Podcast Episode 098 : Is the Amazon Seller Marketplace Saturated with Too Many Sellers?

One of the questions we get asked a lot is “Is selling on Amazon a saturated business model?” Many people believe that there are just too many sellers for the current demand of items to buy on Amazon. Today we unpack this question.

In a saturated marketplace, sellers can only achieve growth by taking the market share away from other competitors and that can be incredibly challenging. Tune in today to hear how this idea that Amazon is saturated is often based on incomplete statistics. We break down what the seller statistics are and what they really say about the continuing growth of Amazon’s market.

Listen to find out the importance of having a marathon mindset to selling on Amazon and why if you can just make it to the six-month mark you’re more likely to achieve long-term success.

Listen on the podcast player below.

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Key points from Episode 98:

• What people mean when they ask if Amazon is a saturated market.
• The consequences for sellers on Amazon if the market is saturated.
• How this idea may be based on incomplete statistics.
• How people’s own feelings or lack of success may lead to this idea.
• Stephen and Rebecca’s take on whether the Amazon seller marketplace is saturated or not.
• How Amazon’s continued growth has always outpaced seller growth.
• Statistics around the true nature of Amazon’s six million sellers worldwide.
• Why if people can make it to the six-month mark they’re more likely to achieve success.
• The importance of having a marathon mindset to selling on Amazon.
• Thoughts on whether or not the use of various sourcing tools can become saturated.
• Why sourcing strategies can’t be saturated.
• Why you should learn how to use sourcing tools and improve your sourcing strategy.
• And more!

Links and resources mentioned in this episode:

• Marketplace Pulse – Amazon Marketplace Is Not Saturated.
• Marketplace Pulse – Amazon Tops Six Million Third-Party Sellers
• Tactical Arbitrage – online arbitrage sourcing tool – Use the code FULLTIME10 to get an extended 10-day trial
• Tactical Arbitrage Academy – Use the code FULLTIMEFBA50 to save $50 off the training course
• BQool – Automatic repricing software
• BQool Review (plus how to get my personal repricing rules that doubles my sales)

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Episode 98 Transcript:

[WELCOME]

[0:00:01.8] ANNOUNCER: Welcome to The Full-Time FBA Show. In each episode, it’s our goal to help you turn part time hours into a full-time income, selling almost anything on Amazon. Now, your hosts of the show, Stephen and Rebecca Smotherman.

[INTRODUCTION]

[0:00:21.3] STEPHEN: Welcome to episode number 98 of The Full-Time FBA Show. We are excited you are here listening today and to talk with me about our topic is my wife, Rebecca, how’s it going?

[0:00:31.5] REBECCA: It’s going great, I’m always here to talk with you.

[0:00:34.2] STEPHEN: Yes, the topic for today is, we’re going to answer the question, “Is selling on Amazon a saturated business model?” People ask this from time to time on our Facebook group and we’re going to answer that question today on the show.

[CONVERSATION]

[0:00:48.6] REBECCA: As Stephen said, today we’re going to be talking about, is selling on Amazon a saturated business model and so to start off, we really need to talk about what does that even mean when we say that? What is a saturated Amazon market mean?

For too many sellers, what they’re talking about when they think about Amazon being saturated is that there’s too many sellers for the current demand of items to buy on Amazon. Some sellers think that the number of sellers on Amazon is at max capacity for the amount of inventory and sales generated by Amazon and throughout the rest of this episode, you’re going to kind of get to know what we think about that, whether or not we agree with that statement that there are too many sellers for the current demand.

[0:01:31.4] STEPHEN: People are concerned about this because if Amazon actually is saturated, that means less success is available for every Amazon seller. New seller is coming onboard means less sales for all of us current sellers. In a saturated marketplace, sellers can only achieve growth through taking the market share away from other competitors and that’s a whole lot harder to do to remain consistent if Amazon actually is saturated.

[0:01:55.6] REBECCA: Thinking about new sellers would mean there’s fewer sales then for me but it also means if you haven’t begun selling yet, because we do have a lot of listeners to the podcast who haven’t even started selling yet, they’re still doing research and trying to figure out if this is for them, they might be thinking, “Oh, there’s too many sellers already, why should I even bother? Why should I start selling on Amazon?”

