Fulfillment by Amazon: Definitions + How It Works (for Beginners)

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Do you want to earn extra money from home? Do you like the idea of becoming your own boss and owning a business that can operate in your free time?

If you’re like most people, the answer is yes!

The problem is that coming up with a profitable idea for a business isn’t always easy. You need to come up with an idea, develop it, test it, and then finally launch the website for your business. This process can sometimes take years and most people don’t have that kind of time to spare. Fulfillment by Amazon or Amazon FBA can help you skip the whole process and jump right into making money.

In this article, we will provide an overview of Fulfillment by Amazon, including its definition, benefits, and how it works. This article is intended for beginners who are new to selling on Amazon and want to understand the basics of this service. We will also explore some of the key features of FBA, such as multi-channel fulfillment and Amazon Prime eligibility, and provide tips for sellers who are considering using this service.

How Does Amazon FBA business work?

Before we get to how you actually make money, let’s talk about how Amazon FBA works.

Fulfillment by Amazon (FBA) is a service offered by Amazon that allows sellers to store their products in Amazon’s fulfillment centers, where they will be picked, packed, and shipped to customers by Amazon. This means that sellers do not have to handle the logistics of their sales, such as shipping and storage, and can instead focus on other aspects of their business.

To get started with FBA, sellers need to create an Amazon seller account and enroll in the FBA program. They can then send their products to Amazon’s fulfillment centers, where they will be stored until they are sold.

When a customer orders a product that is fulfilled by Amazon, Amazon’s team of employees will pick, pack, and ship the product to the customer on behalf of the seller. Amazon also handles customer service and returns for FBA products, which further simplifies the selling process for the seller.

Sellers are charged fees for using FBA, which include storage fees for the products stored in Amazon’s fulfillment centers and fulfillment fees for each order that Amazon processes and ships. The fees vary depending on factors such as the size and weight of the product, the time of year, and the location of the fulfillment center.

Fulfillment by Amazon

Benefits of using Amazon FBA

There are many benefits to using Fulfillment by Amazon (FBA) for sellers who want to grow their businesses and reach a wider audience. Here are some of the key benefits of using FBA:

  • Convenience: With FBA, Amazon handles all the logistics of shipping and storage for sellers. This means that sellers do not have to worry about packing and shipping products themselves, or storing inventory in their own warehouses. This can be a huge time-saver for sellers who want to focus on other aspects of their business, such as product development and marketing.
  • Prime Eligibility: Products that are fulfilled by Amazon are eligible for Amazon Prime, which is a popular membership program that offers free two-day shipping to customers. This can be a big selling point for sellers who want to attract more customers and increase their sales.
  • Multi-Channel Fulfillment: FBA also offers multi-channel fulfillment, which allows sellers to fulfill orders from other sales channels using their FBA inventory. This means that sellers can use FBA to fulfill orders from their own website, or from other e-commerce platforms, in addition to Amazon.
  • Shipping Discounts: Amazon negotiates discounted shipping rates with carriers for FBA sellers, which can help sellers save money on shipping costs. This can be especially beneficial for sellers who sell bulky or heavy items.
  • Customer Service: FBA also offers customer service for sellers, including handling returns and customer inquiries. This can be a big relief for sellers who don’t have the resources to handle these tasks themselves.
  • Increased Visibility: Products that are fulfilled by Amazon are also eligible for Amazon’s Buy Box, which is the prominent placement on product detail pages that show the product price and allows customers to add the product to their cart. This can increase the visibility of the seller’s products and potentially lead to more sales.

Amazon FBA business Model Requirements

To start an Amazon FBA business, there are a few requirements that sellers need to meet:

1. An Amazon seller account

The first requirement for starting an Amazon FBA business is to have an Amazon seller account. If you don’t already have one, you can create an account by registering on Amazon’s seller central platform. This account will allow you to list your products for sale on Amazon and use FBA to fulfill your orders.

2. Product selection

Once you have an Amazon seller account, you need to select the products you want to sell. It’s important to choose products that are eligible for FBA, meaning they are not restricted or prohibited by Amazon and can be stored and shipped by Amazon. You should also consider the demand for the products, the competition, and the potential profit margins.

3. Product preparation

Before sending your products to Amazon’s fulfillment centers, you need to prepare them according to Amazon’s guidelines. This includes labeling, packaging, and any other required preparations. You should also make sure that your products are in good condition and meet Amazon’s quality standards.

