How To Start Amazon FBA Business PDF? | 5 Popular Business Models To Choose From |IPPEI

How to start Amazon FBA business:

Choose an Amazon FBA business model
Find products to sell on Amazon with product research
Identify suppliers to source products
Sign up for an Amazon seller account
Add your products to the Amazon Marketplace
Enroll products in Amazon FBA
Send your product inventory to the Amazon fulfillment center
Use Amazon advertising to market your products to Amazon customers
Manage your Amazon FBA inventory
Scale your business with new products

Starting an Amazon FBA business allows you to earn money online by selling products to Amazon’s 310+ million active customers globally while leveraging Amazon’s advanced logistics systems to fulfill your sales. You should choose Amazon FBA for your Ecommerce business if you want to outsource tasks like inventory storage, shipping, customer service, and processing returns to Amazon and position yourself as an attractive option for the 230 million Amazon Prime members who expect rapid shipping in 2-days or less.

Third-party Amazon sellers account for the majority 61% of all Amazon Marketplace sales, according to data from Statista. In fact, Amazon third-party seller sales have consistently risen over the years, increasing approximately 10.9% in the last three years alone. Considering that Amazon’s revenue continues to increase steadily each year as more customers choose online shopping, it’s clear there’s still a massive opportunity to make money online with Amazon FBA.

1. Choose an Amazon FBA business model

There are a few different Amazon FBA business models you can choose from when starting your business, including:

Private label
Wholesale
Retail arbitrage
Online arbitrage
Amazon Handmade

Private label

Amazon private label entails branding the product of a supplier or manufacturer as your own product. Private label is the most popular Amazon business model, with 54% of Amazon sellers employing the model, according to data from the 2024 State of the Amazon Seller Report by Jungle Scout. The private label business model requires that you source products in bulk and upgrade them with custom branding. You can also request minor product modifications to improve the product as well. Private label sellers on Amazon need to prepare additional capital to invest in Amazon advertising because new private label products have no existing brand loyalty to attract customers like products from established brands do. As such, private label is the most expensive Amazon FBA business model, typically requiring around $10,000-$20,000 to get started.

Wholesale

Amazon wholesale is selling branded products that are sourced directly from authorized suppliers and distributors. The wholesale model is tied as the 2nd most popular business model on Amazon, with 25% of Amazon sellers employing it. Amazon wholesale requires an Amazon business owner to contact distributors and open wholesale accounts to access branded products at wholesale prices. A wholesale Amazon seller then lists their product inventory on Amazon and shares a product listing with all the other sellers of the same branded product. $2,500-$7,500 is a realistic startup cost for starting an Amazon FBA wholesale business.

Retail arbitrage

Amazon retail arbitrage is buying products from local retailers like Home Depot, Target, and Walmart that are selling at a discount compared to the market price on the Amazon Marketplace and then reselling them on Amazon for a profit. Retail arbitrage is tied as the 2nd most popular Amazon business model with wholesale, with 25% of Amazon sellers using the model. Retail arbitrage requires the lowest startup capital of all the major Amazon FBA business models. You can get started with just $100-$500 because your major expenses are just the products you buy from the store to sell on Amazon and shipping those products to Amazon.

Online arbitrage

Online arbitrage is the same concept as retail arbitrage, except instead of buying products in-person from the store, you buy the products from online retailers. For example, buying products from Target.com. You can ship these products to your house to repackage them manually, or ship them to a third-party logistics (3PL) service like Red Stag Fulfillment who can repackage the items for you according to Amazon FBA rules and then ship them to the Amazon warehouse for storage on your behalf. 21% of Amazon sellers use this business model and you can start for just $100-$500.

Amazon Handmade

Amazon Handmade is selling artisan products on Amazon, such as handmade soaps, jewelry, or candles. Only 9% of Amazon sellers do Amazon Handmade. Although the Amazon Handmade program has strict requirements to qualify, it comes with some additional benefits for Amazon sellers, like Amazon waiving the $39.99 monthly professional seller account fee. Depending on how much it costs to produce your handmade products, you can get started with Amazon Handmade for between $100-$500+.

2. Find products to sell on Amazon with product research

Amazon product research is the process of looking for the right variables that indicate selling a product on Amazon might be a good opportunity. Although product research can be a time-consuming process, it’s an essential step if you want to find products to sell on Amazon that will make you money.

