Reviewed By Ron Matheson
Written By Mark Grossman
Published November 13, 2018
Updated September 17, 2024
Some people might be interested in starting an Amazon FBA business because it has become popular recently. Someone who has sold an item on Amazon might have a general sense of how the process works. Knowing your individual goals for setting up an Amazon FBA business helps clarify whether or not this is the most appropriate choice for you.
First of all, recognize whether you intend this to be a supplemental or a primary source of income. Your initial investment will need to be in inventory, but you should not jump to purchasing inventory until you have done appropriate product research about the section of the market that you wish to represent.
Amazon FBA has become increasingly competitive in recent years, but this does not mean that you cannot be successful in making money with your Amazon FBA process. Knowing which types of inventory pieces sell well and the amount of legwork you need to do well in advance can be extremely helpful in building your Amazon store.
Some of the most important aspects of starting an Amazon FBA business include having product knowledge, a product source and potential relationships with suppliers, experience in what sells and how quickly, how to market, and how to price in addition to all of the various rules associated with doing business on Amazon can be helpful.
There are several advantages when you start an Amazon FBA business, particularly in terms of opportunities to reach global markets, scalability, and lessening the operational headaches associated with running a business.
The advantages include the following:
When talking about Amazon, the level of trust that many people have, especially with products that fall under fulfillment by Amazon (FBA), is generally high. This means that worldwide, people know they can trust what they buy on this platform.
That being said, the potential for high customer orders and satisfaction is to be expected when marketed the right way. There are so many businesses that have seen unprecedented growth since launching their products on Amazon, and so many more whose stores closed as quickly as they had opened.
The most challenging part of being an entrepreneur with high product volume is inventory management and order fulfillment. Amazon sellers can greatly benefit when they choose to sell through Amazon because the platform takes care of all these operational requirements so you can focus on your sales.
With Amazon receiving the orders, they can immediately pick the order, package them, and then ship them efficiently. All of these operational activities are removed from an owner’s plate through Amazon FBA.
Every seller’s dream is to grow their business. For some, this could take years to achieve but through Amazon’s global fulfillment centers, scaling the business can be done with ease because as a seller, all you need to focus on is expanding your product listing to a global market. Amazon worries about how to pick, pack, and ship the order.
Based on the success of one product, you can replicate the process of marketing it to your new products and monitor its growth. Repeating this process as you add more and more products to your listing is one way to ensure the growth of your Amazon store.
One of the most attractive features that Amazon offers to sellers globally is a reduced shipping cost because of their negotiated terms with different shipping carriers. Apart from this, the fulfillment is also reliable given that shipments arrive as expected.
Due to the volume that Amazon ships daily, carriers are more amenable to special rates.
Due to the overall efficiency of operations provided by the Amazon platform, the associated operational costs also decreased, resulting in a profit margin increase. With reduced shipping costs, less personnel and software investments, most of the costs deducted from the revenues are purely product associated.
There is no denying that when you sell on Amazon, your small business can flourish because the market reaches consumers globally.
Starting an Amazon FBA business in 2025 can be difficult if you jump straight into purchasing an inventory without doing research. Many of the different categories in Amazon are gated; meaning that individual brands require approval and fee payment.
Furthermore, not knowing which items are prohibited can be problematic and can set you back weeks or months. Make sure to do your research on the items you are interested in selling, as simply selecting something you are passionate about might not be enough. This is because many items could have hundreds or dozens of sellers already.
Make sure you properly calculate possible fees for selling on Amazon FBA. After buying inventory, allowing for returns and loss, paying commissions and shipping, you are unlikely to pocket the profit you received simply by selling the item. This is why you must have extensive and established relationships with sellers and a comprehensive system. Start selling something you already have and have some knowledge about.
Getting some additional information, such as attending trade shows can give you a good idea of what might work for you. It is not recommended to begin importing products to the United States with no knowledge of how the manufacturer works or whether or not they are producing counterfeits. While it is possible to launch your Amazon FBA business with no retail experience, it’s not smart to jump in in a big way.
A couple of products are a good way to test your market and establish your systems so that you can leverage the system as you grow your company and become more effective. Many successful Amazon FBA sellers have spent weeks or months doing their research and this often pays off in spades when they launch their company with great success and grow at a scale faster than expected.
Although there are many advantages when it comes to starting an FBA business, there will also be a couple of challenges you will face that cannot be avoided. These challenges are:
Starting any business requires capital and this is not an exception for sellers of Amazon. There are two types of capital needed here:
All these fees combined are part of the selling fees and must be considered when determining the price of each product.
When you sell on Amazon, there is a dependency on using their platform which means that you have to abide by the regulations and conditions they set for using it. This could further mean that control of how customer service works is upon them.
The quality of the products you sell can make or break your business. With the competition on Amazon, it is important to find the best supplier who can give you the best price for the volume of orders you have. It is equally important that you also find products that have high quality to avoid negative reviews and product returns.
Any business, whether it is on Amazon or not, survives for a long time when its cash flows are managed properly. The challenge with Amazon is the frequency of sales payouts which happens every two weeks. With delayed cash inflows, you need to make sure that you can replenish inventory when your sales increase.
The products on Amazon can sometimes be the same and sourced from the same supplier. This is why similar products can be found on different sellers and some cut the prices so that it is almost impossible to compete.
There are also instances when a product gains so much popularity that other competitors copy it. Even Amazon’s private label products get copied!
You need to be able to invest in optimizing your product listing so that when consumers do a keyword search, your items will rank high in the search results. This can be done when your listings are done according to the search algorithm of Amazon.
All sellers must adhere to the policies set by Amazon. Because their policies frequently change, sellers must also be constantly aware of these changes to avoid Amazon seller account suspension. Violations of the policies due to lack of awareness can badly hurt your sales and your business.
Another important aspect of running an Amazon business apart from adhering to Amazon’s policies is to be compliant with the local tax rules where you operate your business.
You have already decided the type of products you wish to sell and you want to start an Amazon FBA business, what is next? Well, you need to determine whether you are truly ready to launch your Amazon store. There’s a lot more to prepare for than just nailing the product.
Here’s how you can assess your readiness:
If you answered yes to all of these questions, then you are ready to start your business on Amazon.
So many entrepreneurs are interested in having an Amazon business but do not know the right questions to ask on how to start an FBA business. It is more than just knowing the operational requirements and the different technicalities involved, it is the commitment to stay in business for a specific period or more if the business is really doing well.
There are several steps involved when you decide to start selling on the Amazon platform and none of these steps are easy or simple. You will have to understand how the operations work and most especially, how the fees affect your pricing strategy.
Outlined in the next section below are the steps to start an FBA business to help you kickstart your Amazon store.
These are the steps on how to start an FBA Amazon business if this is your first time opening an Amazon seller account:
The steps to starting an Amazon FBA business are not a walk in the park for first-timers but with the right mindset and determination, you will be as successful as those who have already begun their selling journey on Amazon.
There are several businesses that have seen unprecedented success when they launched their business on Amazon such as the following:
Amazon FBA is an excellent launchpad for startup businesses because of their wide reach and global marketplaces. But to start selling on Amazon, it is important for you to really study the platform, understand its ecosystem, identify your products and conduct thorough product research, prepare your capital, and invest in optimizing your product listings.
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