Amazon FBA (Fulfillment by Amazon) lets you sell products online without packing and shipping every order yourself. You send your inventory to Amazon’s warehouses, and Amazon stores it, ships it to customers and handles returns and customer service for those orders.
It can be a practical way to start an online business, but it is not a shortcut. Margins, competition and fees decide whether a product works. This guide explains how FBA operates and how to approach it carefully.
How FBA works
- You source a product. This might be a product you make, buy wholesale, or have manufactured under your own brand.
- You list it on Amazon. You create a seller account and a product listing with photos, a title, bullet points and a price.
- You ship inventory to Amazon. Amazon assigns a fulfillment center, and you send your units there.
- Amazon fulfills orders. When a customer buys, Amazon picks, packs and ships the item.
- You get paid. Amazon deposits your sales minus its fees on a regular schedule.
The costs to plan for
FBA profit is what is left after several costs. The main ones are:
- Cost of goods: what you pay to make or buy each unit.
- Shipping to Amazon: getting inventory to the fulfillment center.
- Referral fee: a percentage of each sale that Amazon charges.
- Fulfillment fee: a per-unit fee for picking, packing and shipping.
- Storage fees: charged for the space your inventory takes up, and higher for long-term storage.
- Advertising: most new listings need paid ads to get early sales.
- Returns and damaged items.
Amazon updates its fee schedule from time to time, so always check its current fee calculator before you commit to a product.
How to choose a product
Product choice is the biggest decision you will make. Good candidates tend to share a few traits:
- Steady demand that doesn’t depend on a short-lived trend.
- A healthy margin after all fees, so you can afford ads and mistakes.
- Small and lightweight, which keeps fulfillment and storage costs down.
- Room to improve on existing listings, for example with better quality, bundles or clearer photos.
- Not heavily regulated or restricted.
Before you order a full batch, work out the profit on a single unit with every fee included. If the numbers only work in the best case, move on.
Build a listing that sells
Your listing is your shop window. Focus on:
- Title: clear, with the main keyword near the start, and no keyword stuffing.
- Images: a clean main image plus lifestyle and infographic images.
- Bullet points: lead with benefits, then details.
- Description and A+ content: answer the questions buyers ask most.
- Reviews: deliver a good product and follow Amazon’s rules on requesting reviews.
Common mistakes
- Choosing a product by gut feeling instead of margin math.
- Ordering too much inventory before testing demand.
- Ignoring the cost of returns and storage.
- Relying on one product.
- Breaking Amazon’s seller policies, which can suspend an account.
Is FBA right for you?
FBA suits people who want a product-based business and are comfortable with spreadsheets, suppliers and patience. If you prefer to avoid holding inventory, compare it with dropshipping, Etsy and other models.
When you are ready to learn it properly, the Start Selling with Amazon FBA course covers setup, product research and growth in short lessons. If you plan to build your own store alongside Amazon, see the Online Business course. And for what to do with the customers you win, read about building an email list.
Want to go deeper? Browse the AdCoach course library for short, practical lessons on this topic, or start a 7-day free trial.