Product research looks different for each Amazon FBA business model. For example, private label product research typically entails looking for gaps in a market or areas of potential product improvement, while retail arbitrage just involves verifying that your Amazon seller account is eligible to sell a given product and that you can earn a sufficient profit by selling that product on Amazon. To perform product research, successful Amazon sellers typically employ a range of product research tools like Jungle Scout, Helium 10, Amazon Seller Assistant App, or Viral Launch.

Amazon FBA product research tutorial steps for private label

Considering that private label is the most popular Amazon business model, here are the Amazon FBA product research tutorial steps for finding private label opportunities.

Use an Amazon product research tool like Viral Launch to discover products with high potential
Analyze the products on the Amazon Marketplace
Verify market stability for the product and a history of successful sales
Look for areas of improvement
Perform competitor research to see if there are any high value traits common among best-selling products
Confirm your ability to sell the product
Calculate Amazon fees and shipping costs to verify profitability potential

What are the best types of products for a new Amazon FBA seller?

Some of the best types of products for a new Amazon FBA seller are those that:

Are small and lightweight
Have no moving parts
Don’t contain multiple parts

What are products to avoid as a new Amazon seller?

Some products to avoid as a new Amazon seller are:

Topical products
Ingestible products
Seasonal products
Fragile products
Electronic products

What are some tips to differentiate your Amazon FBA product from the competition?

Some tips to differentiate your Amazon FBA product from the competition are:

Find an unsolved problem
Choose a non-typical country for product sourcing
Create custom packaging for your product
Bundle with relevant products to offer a better value to potential buyers

3. Identify suppliers to source products

Once you have a product idea in mind for your FBA business, you need to research suppliers that you can obtain that product from. Fortunately, there are a range of supplier options available. There are also many online supplier directories where you can quickly research potential supplier options, including Alibaba, AliExpress, Worldwide Brands, Wholesale Central, and Global Sources.

The supplier options for Amazon FBA product sourcing are:

Manufacturers - Businesses that actually produce the products, they are the original source of the product.
Distributors - Businesses that have special relationships with brands to source their products from manufacturers and resell them in bulk to retail businesses.
Wholesale suppliers - Businesses that source products in bulk from manufacturers and distributors to resell in smaller bulk quantities for a profit.
Closeout companies - Businesses that purchase leftover stock at a discounted rate and resell it for a profit.
Retail stores - Businesses that buy products in bulk for a discount and resell them to consumers for a profit.

You can sign up for an Amazon seller account through Amazon Seller Central. It’s best to do this step once you’ve already found a product and supplier because the professional Amazon seller account costs $39.99/month. Therefore, you want to start selling as quickly as possible once you become an Amazon seller to avoid wasting money. To open a seller account in Seller Central:

Go to https://sell.amazon.com/
Click “Learn more”
Click “Sign up”
Enter your email address and “Create a New Account”
Fill out your business details
Fill out your personal details
Enter your billing information
Add information about your products
Verify your identity to complete the process

5. Add your products to the Amazon Marketplace

Once you get approved to sell on Amazon, you can add your products for sale on the Amazon Marketplace. If you’re using the private label model, you’ll need to create a brand new product listing. If you’re doing wholesale or an arbitrage model, your product likely already has a product listing on the Amazon Marketplace and so you will just need to add your inventory to the current product listing.

Amazon only allows one product listing for each unique product, so you can’t create a new product listing if one is already available. Amazon does this to ensure space on its platform is used efficiently as there are already over 350 million products on Amazon, according to RepricerExpress.

How to optimize an Amazon product listing?

Perform keyword research
Optimize the product title with the most important keywords
Use high resolution product images and videos
Write bullets that attract customers with benefits and features
Optimize the product description with more important keywords
Optimize the backend of the Amazon listing with leftover keywords

These are the main steps for how to optimize an Amazon product listing .

6. Enroll products in Amazon FBA

To leverage the Amazon FBA program, you need to specify that you want your product fulfilled by Amazon when adding your inventory. This notifies Amazon that they can expect to receive incoming product inventory from you. Amazon has 110 active fulfillment centers in the US and 185 total globally. Amazon will tell you which Amazon fulfillment center you should send your products to when you enroll your products in the FBA program. Amazon chooses the fulfillment center that makes the most sense logistically for your products, sometimes splitting up products into multiple fulfillment centers.

How do you create your first FBA shipment?