Basically, what it comes down to, why people might get this idea that Amazon might be saturated for sellers is that people are often looking at incomplete stats. You might see stats floating around on the Internet, saying things like, Amazon has over three million sellers selling in North America and over six million worldwide. You might think, “That’s a lot of sellers, do I want to join that or is that too many – I’m already a part of that but is it becoming too many for me.”

Or, you might see something like Amazon is adding over 2,000 new sellers every day, on a daily basis, 2,000 new sellers every day. That’s a lot and so, you might hear those stats and think, “I don’t know, that sounds too many to me, I don’t know if I want to compete in that market.”

Another reason people might have this idea that Amazon is saturated as a business model is just based on their own feelings that they have based on their experience on Amazon. They might be thinking, “Well, I’m not seeing success, the type of success I was lead to believe I should expect and so, the reason why I’m not doing well is because Amazon is saturated” rather than thinking through some other things, and we’ll get into that more later, about why these are incomplete stats and why you shouldn’t necessarily trust your feelings if you’re feeling like, “I’m not succeeding so Amazon must be too saturated.”

[0:03:37.7] STEPHEN: Now, we’ve come to the time in the episode where we are going to reveal the answer to this question, “Is selling on Amazon a saturated business model?” Rebecca?

[0:03:45.7] REBECCA: I mean, to us, no. Some people, maybe. As far as we’re concerned, as far as how we view selling on it, no.

[0:03:52.8] STEPHEN: Yeah, I totally agree and believe for us and many resellers out there, Amazon is not a saturated business model, there is still plenty of room for growth, plenty of room for new sellers, plenty of room for current sellers to continue to find success in the long term and there’s reasons why.

When we take a look at stats, I’m going to put in the show notes the links to where I get all these stats but Amazon’s continued growth has always outpaced seller growth. When you see the number of items that you can buy on Amazon, that number continues to grow in a faster rate than the number of sellers is growing. That trend is not expected to change anytime in the foreseeable future.

There is always going to be more items added to Amazon’s catalog, while there’s still going to be more people selling on Amazon being added, right now, 2,000 new sellers every day. That growth, the Amazon is experiencing is going to continue to outpace the seller growth and they expanding overall, Amazon GMV which stands for gross merchandise value. Because that’s expanding, it allows new sellers to grow without taking away sales from the existing sellers and so you can continue to sell in your area, whether it’s retail arbitrage, online arbitrage, wholesale, you can continue to get sales without stealing sales from existing sellers.

[0:05:05.1] REBECCA: That applies to different categories too, not just your sourcing method but the different categories you might be selling in. Some of you are selling in apparel, some of you are selling in groceries, some of you are selling in toys. Those are all growing.

[0:05:16.0] STEPHEN: Yes. Let’s take a look at some of these stats that Rebecca talked about a minute ago. Over three million sellers selling on North America and over six million Amazon sellers worldwide, that’s a pretty big number, six million sellers worldwide.

The stats show us that only one million of those sellers actually received one marketplace feedback, so they have at least one marketplace feedback, only a million sellers, got to the point where they were able get one feedback. If you know anything about selling on Amazon, if you’re not using any type of feedback tools like feedback genius to get more feedback, then most likely, you’ll probably get a buyer feedback, given to you, the seller, probably about once or twice every 100 sales. Wouldn’t you think that’s probably about accurate Rebecca?

[0:05:57.3] REBECCA: From what I understand, yes.

[0:05:58.4] STEPHEN: Yeah. There’s six million sellers worldwide but only one million of them have actually sold enough to get at least one feedback score. There’s a lot of sellers but not a lot of them are finding the success that a lot of us are already experiencing. Just because 2,000 new sellers join Amazon every single day does not mean that they’re all going to be successful sellers.

In fact, most Amazon sellers quit within the three to six months of starting to sell. Which is interesting because six months is around the magic time when a lot of restricted brands and categories begin to open up for sellers and it allows you to buy more inventory and sell more inventory on Amazon. If people can just press through that six months mark, they’re going to be able to setup for a more long term success but there’s too many people just thinking that Amazon is a get rich quick strategy, which it’s not, you need to have it the marathon mindset, you need to be in it for the long haul.

