A select group of Amazon's most successful third-party sellers are bringing in incredible profits selling on the platform. According to a recent survey, 60,000 professional Amazon merchants made over $1 million in sales last year - and that number is expected to grow as online shopping continues to overtake traditional methods.
These ultra-profitable sellers are benefiting from Amazon's continuous growth and dominance as an online marketplace. As Amazon takes over more of the ecommerce landscape, sellers have access to an ever-wider pool of customers.
Prime membership exceeds 100 million globally and accounts for most of Amazon's ecommerce volume. With Prime's emphasis on speedy shipping and convenience, customers demonstrate tremendous loyalty to Amazon. Sellers who can thrive in Amazon's intensely competitive marketplace are handsomely rewarded.
Let’s take a closer look at Amazon's million-dollar merchants. What products are they selling to drive such incredible sales volumes? How are they leveraging Amazon's platform and ecosystem to maximize success? What can other sellers learn from their winning strategies?
What Products Are Million-Dollar Sellers Focusing On?
Amazon's marketplace features merchants selling products across virtually every category imaginable. From household essentials to niche hobby items, someone out there is making good money selling them on Amazon. However, the highest-earning sellers tend to focus their efforts on a few key product areas:
- Toys & Games - Selected by 26% of $1M+ sellers
- Sports & Outdoors - 25%
- Home Improvement/Tools - 22%
- Beauty - 21%
These categories have several things working in their favor. For one, they include products shoppers frequently purchase and replenish, driving repeat business. Items like beauty products, household tools, sporting goods equipment, and toys for kids have a high turnover.
Several of these categories lend themselves well to private labeling and building recognizable brands. Remember – branding is a key strategy top sellers use to stand out in Amazon's crowded marketplace. For example, developing a proprietary line of toys allows a seller to differentiate itself from generic toy wholesalers.
Of course, even within popular categories, specific item selection is critical. Succeeding on Amazon requires intensive research into sub-categories, demand trends, competition levels, and a variety of other factors.
Leveraging Amazon's Ecosystem and Resources
Million-dollar sellers don't achieve their lofty sales figures solely through shrewd product selection and marketing. They also rely heavily on Amazon's unparalleled logistics and distribution capabilities. The key fulcrum of this ecosystem is Fulfillment by Amazon (FBA).
FBA allows sellers to ship their inventory directly to Amazon's fulfillment centers. When an order arrives, Amazon handles packing and shipping the item to the customer. This provides two major advantages:
- Fast and reliable Prime shipping: Items fulfilled by Amazon are eligible for Prime's free two-day shipping. This perk draws in a huge volume of buyers.
- Hands-off order processing: Sellers don't have to worry about stocking items, buying packaging supplies, or making post office runs. Amazon's warehouses and shipping network do the heavy lifting.
In fact, a whopping 96% of million-dollar merchants use FBA for at least some of their inventory. The convenience, speed, and trust it provides are unmatched. Million-dollar sellers also avail themselves of Amazon's extensive array of other services to scale their businesses:
- Advertising: Promoted listings and sponsored products get products in front of buyers searching Amazon. Top sellers leverage ads to compete with giants.
- Analytics: Data on conversions, traffic sources, reviews, and more informs high-level strategy. Million-dollar merchants constantly evaluate the numbers.
- Customer Service: Services like 24/7 call support for buyers provide great customer experiences that earn loyalty and reviews.
Getting the most out of what Amazon offers is instrumental to long-term prosperity. We'll highlight some of the tactics million-dollar sellers deploy next.
Key Strategies To Reach the 1%
By leveraging Amazon's tools and resources, top sellers are able to push their businesses to new heights. But simply using FBA and buying ads won't pave the way to seven-figure success. Million-dollar merchants employ some keen strategies that set them apart. Based on insights from Amazon seller research, here are a few of their tactics:
Focus Obsessively on Reviews and Ratings
Reviews are social proof that build trust and rankings on Amazon. 97% of million-dollar sellers said positive reviews were essential to their success. They encourage satisfied customers to leave feedback, address issues promptly, and do everything to earn 5-star ratings. A few low ratings can tank a listing's visibility.
Continuously Launch New Products
Reaching million-dollar status requires scale across multiple products. 93% of these top sellers launched new items over the past year. They are constantly evaluating catalog gaps and researching demand to identify fresh opportunities. Diversification also mitigates risk should one product encounter issues.
Go Heavy on Amazon Advertising
Paid advertising is the norm rather than the exception among high-level sellers. These promotions increase discoverability and provide another channel to outrank competitors. Million-dollar merchants have substantial budgets to amplify their most promising listings.
Build Unique Brands
Rather than simply retailing other companies' goods, two-thirds of 7-figure sellers have their own branded product lines. Unique brands that resonate with buyers are difficult for other sellers to replicate. Brand equity also translates to higher margins and pricing power.
Will You Join the 1% On Amazon?
If you are going to reach the top echelon, you need to have a strategy that not only involves selling products but also building a brand. By combining effective marketing techniques and creating your own unique brand, you can differentiate yourself from other sellers and increase your chances of reaching the 1% on Amazon.
So what are the key steps to building a successful brand on Amazon? Try the strategies above and see how they can help take your business to the next level.