You create your first FBA shipment by:

Accessing Amazon Seller Central and clicking “Manage inventory”
Choosing your product from your inventory list and clicking “Send/Replenish inventory” from the menu
Entering the address you’re shipping the products to Amazon from
Adding your packing details, selecting “Create new packing template” if you’re sending multiple items, and filling out details like dimensions, weights, and who is responsible for preparing and labeling your items
Downloading your SKU labels and attaching them to your inventory, or having your supplier do it for you
Inputting the number of boxes you’re sending to Amazon
Confirming the shipping plan by adding your shipping date and shipping mode
Selecting your shipping carrier and printing your shipping labels to stick on your boxes of inventory
Clicking “Accept charges and confirm shipping”

7. Send your product inventory to the Amazon fulfillment center

After notifying Amazon of the inventory you’re sending them, you need to ensure your products are prepared according to Amazon FBA product packaging requirements before sending in the inventory. If your products are not prepared correctly, Amazon could charge you additional money to update the packaging themselves in the Amazon warehouse or reject your shipment altogether. Be aware that different product categories have different packaging requirements, so verify how each of your products should be packaged.

What are Amazon product packaging requirements?

The Amazon product packaging requirements are:

Must display UPC barcode on exterior of product packaging
Country of origin is clearly visible on product packaging
Use Amazon approved packaging material only
No loose products
Any product inserts included cannot interfere with honest Amazon product reviews

8. Use Amazon advertising to market your products to Amazon customers

If you’re selling your own private label product like most Amazon FBA sellers do, then you will need to do Amazon advertising to start getting sales. Amazon advertising, called Amazon PPC or Sponsored Ads, is Amazon’s on platform advertising network where Amazon sellers can bid on the keywords they want their ads to show up for and pay when a potential customer clicks into the ad. Amazon ads can be quite effective because they appear directly on Amazon, where purchase intent is high. In fact, the average conversion rate for Amazon ads is 9.58% according to Ad Badger, while the average conversion rate for Google Ads is just 2.85%, based on data from Databox.

The reason you need to run Amazon ads if you have a private label product is because your sales velocity plays a major role where the Amazon A10 algorithm ranks your product in Amazon search results. A new product has no history of sales in the beginning, so there will be low visibility on the Amazon platform for organic search. By running Amazon ads like Sponsored Brand or Sponsored Product, you can place your product at the top of the Amazon search results page. Over time, as you get more sales and reviews, your product may start showing up on the first page of Amazon for your target keyword and you can rely less on Amazon advertising to get sales.

9. Manage your Amazon FBA inventory

Managing your inventory well ensures you maximize your revenue potential and limit Amazon FBA fees. If you run out of FBA inventory, your product listing will automatically become deactivated. You want to avoid this happening because it will negatively impact the sales velocity of your product, which negatively affects your product’s ranking on the Amazon marketplace.

Storing too many products at the Amazon warehouse also comes with consequences. Amazon charges FBA storage fees for keeping your products in the Amazon warehouse. These fees range from $0.56 to $2.43 per cubic foot, depending on the season, size, and product type, and are charged based on the average number of units stored per month. However, FBA products that exceed 25 weeks in the Amazon warehouse receive an additional storage utilization surcharge ranging from $0.69 to $0.94 per cubic foot on top of the standard FBA storage fee. Therefore, you should keep track of poor selling items and potentially create a removal order to avoid collecting unnecessarily high storage fees from Amazon.

What are Amazon’s recommendations for managing FBA inventory?

Check your inventory on the Amazon FBA inventory management page frequently
Set reminders for restocking on the Amazon FBA inventory management page
Maintain approximately 2 months of inventory at the fulfillment center at any given time
Send products you know will sell

10. Scale your business with new products

To scale your Amazon FBA business, reinvest your profits into new product lines. Adding more products to your Amazon store allows you to achieve greater revenue potential and increases your chance of long-term success. Selling between 5 - 10 different products allows you to diversify your business and limits the risk that you’ll lose all your revenue because of issues like increasing competition in your product’s niche, or an inability to continue sourcing or selling a product.

For example, Amazon seller Janson Smith lost his Amazon revenue when his product was removed by Amazon due to a patent infringement complaint. He had overlooked this aspect during the product research process and was left with a large quantity of products he couldn’t sell on Amazon as a result. When selling on Amazon, there are likely to be setbacks at some point along the way, but having multiple products can protect your business from total failure.

Download Amazon FBA PDF .

What is the difference between Amazon FBA vs FBM?

