The Amazon FBA Gold Rush

Ever since Amazon opened up its marketplace to third party sellers back in 2011, there has been wave after wave of new sellers entering the market. This stream of sellers has become an explosion in 2016. Everyone is trying to get on board!

The expansion has not only hit the mainstream, but it has also gone global. The biggest threat to your average seller being the Chinese entering this market en masse. Many manufacturers are also selling directly on Amazon now and they have an advantage with the cost of production that no one can really match.

This has become a global market place where fortunes will be made, but it is not as rosy as it may seem at first glance. It is very easy to get caught up in all the hype. There are no shortage of gurus selling training courses that promise riches, and flaunt massive six and seven figure sales numbers. Many new entrants go into the business with stars in their eyes which can blind them to the risks involved.

As more and more sellers enter the market the underlying question that everyone will have to ask themselves is what makes you different? Why would a customer choose your item over the thousands of other items for sale in the same category? If you do not have a clear answer to this question then you are doomed to fail.

There are the cliché product examples that have featured in many training videos such as the Silicon BBQ Gloves, or the famed Garlic Press from the Amazing Seller Podcast. As cliché as they have become people do still actually enter the market to sell these damn things. If you follow the crowd like this you are setting yourself up for failure.

As with any business there will always be naysayers that will never take any action, but will point out every reason why someone will fail in this business. As the competition becomes overwhelming you do not have to look far for reasons why people will fail. New sellers always ask the question, is the market too saturated? The answer in many categories is yes, but that doesn’t mean you can’t find a gap in the market, exploit it, and make a fortune doing it. What you cannot do is sell a generic item, with no differentiation and expect to be able to compete on anything other than price. The race to the bottom will ensue and no one will make a cent, regardless of how impressive their sales numbers are.

Many of the training courses around were developed back when Amazon was an easier game. If you go back two years or more you could slap your brand on pretty much anything that sells, do a few giveaways to get to the top of the search rankings, and you would rocket your way to high monthly sales. That window of opportunity is now closed and a higher level of sophistication is required to succeed. The majority of sellers who have joined the gold rush are there looking for the quick buck. If you are looking to build a long term business and approach it as such then you will beat the masses. They will drop out when they find out that its not so easy, and they will lose money when they have inventory they cannot sell. Don’t be that guy. Be different. Build a real business, with real differentiation, and a real brand message.

The big winner in all of this – Amazon! It is an amazing platform and they are really setting themselves up for world domination. But the opportunity is there for you to get your piece of the action if you are good enough.

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