Why e-commerce and Amazon Private Label business are promising

In the next 5 years, online purchases will account for 63% of the total number of transactions (analysts’ forecasts). This is driven by global digitalisation.

The mentality of customers has also undergone significant changes. While the younger generation has long appreciated and actively uses the benefits of online, all the significant events of 2019-2021 have made people aged 50+ fall in love with the internet. As a result, the e-commerce market is not limited in its target audience and can actually include anyone in the world who has a phone and access to the Internet.

And now for more serious figures: by the end of 2021, e-commerce will reach USD 3.33 trillion; by 2026, it will “jump” over USD 5.7 trillion.

* information is based on the forecasts of Edge by Ascential

Nowadays, the first step in shopping starts with a mobile phone, tablet or laptop, even if the final transaction is done offline.

Therefore, the most successful businesses of the future will be those that adopt a digital mindset to maximise growth opportunities in the e-commerce niche.

Amazon’s role in the e-commerce segment

According to the same Edge by Ascential website, by 2025, Amazon and Walmart sales will reach approximately 50% of total US retail sales (in terms of gross merchandise value (GMV)).

As for the current situation, Amazon’s sales in 2021 amounted to $469.8 billion. For comparison, Apple has $365.817 billion.

These statistics, as well as global practice, make you at least think about the transition to e-commerce, and at most – actively develop your business in this direction, accepting that the “digital future” has already arrived.

Will it be profitable to do business on the Amazon Private Label model in 2022-2023?

If we look at the e-commerce niche in general, it is definitely yes.

But let’s assume that you have a financial asset that you want to invest for growth.

Would it be better to invest it in a passive business rather than doing business on Amazon?

Let’s model different options using several important indicators.

You can start a business using the Amazon Private Label model with a capital of $3,000-5,000. It will cost you about the same to open a small coffee shop in the capital.

Start-up investments

Of course, you can invest less by reselling or retailing goods from China in the domestic market. However, the prospects of such investments will not allow you to scale into a million-dollar company.

Amazon customers are spoilt for choice, but they know how to appreciate a unique product. Therefore, crowdfunding is a great way to start a production without start-up capital (you only need a unique idea, and the production of the product can be covered by investment fees).

Possible risks

Any business is a risk. Doing business on the Amazon Private Label model is no exception. However, having made such a decision, you are very flexible in the consequences.

If the product did not meet the expected demand, you can easily reclassify your store. If a supplier has produced a low-quality batch, you can easily change suppliers with little or no consequences.

You also have full control over the level of risk, which is not possible when investing, for example, in securities.

Running costs and profitability

An Amazon Private Label store involves a constant turnover of funds: purchasing products, packaging, advertising, paying commissions, etc.

Against this background, more passive business activities may seem more promising. For example, investments in real estate. Yes, monthly operating costs will be lower, but one-off expenses will be much higher (replacement of communications, purchase of furniture, etc.).

When investing in real estate, you have to take into account the effects of rapid inflation. By choosing a good product, you can develop your brand, expand your product range and, as a result, build a business that will become your main source of income.

Reaching the target audience

As a sales outlet, Amazon is attractive for many reasons, but the main one is the audience of 197,000,000 visitors per month. This is more than any other sales method or channel can provide.

Prospects and profitability

Selling on Amazon is a great way to make money in the long run.

Even small businesses that work on the marketplace can sell for as much as $100,000.

Conclusions

There are no perfect business models, just as there can be no single right decision on where to invest. There are too many variables and personal factors.

However, the prospects and profitability of the e-commerce niche are undeniable. As well as the fact that by building an Amazon Private Label business with our help, you can achieve the desired results with minimal investment and risks.