Amazon FBA (Fulfillment by Amazon) lets you sell products on the world’s largest e-commerce platform without packing a single box yourself. You send your inventory to Amazon’s warehouses, and they handle storage, shipping, returns, and customer service. Here is how to start.
What Amazon FBA actually means
FBA stands for Fulfillment by Amazon. You source or manufacture products, ship them in bulk to an Amazon fulfillment center, and create product listings. When a customer orders, Amazon picks, packs, and ships the item under Prime two-day delivery. Your job is sourcing, listing, and managing your account. Amazon’s job is everything else. In exchange, Amazon charges referral fees (typically 8–15% of the sale price) plus FBA storage and fulfillment fees.
The three main FBA business models
- Retail and online arbitrage. Buy discounted products from retail stores or websites and resell them on Amazon at a profit. Low upfront cost, fast to start. Use apps like Seller Amp or Keepa to check profitability before you buy. This is the most common starting point for beginners.
- Wholesale. Buy brand-name products directly from authorized distributors at wholesale prices and sell them on existing Amazon listings. Requires more upfront capital but more predictable margins. Good for building volume.
- Private label. Source a generic product (usually from Alibaba), brand it with your own label, and create a new listing. Highest potential margins and long-term value, but requires 3–6 months and $2,000–$10,000 or more to launch properly. Most successful FBA sellers eventually move here.
What you need to get started
- Amazon Seller account. Go to sell.amazon.com. Choose the Individual plan ($0/month, $0.99 per sale) to start, or the Professional plan ($39.99/month) once you’re selling more than 40 units per month.
- Starting capital. Budget at least $500–$1,000 for your first inventory purchase. Retail arbitrage lets you start smaller; private label requires significantly more.
- A sourcing strategy. For retail arbitrage, clearance sections at Walmart, Target, Home Depot, and TJ Maxx are your starting point. Use the Amazon Seller app to scan barcodes and see current Amazon prices and profit margins instantly.
- Keepa or Jungle Scout. Keepa (free tier available) tracks price history on Amazon listings so you can see whether a product’s current price is typical or inflated. Jungle Scout helps with product research for private label.
How FBA fees work
Every FBA sale has two main costs beyond what you paid for the product: the referral fee and the FBA fulfillment fee. Referral fees are a percentage of the sale price — usually 8% for electronics, 15% for most categories. Fulfillment fees are based on the item’s size and weight, typically $3.00–$7.00 for small standard items. Use Amazon’s FBA Revenue Calculator (free tool on Seller Central) to calculate exact fees before committing to any product.
The biggest mistakes beginners make
- Buying without checking fees first. An item that sells for $20 on Amazon can easily have $8 in fees, meaning you need to buy it for under $6 to make any profit. Always calculate before you buy, not after.
- Ignoring competition. If 15 other sellers are already on a listing with identical pricing, you’ll struggle to get the Buy Box. Look for listings with fewer sellers and stable pricing.
- Underestimating prep requirements. Amazon has strict labeling and packaging requirements. Items that arrive at the fulfillment center incorrectly prepped get rejected or charged prep fees.
- Seasonal inventory timing. Buying too much of a seasonal product and getting stranded with long-term storage fees in January is one of the most common early mistakes.
Realistic income expectations
Most retail arbitrage sellers make $500–$2,000/month in profit within their first six months if they’re consistent. Wholesale sellers with more capital often hit $2,000–$5,000/month after 12 months. Private label sellers who build a successful brand can eventually generate $10,000+/month, but that typically takes 1–2 years of development. FBA is a real business, not a passive income scheme — it rewards people who treat it like one.