Is Amazon FBA oversaturated in 2023?

Written By Ecommerce Beast

Every article is researched and written by e-commerce experts and then peer-reviewed by our team of editors.

In recent years, Amazon’s FBA (Fulfillment by Amazon) program has gained immense popularity among online sellers. However, there is a growing concern that the platform has become oversaturated, making it difficult for new sellers to enter the market. While it’s true that competition has increased, there are still plenty of opportunities for aspiring Amazon sellers.

So the short answer is No. Even though competition has significantly increased, there is still a lot of untapped potential in the Amazon FBA model in 2023.

According to a recent Marketplace Pulse survey, there are over 6 million active Amazon sellers worldwide, with more than 1 million of them using FBA. The number of active FBA sellers has grown significantly over the years, and it’s reasonable to assume that the platform is becoming increasingly crowded. However, despite this increase, Amazon’s overall share of the retail market is still relatively small, representing only 10.4% of total US retail sales in 2023.

Reasons why Amazon FBA has become increasingly competitive & somewhat saturated (at least in some niches):

  1. Increasing number of large-scale sellers: The number of sellers on Amazon has grown significantly in recent years, leading to increased competition in many product categories. I personally believe that one reason for this is because of the recent explosion of new sellers from China, India, and Pakistan. Governments & the private sector in these countries has opened training centers at scale that teach thousands of students the art of selling product on Amazon US & UK. Back in the day, sellers from developing countries often struggled with understanding the cultural & branding preferences of western consumers, but now that gap has dwindled. There are multiple billion-dollar sellers on the Amazon US platform that completely operate from China, with no offices in the US.
  2. Easy access to selling tools: The availability of easy-to-use selling tools and resources has made it easier for new sellers to start selling on Amazon, resulting in increased competition. With a click of a few buttons, you’ll know the sale of your competitor’s product in the last month, which makes it extremely easy for sellers in countries such as China & Bangladesh to reverse engineer successful Amazon brands, leveraging their supply chain and production capabilities.
  3. Low barriers to entry: Amazon has a relatively low barrier to entry compared to traditional brick-and-mortar retail, making it easier for sellers to start selling on the platform.
  4. Amazon’s algorithm: Amazon’s algorithm favors products that have high sales velocity and positive reviews, making it difficult for new sellers to gain traction on the platform. Additionally, the current industry leaders outprice newer players with less capital, making it a saturated market in some product categories.
  5. Amazon’s fees: Amazon charges fees for its FBA service, which can eat into sellers’ profits and make it difficult to compete on price. Back in the day, it was easy to afford the high platform costs, because the gross margins were higher. Due to increased competition, average gross margins on amazon are now in the 30-35% range, which makes it difficult for sellers without economies of scale.
  6. Increased advertising competition: As more sellers have entered the platform, advertising competition has increased, driving up the cost of advertising and making it more difficult for sellers to get their products seen by customers. The PPC bids in 2023 are 2x of what they were in 2018.


So, is it too late to start amazon fba 2023? (does amazon fba still work)

In short – No! Amazon FBA is still a very lucrative and viable business model in the US, with many untapped segments and niches that present significant growth opportunities for sellers. And yes, you can still make an extremely profitable Amazon FBA business in 2023. 

While some categories like electronics, clothing, and home goods are highly competitive, there are still many underserved markets that have not been fully explored by sellers. For example, categories like pet supplies, sports and outdoor gear, and health and wellness products are still relatively untapped, with plenty of room for new sellers to enter and establish a strong presence.

Moreover, emerging markets like Brazil, India, and China represent huge opportunities for Amazon FBA sellers, since sellers based in the US & UK can easily sell in emerging markets from the comfort of their homes, just like Indian & Chinese sellers are selling on Amazon US/UK from their countries.

In addition, Amazon’s continued investment in emerging technologies like artificial intelligence and machine learning has created new ways for sellers to optimize their operations and better serve their customers. Furthermore, Amazon’s vast customer base and sophisticated search algorithms provide sellers with the potential to reach new customers and grow their businesses.

Untapped Product Categories on Amazon:

Many categories on Amazon are still relatively untapped from a selling point of view. Here are some examples:

  1. Sustainable and eco-friendly products: As consumers become more environmentally conscious, there is a growing demand for sustainable and eco-friendly products. From reusable shopping bags to bamboo utensils, there are many opportunities to sell products that are both environmentally friendly and practical.
  2. Personalized and custom products: Custom products are increasingly popular, from custom t-shirts and mugs to personalized jewelry and phone cases. The print-on-demand market is a great example of a niche that is still relatively untapped, with opportunities to create unique designs that appeal to specific audiences.
  3. Health and wellness products: Health and wellness products are a growing market on Amazon, with opportunities to sell everything from supplements and vitamins to fitness equipment and yoga mats. With the COVID-19 pandemic, the demand for at-home workout equipment and wellness products has increased even more.
  4. Pet supplies: Pet owners are a passionate and dedicated market, and there are many opportunities to sell pet supplies on Amazon. From specialty food and treats to pet accessories and grooming products, there is a wide range of products that pet owners are willing to buy.
  5. Beauty and personal care products: Beauty and personal care products are a popular category on Amazon, but there are still many niches that are untapped. For example, there is a growing demand for natural and organic beauty products, as well as products that are specifically designed for different skin types or ethnicities.
  6. Home and kitchen products: Home and kitchen products are a broad category on Amazon, but there are still opportunities to sell products that cater to specific niches. For example, there is a growing market for kitchen gadgets and tools that are designed for specific diets, such as keto or vegan.
  7. Plus size clothing: As mentioned earlier, plus size clothing is an untapped niche with enormous potential. With more and more consumers demanding inclusive clothing options, there is a growing demand for plus-size clothing on Amazon.
  8. Niche beauty products: While beauty and personal care products were mentioned earlier, there are still many untapped niches within the beauty category, such as men’s grooming products, ethnic hair care, and gender-neutral skincare. These niches cater to specific audiences and can be lucrative for sellers who can target them effectively. I have personally witnessed success in the men’s grooming category, and I can confidently say that there is still massive untapped potential in the niche.