Just because those 2,000 new sellers are jumping onboard, doesn’t mean that they’re all going to be successful. You want to do what you can to learn what you can do to become successful, that’s why we have the Full-Time FBA resources that we have and this podcast to help you become successful and so, be sure you stick with it, don’t give up, press forward and if you stick with it and commit to the marathon long term mindset, you’re going to find success eventually.

The bottom line is, once an Amazon seller has become established by ethically building their Amazon business, not by breaking rules or doing any black hat type stuff, once an Amazon seller has become established, the stats show that they rarely fail.

Overall, we don’t believe the Amazon marketplace is saturated, there’s still a lot of opportunity, in fact, I would say that we’re probably in the toddler stage of growth. Maybe five or six years ago, we were in the infant stage of growth. Now we’re in the toddler stage of growth, there’s still plenty of time to grow and mature and have long term success selling on Amazon.

[0:07:48.2] REBECCA: Yeah, I think that marathon mindset is absolutely the key to it. If you are looking at your first three to six months and thinking, that is going to determine what your overall business is going to look like for the long term, then yeah, I could see how you might want to quit because that is still just the very beginning stages and that is just establishing a foundation and moving forward from that is when you’re going to really see the growth.

Now, some people start off, they hit the ground running and they have amazing sales right from the very beginning but that is not typical. It is not typical to be experiencing crazy, you know, tens of thousands of dollars in sales within the first three to six months. That’s not typical results that is a get rich quick type plan but slow and steady growth is totally possible. You just have to keep the right mindset of this is a long-term business. Is this a long-term business for you? Then keep the marathon mindset.

[0:08:43.2] STEPHEN: Absolutely.

[0:08:44.1] REBECCA: Before we wrap up for today, let’s pivot and talk a little bit about some other things that come up whenever Amazon seller saturation is the topic. These types of questions come up from time to time and it is not necessarily about Amazon sellers but we’ve seen people ask these question in our Full-Time FBA Facebook group and in other places as well and that is saturation when it comes to different types of sourcing tools.

What I mean by that is we will hear people say, “Tactical arbitrage is saturated. Don’t you think tactical arbitrage is saturated? There’s too many people using it” or “The BQool repricer is saturated, there’s too many people using the BQool repricer.” I guess that’s what they mean by that. I don’t know, I don’t know how a repricer can be saturated.

[0:09:29.4] STEPHEN: Yeah, because people, everyone is repricing and so no one is able to get any of the sales because everyone’s repricing.

[0:09:35.7] REBECCA: Right, and so it’s interesting to be to think that sellers might think a tool can become saturated and really, I think that’s a misunderstanding of what’s going on when you are using these tools. Tactical arbitrage in it of itself can’t really be saturated. What the problem is that the person using it might not be using it correctly. Now, is Walmart.com the toy section saturated by people trying to use tactical arbitrage to scan it and make a profit?

Possibly, probably, likely because if everybody who is selling online, doing online arbitrage decides to go to that one big box store in one major category and scan that with tactical arbitrage then no, you’re not going to find profits because there is going to be too many sellers but in general, tactical arbitrage can’t really be saturated if there are hundreds and hundreds of websites with hundreds and hundreds of categories per website out there. Hundreds and hundreds of items in all these categories, then no, there’s not saturation for that. And yeah, the same for a repricer.

A repricer is only as good as the rules that you set it up to work with and so if you are not setting up your repricing rules or using that tool, whatever the tool is correctly, then you might see results that look like, “Oh this is just not working because too many people are using it. If nobody else was using this, this would work great for me.” That is not reality.

The reality is that a lot of sellers will think their saturation when really what it is, is they need to do something differently whether it’s selling to different category or find a different niche or learn how to use a tool better. I mean, honestly, that’s what it comes down to a lot of times with tactical arbitrage or a repricer is you didn’t do the education upfront. You didn’t watch the videos, free videos that these tools provide you to learn how to use their tool.

A lot of times, these question of, is something saturated really comes back to you know, you need to rethink that question. You are not asking the right question. What is causing it to not work?