The difference between Amazon FBA vs FBM is who fulfills the order to the customer. With Amazon FBA, Amazon handles all order fulfillment aspects on behalf of an Amazon seller, like inventory storage, picking and packing items, shipping, customer service, and returns processing. On the other hand, the Amazon seller is responsible for all fulfillment aspects when choosing FBM.

What is Amazon FBA meaning?

Amazon FBA meaning is fulfilled by Amazon.

What is Amazon FBM meaning?

Amazon FBM meaning is fulfilled by merchant (FBA seller).

How much are Amazon FBA startup costs?

Amazon FBA startup costs are between $100 and $20,000+, depending on factors like the FBA business model you choose, your specific product, and where you source from. Some of the most common Amazon FBA startup costs include:

Amazon professional seller account: $39.99/month
Product research tool: $49.00 - $129.00/month
Product inventory: $100 - $3,000+/order
International shipping: $1,000 - $3,000+/order
Amazon ads: $300 - $500+/month

Many people wonder if $500 is enough to start an Amazon FBA business. You can start Amazon FBA with $500, but you’re limited to doing retail or online arbitrage.

What are Amazon FBA pros and cons?

Pros	Cons
Ability to leverage Amazon's brand recognition	Inability to build a loyal Ecommerce customer base for your business
Low entry barrier means anyone can try it	Amazon can suspend or terminate your account without notice
Amazon handles many Ecommerce tasks for you	FBA fees gave increased over the years
Flexible working arrangement	High competition with over 9.5 million Amazon sellers

These are some of the major Amazon FBA pros and cons .

Is Amazon FBA still profitable?

Yes, Amazon FBA is still profitable . According to the latest seller profitability data from the 2024 State of the Amazon Seller report by Jungle Scout, the majority 78% of Amazon businesses are currently profitable.

Is Amazon wholesale profitable?

Yes, Amazon wholesale is profitable . Amazon wholesalers typically make between 15% to 20% profit margin per product, according to data from Jungle Scout.

Is Amazon private label profitable?

Yes, Amazon private label is profitable. Amazon private label sellers can generate profit margins between 20% to 50%, according to established Amazon seller Christopher Grant of Clear the Shelf.

How long before Amazon FBA is profitable?

It typically takes around 6 months before Amazon FBA is profitable. 38% of Amazon sellers are profitable within 6 months, while 31% achieve profitability within 2 years. How long it takes to be profitable on Amazon heavily depends on the business model being used. For example, a retail arbitrage seller can be profitable right away because they avoid high product costs and don’t need to advertise while a private label seller might not be profitable for 1 - 2 years while they invest into establishing a strong organic ranking for their product on the Amazon Marketplace.

How much money does an Amazon seller make?

An Amazon seller makes between $30 and $2,500/month typically. That’s because 50% of Amazon sellers make between $501 and $10,000 per month, and 59% of Amazon sellers earn profit margins between 6% to 25%, according to the latest 2024 data from Jungle Scout. However, how much an Amazon seller makes depends on many factors, with some making substantially more and others losing money by selling on Amazon.

Is Amazon FBA safe?

Yes, Amazon FBA is safe . Millions of Ecommerce companies sell through Amazon FBA because Amazon has established itself as a trusted Ecommerce platform globally. If you’re concerned about cybersecurity, you can enroll in two-step verification to protect your Amazon account from hackers. Amazon also offers various channels to report any suspicious activity that you notice on your account.

What are the risks of Amazon FBA?

Some risks of Amazon FBA are:

Amazon can remove your listing at their discretion
Negative reviews can hinder your sales
An Amazon FBA business can lose money

What are ways to lose money with Amazon FBA?

Ways to lose money with Amazon FBA are:

Sending too much inventory to the Amazon warehouse
Miscalculating your expected profit margin
Breaking Amazon’s rules and losing access to your seller account

Reasons Amazon FBA is a bad idea

Some reasons Amazon FBA is a bad idea include:

Influx of Chinese manufacturers selling directly on Amazon makes it hard to compete
Amazon can accidentally mismanage your product inventory
Amazon FBA fees take a major portion of your profit margin
Your Ecommerce business will likely have more refunds with Amazon FBA

Is Amazon FBA easy?

No, Amazon FBA is not easy. Although Amazon FBA can certainly make Ecommerce easier by handling the fulfillment aspects, actually being successful and making good money with Amazon FBA is challenging. In fact, 70% of Amazon FBA sellers need to have a full-time job or secondary source of income outside of selling online to supplement their Amazon FBA income, according to Jungle Scout.

