Average Amazon Seller Makes Minimum Wage – WAKE UP!

Average Amazon Seller Makes Minimum Wage – WAKE UP!

February 16, 2020 35 By Luis Garrison


So recently this thing has been
circulating that “the average Amazon seller makes minimum wage” so that’s what
we’re gonna talk about in this video first off if I sound a little bit weird
it’s because since I received this news I was bedridden for a few days I just
just couldn’t believe it so just excuse me if I haven’t fully recovered from
this illness of hearing this news so first let’s understand where does this
data even come from I mean this doesn’t come from the IRS this doesn’t come from
Amazon this doesn’t come from every seller on the planet you know getting
together and determining this so this came from some data that market pulse
put together they didn’t put together the whole thing but they do tally up the
overall revenue by sellers and that’s going to be important in just a second
so this site and I’ll link it in the description as well as I’m probably
popping it up on the screen right now this is showing how many total sellers
how many sellers over a hundred thousand revenue per year how many sellers over a
million dollars per year and it’s giving these totals and then what happened from
there is people started to piece together well what is the average profit
margin of an Amazon seller and you see where this is going basically to
determine how many total sellers there are what’s the average profit margin
what’s the average amount I guess then an Amazon seller may be selling and
therefore the average Amazon seller makes less than minimum wage so let’s
all just hang up our amazon hats and get a job at McDonald’s now this might not
be the greatest debunking of all time I don’t have weeks to sift through every
court ordered document of all time or whatever but I do find quite a few
things wrong with this and before I get into those I also want to say that a lot
can go wrong with Amazon you can lose money on Amazon you can make a lot of
money on Amazon you might break even on Amazon you might make minimum wage on
Amazon you might make a lot more minimum wage on Amazon it’s all possible
it’s all a spectrum and it’s all happening first problem with this really
comes down to perspective because a lot of posts that I saw in Facebook groups
where you know people get negative people get fearful this is nothing new
by the way this is like basically every day it’s the end of the world
Amazon’s exploding you know you’ve heard me say this for years now those of you
that have been on the channel for a while and I’m just tired of a lot of it
I just think there’s so much like why all this negativity all the time it’s
just like just like move on if you don’t want to do it okay but what I mean is
people were citing this statistic as being horrendously negative and I just
think it’s a matter of perspective and the stat is that there are 206 thousand
sellers doing a hundred thousand dollars per year or more and people were saying
there’s only two hundred and six thousand sellers doing a hundred
thousand dollars or more and I was just like that’s kind of a lot I mean how
many people do you know that are doing Amazon seriously and do you not think
you could be one of these two hundred and six thousand considering you
probably don’t even know anyone in person that is giving this a real try so
that one just struck me as funny almost because it’s just this way of viewing
the world and like spinning it it’s like well what do you what did you expect
that number to be 500 million sellers doing a million dollars a year or more I
mean like what did people want to hear for this to be good news for Amazon like
how high would the numbers have had to have been for people to be like oh wow
like okay now yeah there’s clearly a lot of room there the next thing is look not
all sellers are sellers I would argue most by a longshot of sellers on Amazon
are not doing the stuff we are talking about here at all and what I mean by
that is about eight years ago when I was in Community College every
semester I would buy new textbooks right and I would buy used textbooks and I
would buy them on Amazon or Ebay and at the end of the semester I would
sell them for about the same price used on Amazon and I did this for several
years and this was not a business not a nothing but I was an active Amazon
seller right how much money was thinking not much so market pulse says there are
about 8 million total sellers and roughly 3 million active sellers now
thankfully those that were doing these calculations were only considering the
active so I can’t fault them there it’s like they were saying out of all 8
million it was using the lower figure at the least but the figure that we don’t
have the figure that I would love to see is of those 3 million active sellers
what are the different what is the breakdown of the business model that
these people are doing how many of them are just selling some random crap that
they have around the house how many of them are I don’t know thrifting selling
old DVDs how many of them are doing wholesale how many of them are doing
retail arbitrage online arbitrage versus how many of them are creating their own
products building their own brands which is what private label and all this brand
building stuff is all about which is what everybody was taking this data to
mean that it’s dead when the overall seller marketplace is only a that only
makes up a fraction of it so clearly I don’t think it’s fair to call all Amazon
sellers all active sellers the same thing you know people are doing
different business models people are giving this different levels of actual
commitment probably a lot of those active sellers are not considering this
a business for themselves whatsoever it’s just they’re selling a few things
you know it’s just a it’s not a business and that’s not a way of saying that out
of you know 3 million people that tried Amazon FBA private label only X number
succeed and this next one just really really shows the flaws because it’s
almost like they understand the last point that I just made yet
continue to badger the other point and this is because it seems like in the
data that I saw going around the profit margin used was set at 15% so for
example for hitting this hundred thousand dollars in sales which is
already so immensely incredibly rare and it’s never gonna happen to you so you
know you’re never gonna have a hundred thousand dollars in sales that if you do
that if you hit up hundred thousand dollars in sales you’re only going to be
