 million) of them selling in North America and 25% of them (1.4 million) selling in Europe. There are reportedly 2000 accounts registered daily across Amazon’s market. Looking at this data it’s easy to assume that Amazon is saturated.
However, if you take a closer look and compare other relevant data points, your views may tilt in the opposite direction.
As of March 2021, Amazon had more than 75 million products listed on their website and with only 12% of Amazon third-party sellers holding 1,000 items in their inventory, it's impossible for all millions of these products to be saturated.
Over the years, Amazon third-party sellers have identified certain categories as ‘fast-selling’ leading to more sellers wanting to jump on the cake train but there are also far more products with opportunities.
Saturation on Amazon listings can be a problem. However, it is not THE problem.
Is Amazon FBA UK Saturated? A look at the Numbers
Highlights of the UK marketplace
- 281,257 Amazon UK third party sellers reported in 2019
- Amazon sales account for 5.5% of UK Retail Sales
- Between May 2019 - May 2020, Amazon had sold over 600 million products in the UK
In 2021, there were 16,000 registered new sellers in the UK and while this figure may seem high, it’s similar to the July 2018 numbers when Amazon had its biggest spike in new sellers.
Additionally, the products sold on Amazon UK jumped by 58% from 2018 (from 380 million in 2018 to reportedly 600 million in 2021). While this growth might be attributed to the 2020 lockdown and forced online grocery shopping adoption, post-pandemic e-commerce growth is in line with the pre-pandemic projected trajectory.
Before the pandemic, the Department of E-commerce projected that e-commerce would have 12.6% of 2021 retail sales in the US while the actual number achieved was 12.4%
Furthermore, while the e-commerce percentage of total retail sales spiked in 2020, the growth has continued and is expected to rise steadily in years to come. From 13.8% in 2019 to 17.8% in 2020 and 19.6% in 2021.
Is the Amazon US Marketplace Saturated? A look at the Numbers
Highlights of the US marketplace
- In 2021, Consumer Intelligence Research Partners (CIRP) estimated that there were 150 million Prime Members in the US.
- As of 2019, SMBs on Amazon US sold 4000 products per minute. That’s about 172 million items sold in a month.
- In 2019, there were 1.1 million active Amazon sellers in the United States.
- As of October 2021, Amazon had 41% of the retail e-commerce share in the US.
Find more statistics at Statista
Another interesting factor to look at when considering saturation on Amazon is the dropoff rate. A review of marketplaces in 2021 showed that of the top sellers on Amazon, 42% of them have been selling since 2016 or earlier while 8% of them have been selling for two years. Marketplace Pulse summarises this nicely by stating that “new sellers [are] spotting niches, but long-established sellers continue to succeed for years”. In a saturated market, the dropoff rate would keep rising but Amazon’s seller drop-off rate remains steady.
It may be a bit more difficult now to grow a successful Amazon business due to stricter Amazon policies, the influx of new sellers, and more manufacturers jumping on their listings but it is not impossible. The growing Amazon marketplace sales mean that new sellers can grow without taking sales from old sellers - this would be the opposite in a saturated market.
Amazon online arbitrage is a very hands-on business, there is a lot of data to keep track of and a lot of decisions about but as the chart shows, established sellers on Amazon go on to succeed for years.
Amazon Listing Saturation: The Way Forward
Start by looking out for niche listings with steady sales and test the waters with little stock. From the Amazon statistics, we know that there are enough customers and demand to go around. The popular listings are crowd favourites and a lot easier to find during the sourcing process and that’s why they are so saturated. Invest in a deal list service or an Amazon sourcing VA to help you find listings with enough sales to go around.
Amazon Sourcing VAs vs Amazon Lead List: Which is more Exclusive/Less Saturated?
While with Amazon Virtual Assistant, there’s the promise of exclusivity to deals found, there’s also uncertainty. Amazon online arbitrage sourcing can be time-consuming and unpredictable so there’s no guarantee that your VA will find a profitable deal during the allocated time slot. On the other hand, deal sheet services already have vetted ready-to-go profitable deals but they are typically shared with a number of sellers.
The solution would be to look out for lead list services that sell to a small number of sellers - somewhere between 4 to 8 and services that offer the opportunity to get exclusive access to a deal. While this does not completely eliminate the chance of other sellers finding that listing, it does drastically reduce the odds.
So Amazon Sourcing VA or Amazon Online Arbitrage Leads? The chance is entirely up to your budget and how many deals you’re determined to find in a day.
Lead list services like One Good Deal share one deal with 5 sellers and offer the option to buy out an online arbitrage deal with their Superbuy feature. The superbuy feature is like having your own Sourcing VA but without the uncertainty of having a Sourcing VA.
What if the niche/exclusive deal starts to attract more attention?
Success will always attract attention. If you discover that your favourite moneymaker is slowly attracting unwanted attention from Amazon FBA sellers, it’s time to take a closer look at the numbers and determine the best course of action
- How many units does the Amazon item sell in a month?
- What’s the available stock?
- If there are sellers who have dropped their price, how long would it take for their stock to run out? How fast do they replenish?
- Could you play the waiting game and still sell at a profit when they’re out of stock or would it take too long and now you have to figure out the best price to break even?
There are online arbitrage tools like SellerAmp that display this data so you can use them to make the best decisions.
In summary, there is no universal tip that will get your Amazon business into a 7 figure club, it takes patience and a little trial and error to get it right. Amazon currently sits at the top of e-commerce stores - hogging almost 40% of the e-commerce market share in the US.
While it’s not as easy to make a profit as it was in 2015 when there were fewer entries into the market, Amazon’s growth spurt and statistics (over 70 million products from small businesses sold within 48 hours during Prime Day 2021) prove that there are a lot of opportunities and the sky is big enough for every bird that takes a step back from the flock.