[0:11:41.7] STEPHEN: Yeah and we’ll be sure to put in our shownotes links to training for tactical arbitrage, training for BQool so you could know how to best use that but think for yourself. If you are trying to use a tool and it’s not working right for you, maybe it’s not saturated, maybe you are just not using that tool correctly. Anytime you try a new tool, a new resource, take advantage of your free trial by going through and learning the process first and then starting your free trial and being able to maximize your free trial to really try to use that product.

When it comes to another type of saturation people think of about, we just talked about resources and tools, a lot of people think like sourcing strategies could be saturated like, is RA dead. Is retail arbitrage dead? There’s too many people doing retail arbitrage so it’s dead or maybe we just went through a wholesale formula launch, maybe people are saying, “Well, with the people buying the wholesale formula and learning how to do wholesale, is wholesale now saturated?”

I actually had an email from one of our listeners asking me that question, “Is wholesale saturated because everyone is learning how to do it with the wholesale formula?” and the answer is no. These different types of strategies are not dead. For some reason, it reminds me of the old Yogi Bear quote, “No one goes to the restaurants anymore, it’s too crowded.” It’s like you know, that doesn’t make any sense because it is too crowded of course people are going.

There’s different types of strategies, just because there’s a lot of people doing retail arbitrage doesn’t mean it doesn’t work anymore. I mean there is a lot of people doing it and they can work for them and they can work for you. A lot of times though, people think retail arbitrage is dead or saturated. Online arbitrage is saturated because it is personally not working for them.

[0:13:15.5] REBECCA: Or they’re just going for low hanging fruit. I think a lot of times people think that all of one’s strategy is saturated because they have just kind of defaulted to whatever is easiest. Well, of course, that’s going to be saturated. Something that doesn’t require a lot of effort like only scanning the clearance isle of a certain store once every month, well yeah, then you’re not going to find anything because everybody is doing that.

[0:13:39.2] STEPHEN: Yeah and so what you want to do is kind of retighten down your strategies just to see if you are looking for low hanging fruit or if you need to step it up a notch, you know? We’ve got courses to help you out with online arbitrage and a lot of other courses that can help you improve your overall sourcing strategy but you know what? You can just make sure that you’re not just going for the easy stuff.

Take the time and the effort, learn some new skills to help improve your sourcing strategy so that you are able to find more inventory and sell more stuff on Amazon. Amazon is not saturated, tools are not saturated, sourcing strategies are not saturated. Hopefully, this gives you an opportunity to realize that there is a lot of opportunity out there.

[CLOSING CONVERSATION]

[0:14:21.0] REBECCA: We’re so glad you joined us this week for this episode of The Full-Time FBA Show. It is always a pleasure to talk with you and as always, you can find the transcript for this episode as well as the shownotes with any of the links that were mentioned above for any of those sources for statistics or some of the products that we were mentioning at the link for this show at fulltimefba.com/98, the number 98 because this is episode 98. We’re only two away from episode number 100, very exciting.

[0:14:51.2] STEPHEN: Woo-hoo, yes so next week on the show on episode 99, we’re going to talk about how to increase sales on slow-moving inventory. How annoying is slow speech? I mean, that’s annoying. Slow-moving inventory is even more annoying.

[0:15:05.4] REBECCA: Don’t worry, you will not have to speed up the podcast player in order for it to sound normal. We will talk in a normal pace next week, not last week. Well, we did last week too.

[0:15:13.8] STEPHEN: Yes, we did. Yeah and I talk too fast anyway but yeah, next week on the show, if you have slow-moving inventory and you’re like, “What can we do to boost the sales of this stuff that’s just not moving?” we’ll give you some ideas in next week’s episode of The Full-Time FBA Show. See you then.

[OUTRO]

[0:15:30.0] ANNOUNCER: That is all for this episode of The Full-Time FBA Show. So head over to fulltimefba.com/podcast, where you will find the show notes and links from this episode. While you’re there, subscribe to our newsletter where you’ll get several free downloads of our popular and helpful Amazon FBA resources. Now, take action on what you have learned today so you can find success at turning part-time hours into a full-time income with Amazon FBA.

[END]