These are just a few examples of untapped categories on Amazon. As with any market, the key to success is to find a niche that you are passionate about and that has significant demand from consumers. You can find a more comprehensive list of 100+ Amazon FBA Low Competition Product Niches here.

Is Amazon FBA oversaturated in 2023?
Untapped Amazon FBA categories that are not oversaturated in 2023


Making a Large Asset on Amazon in 2023:

Amazon FBA selling represents an opportunity to build a large asset and then sell it to Amazon aggregators like Thrasio and on platforms like Empire Flippers for a variety of reasons. Here are some of them:

  1. Scalability: Amazon FBA allows sellers to scale their businesses quickly and efficiently, with the potential to generate significant revenue and profits.
  2. Proven business model: Amazon FBA has a proven business model that has been successful for many sellers, making it an attractive investment opportunity for buyers.
  3. Established customer base: Amazon FBA has an established customer base, with millions of shoppers visiting the site every day, making it easier for sellers to reach a large audience.
  4. Low overhead costs: Amazon FBA has relatively low overhead costs, making it an attractive business opportunity for investors.
  5. Valuable intellectual property: Amazon FBA businesses often have valuable intellectual property, including trademarks, patents, and proprietary product designs, which can be attractive to buyers.
  6. E-commerce market growth: The e-commerce market is growing rapidly, and Amazon FBA is a significant player in this market, making it an attractive investment opportunity for buyers.
  7. Increasing interest from buyers: As the Amazon FBA market has grown, there has been increasing interest from buyers, including Amazon aggregators like Thrasio, who are actively looking to acquire successful Amazon FBA businesses.

By building a successful Amazon FBA business, sellers can create a valuable asset that can be sold to Amazon aggregators or on platforms like Empire Flippers. However, it’s important to note that building a successful Amazon FBA business takes time, effort, and expertise, and not all businesses will be attractive to buyers. But if you execute correctly, you can exit with a 40x monthly income multiple within 1 year. Thousands of sellers have done it on platforms like Empire Flippers in the past.

Amazon Product Research Tools That Can Help You Uncover Unsaturated Product Categories in 2023:

There are several product research tools available to potential Amazon sellers that can help identify unsaturated selling niches and products on Amazon. Here are some of the top product research tools (PS: I don’t earn affiliate commissions from any of these products):

  1. Jungle Scout: Jungle Scout is one of the most popular product research tools for Amazon sellers. It offers a wide range of features, including product research, keyword research, and sales analytics. Jungle Scout can help you find profitable niches and products, and provides detailed information on sales data, pricing, and competition.
  2. Helium 10: Helium 10 is another powerful product research tool that offers a suite of features, including keyword research, product research, and competitor analysis. It also includes a range of tools for optimizing listings, managing inventory, and automating pricing. I have personally been using Helium for over 5 years, and I almost exclusively depend on it for all my product research needs. Although it is a little more complex, and the learning curve is steeper than Jungle Scout, it is still the best option available for serious Amazon sellers who want all the tools under one umbrella.
  3. Viral Launch: Viral Launch offers a range of features to help you find profitable niches and products on Amazon. It includes tools for product research, keyword research, and competitor analysis. Viral Launch also offers a product launch service that can help you drive sales and increase your product’s visibility on Amazon.
  4. AMZScout: AMZScout is a suite of tools designed to help Amazon sellers find profitable niches and products. It includes features for product research, keyword research, and sales analytics. AMZScout also includes a range of tools for managing inventory, tracking sales, and automating pricing.
  5. Unicorn Smasher: Unicorn Smasher is a free product research tool that provides detailed data on sales, revenue, and competition. It includes a range of features for identifying profitable niches and products, including keyword research and product tracking.
  6. Keepa: Keepa is a browser extension that provides detailed data on pricing, sales history, and trends for Amazon products. It can help you identify profitable niches and products, and provides real-time data on pricing and sales trends.
  7. Sellics: Sellics is a suite of tools that offers features for product research, keyword research, and sales analytics. It also includes tools for managing reviews, optimizing listings, and automating pricing.

In conclusion, while competition in some categories is fierce, Amazon FBA in the US still presents significant growth opportunities for sellers who are willing to explore underserved markets and emerging trends. With the support of Amazon’s advanced technologies and vast customer base, sellers can establish a strong brand and reputation in their niche and achieve significant success in the Amazon FBA marketplace.

JS: Product Hunting