What are reasons Amazon FBA is hard?

Some reasons Amazon FBA is hard are:

Product research is a time-consuming process
Many product categories are saturated already with sellers that have accumulated years of positive reviews
Product sourcing, especially international, comes with complicated logistic and legal considerations
Approximately 83% of Amazon sales go through the Featured Offer (previously called Buy Box), meaning only a handful of sellers dominate sales on a product listing

Is Amazon FBA saturated?

Amazon FBA is not saturated , there are still opportunities to make money on the platform. Although some products and categories are saturated with sellers, you can use product research tools to identify opportunities with low competition.

Is Amazon FBA still worth it?

Yes, Amazon FBA can still be worth it . It’s an opportunity to make money online that doesn’t require too much time. Half of all Amazon sellers spend 10 hours a week or less managing their business, according to data from Jungle Scout. If you’re wondering whether Amazon FBA is worth it compared to alternative shipping, Amazon FBA is estimated to be 70% cheaper than two-day shipping alternatives.

Is Amazon FBA dead?

No, Amazon FBA is not dead . Amazon’s Ecommerce sales continue to increase each year, indicating that more transactions are taking place online and Amazon FBA sellers are making more money. In fact, Amazon owns the biggest share of US Ecommerce sales by a wide margin, accounting for 37.6% of internet sales as of 2023.

What is the Amazon FBA success rate?

The Amazon FBA success rate is 78%, because that is the percentage of Amazon sellers that report operating a profitable FBA business, according to data from Jungle Scout.

What are Amazon FBA fail reasons?

Amazon FBA fail reasons include:

Setting unrealistic expectations
Not reinvesting profits back into the business
Not accounting for unforeseen hurdles, such as needing to spend more on Amazon PPC to sell products

What are some other Amazon FBA mistakes that could contribute to failure?

Amazon FBA mistakes that can contribute to failure include:

You love your own product too much that you can’t see its flaws
Putting too much faith on the teachings of “gurus”
Not using sales data to make informed business decisions

Are Amazon FBA courses worth it?

Yes, Amazon FBA courses can be worth it. If you want to get started with Amazon FBA but don’t know where to start, an Amazon FBA course can provide a step-by-step walkthrough from an Amazon selling expert to help you get started.

What are the best Amazon FBA courses?

The best Amazon FBA courses are:

Private Label Masters by Tim Sanders
AMZ Champions by Trevin Peterson

What are the best Amazon private label courses?

The best Amazon private label courses are:

FBA Masterclass by Tom Wang
FBA Academy by David Zaleski

What are the best Amazon wholesale courses?

The best Amazon wholesale courses are:

The Wholesale Formula by Dan Meadors and Dylan Frost
Wholesale Academy by Larry Lubarsky

Who are the best Amazon FBA coaches to learn from?

The best Amazon FBA coaches to learn from are:

Tim Sanders
Seth Kniep
Trevin Peterson
Tom Wang

Can you do Amazon FBA part-time?

Yes, you can do Amazon FBA part-time . In fact, the majority of people who do Amazon FBA do it part-time. Only 18% of Amazon sellers work on their Amazon business more than 30 hours per week, according to data from Jungle Scout.

Conclusion: Who should start an Amazon FBA business?

Those who are looking for more income flexibility and who are willing to put in the work to learn Ecommerce should start an Amazon FBA business. Although Amazon FBA isn’t as easy as it used to be, it’s still a viable way to make money online, especially if you put in the effort to develop your own brand and products over the long-term. However, after trying Ecommerce myself, I prefer local lead generation as an alternative way to make money online.

From my experience, you can start making real money much faster with local lead generation. Local lead generation entails creating websites that attract customers for local service businesses. It typically takes between 6 weeks and 6 months to create and rank these sites on Google, and each site can generate between $500 to $3,000 per month once you partner with a local service business to take the leads. Setting up these websites is relatively affordable, costing only a few hundred dollars at most. Therefore, you can earn upwards of 90% profit margins from your website, which is much better than the typical Amazon FBA profit margin of around 20%.

Considering that the average Amazon seller makes around $2,500/month in profit by selling hundreds of products, but you can make that much or more with just one local lead generation website, many find local lead generation a superior business model for earning online income. You can learn how to make money online with local lead generation through this step-by-step lead gen training program .