4. Inventory management

Once your products are in Amazon’s fulfillment centers, you need to manage your inventory levels and make sure that your products are always in stock. This includes forecasting demand and ordering new inventory as needed. You should also monitor your inventory levels regularly and remove any products that are not selling well.

5. Pricing strategy

To be successful on Amazon, you need to have a competitive pricing strategy. This means considering your costs, competition, and customer demand when setting your prices. You should also be aware of Amazon’s pricing policies and make sure that you are not violating any rules or regulations.

6. Marketing and promotion

To attract customers and increase sales, you need to create a marketing and promotion plan for your products. This can include optimizing your product listings, using Amazon’s advertising tools, and promoting your products on social media and other channels. You should also consider offering promotions, such as discounts or free shipping, to encourage customers to buy your products.

7. Customer service

Providing excellent customer service is essential for building a successful Amazon FBA business. This includes responding to customer inquiries, handling returns, and resolving any issues that arise. You should also monitor customer feedback and use it to improve your products and services.

What type of items to sell on amazon FBA?

When it comes to selling on Amazon FBA, there is no one-size-fits-all approach to the types of items that you can sell. However, there are certain categories and types of products that tend to perform well on the platform.

Firstly, it’s worth considering selling products that are popular and in demand. This can include items such as electronics, clothing, beauty products, and household goods. These categories tend to have a large audience on Amazon and can attract a lot of buyers.

Another consideration is to sell products that are lightweight and easy to ship. Amazon charges fees based on the weight and size of the products, so selling smaller items can be more cost-effective. Additionally, it’s important to consider the fragility of the items as they will need to be shipped and stored without damage.

It’s also worth researching niche products that have a dedicated audience. These can include products such as specialized tools or equipment, collectibles, or unique handmade items.

When selecting products to sell on Amazon FBA, it’s important to research the competition and market demand for the product. This can be done using Amazon’s own product research tools, as well as third-party software and tools.

How to Make Money Using Amazon FBA

Amazon FBA offers a variety of ways for entrepreneurs to make money, whether it’s selling products they’ve sourced from suppliers or creating their own unique products. Here are some strategies for making money using Amazon FBA:

  1. Private label products: Private label products are those that are manufactured by a third party and sold under your brand name. This is a popular way to make money on Amazon FBA as it allows you to differentiate yourself from the competition and potentially earn higher profit margins.
  2. Retail arbitrage: Retail arbitrage involves buying products from retail stores or online marketplaces at a low price and reselling them on Amazon at a higher price. This can be a lucrative way to make money on Amazon FBA, especially if you can find products that are in high demand and difficult to find elsewhere.
  3. Wholesale sourcing: Another way to make money on Amazon FBA is by sourcing products wholesale from manufacturers or distributors and selling them on Amazon at a markup. This can be a more reliable and scalable way to make money as you can establish long-term relationships with suppliers and streamline your supply chain.
  4. Bundling products: Bundling products together is a way to create unique product offerings and increase your profit margins. For example, you might bundle a set of kitchen utensils or a selection of skincare products. Bundling can also help you stand out from the competition and attract more customers.
  5. Multi-channel fulfillment: Amazon FBA also allows you to fulfill orders from other sales channels, such as your own website or social media platforms. This can help you reach a wider audience and increase your sales.

In order to make money on Amazon FBA, it’s important to do your research and understand the market demand for your products. You’ll also need to consider factors such as product pricing, shipping costs, and marketing strategies in order to maximize your profits. With the right approach and some hard work, Amazon FBA can be a great way to build a successful business and earn money online.

How much money can be made using Amazon FBA?

Now you’re probably wondering just how much money can be made using Amazon FBA. Let’s do some math.

According to Amazon, the average customer will spend $35 per order. If your profit margin is 20%, you’ll make about $7 per sale. If you’re selling 100 products per day, that’s $700 per day or $31,000 per month. If you sell 300 products per day, you’ll earn $21,000 per month.

You can see that it’s possible to make a lot of money using this business model. The key is finding items that will sell well on the marketplace and then making sure to purchase them at wholesale prices.


Using the Amazon FBA business model can be a lucrative way to make money quickly on Amazon. With a variety of strategies such as private label products, retail arbitrage, wholesale sourcing, bundling products, and multi-channel fulfillment, entrepreneurs can find a method that works best for their business.

To maximize profits, it’s important to research the market demand for your products and find them at wholesale prices to ensure a healthy profit margin. It’s also important to consider factors such as shipping costs, product pricing, and marketing strategies.

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