making fifteen thousand dollars in profit which do the math is not a lot
now here’s what I mean when I say it’s almost as if that point relied on
understanding the point that I made just a minute before that’s because there are
different profit margins for each business model within Amazon if you are
doing a high-volume wholesale business maybe it is only 15 percent maybe it’s
five or ten percent but then if you look at private label having your own brand
20 30 40 50 percent I’ve seen that range even at the end of the day 20 to 30 is
very very typical especially at the higher levels when you start getting a
lot of other expenses going on and again I’ve seen them go higher than that 30 40
50 % even at the end of the day after everything and I’m not saying you will
hit 50 percent or 40 percent or even 30 percent at the end of the day but the
point is is it’s not necessarily 15 percent across-the-board its 0% for some
people and it’s a lot for other people and it there are averages within that
average from the different business models there’s the average of wholesale
there’s the average of private label there’s the average of dude selling
stuff out of his garage there’s the average of me selling textbooks in 2011
and another problem with all of this is that it’s looking at this through a
probabilistic statistical way like as if you signing up to create an Amazon
seller account just puts your name into a raffle of what where you’re gonna hit
in terms of revenue and when I say that you’re probably thinking that sounds
freaking insane and that’s because it is freakin insane because
that’s just not the way that the world operates you know your potential
outcomes are determined by what your inputs are so relating back to what I
said everyone is putting in different inputs to this some people are hiring
teams and putting millions of dollars of capital into this business and making it
you know a real crazy high high level thing other people are 16 years old and
just selling some random games or whatever so acting like your chances of
making more than minimum wage are this or this or this or this or whatever is
just crazy and you might hear oh it’s I don’t know 1% I don’t even know what it
said 1% chance you’ll make more than a minimum wage but that’s 99% crap data
pretty much because it’s you don’t even know what those people are putting in or
if they’re what type of business they’re trying to build how much effort they’re
putting in any of these things and here’s where anyone saying anyone that
actually wants to be an entrepreneur is just going to rip their eyeballs out and
eat them themselves and this is just the complete lack of understanding of upside
and putting in risk risk of loss for upside that is the difference of a job
versus starting a business so if you want absolute guaranteed minimum wage go
get a job making minimum wage businesses can lose you money and it seems like
this mentality going around right now with this average Amazon seller whatever
it’s just it’s just fear and again it’s people that just want an absolute
guarantee and that is just not business like what are you what are people
looking for here it’s crazy like oh yeah you could lose money with that it’s like
yeah you could cuz you’re starting a business that could also scale it could
be something that eventually has teams of employees something that I don’t know
sells product internationally I mean you’re talking about starting a business
oh yeah but there’s risks yeah and your grandpa started a business by putting
down a five taking out a loan that was like more
money than he made in his life after being on a boat across an ocean for like
40 days just to have that chance like that’s risk and did all that probably
like with children while you’re just like 18 years old being like oh I can’t
I can’t make it take a risk like that’s crazy like isn’t that the whole point of
business isn’t that the whole reason people are even looking at an
opportunity like Amazon or any of these opportunities by the way the whole point
is that there’s upside there’s no upside in minimum wage in mostly any job yeah
sure people can do great going jobs I’m not like here to crap on jobs I’m not
completely anti job but if you want to be able to scale and do things on your
own you’re going to have to take risks and do things on your own things that
are not necessarily guaranteed to provide you this exact income at these
exact times at these exact intervals because that’s having a job and the
chances of becoming a McDonald’s employee who goes on to make a million
dollars a year is literally zero where the chances of somebody who starts on
Amazon may make nothing or they might make a lot of money and that’s the
difference in the risk reward profile of a minimum wage job verse starting a
business like Amazon FBA and look I know this was a bit of a funny video but the
truth here is the people that are on the opposing side it’s not for them anyways
I’m not scaring anybody valuable away here you know like if this is how people
are thinking they’re they’re not ready they’re not doing it they’re just like
oh yeah that’s wrong with this so I’m just yeah I’m much better off with my
crappy you know minimum wage it’s like okay like whatever why are you even
having this conversation doesn’t make sense then yeah I’m not actually like
you know worked up about this I just think it’s funny I just think it’s an
odd perspective that people even have and you know I’ve been saying it on my
channel for years there are definitely downside to this
business model too there’s a lot of upsides like I got into but there’s a
lot of potential downsides too and I think these problems come up only
because there are people out there that only talked about the positives only
talk about the crazy successes so then you hear the complete opposite side of
the spectrum and then what I’m trying to do here is be like no no like let’s just
let’s just come back to reality that’s what I’ve been doing in my videos for
quite a while is I just want to give a realistic look on these things because I
don’t think people should be tricked into starting a business I think they
should know exactly what they’re getting into and please do smash the like button
and subscribe to this channel help the YouTube algorithm put this video in
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because you probably haven’t yet already leave comments on this video you can
check out in the description I do have a free training for Amazon FBA you can
check that out and yeah I hope you like this video and see you soon