What I Wish I Knew Before Starting Amazon FBA

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What I Wish I Knew Before Starting Amazon FBA

What Amazon FBA Actually Means

Amazon FBA stands for "Fulfilled by Amazon," and it's essentially a service that lets you tap into Amazon's massive logistics network. When Amazon launched this program in 2016, they opened up their warehouses, shipping systems, and customer service teams to third-party sellers like you and me.

Here's something that might surprise you: Amazon makes roughly half their revenue from sellers who use their platform, and about 66% of the top 10,000 sellers use FBA. That's a pretty clear signal that this system works for a lot of people.

How It Actually Works Day-to-Day

The process is straightforward once you understand the basics. You ship your products to one of Amazon's fulfillment centers—these are enormous warehouses scattered across the country. To give you an idea of scale, their biggest facility in Texas covers over 1.2 million square feet and runs on a combination of human workers and robots.

Amazon currently operates 75 fulfillment centers across North America, plus another 25 sorting facilities where they organize packages for different delivery routes. When your products arrive at a fulfillment center, everything gets sorted and catalogued through their computerized system.

The tracking is pretty sophisticated, so losing inventory is extremely rare. If something does get damaged while in their care (which Amazon says is uncommon), they'll compensate you at the full retail price.

Once someone buys your product on Amazon's website, the entire fulfillment process happens automatically. Each item gets assigned a unique inventory code, making it easy to locate among thousands of shelves. Amazon handles the packaging and shipping, then follows up with customers to make sure everything arrived in good condition.

They also take care of customer service issues, returns, and refunds, though they'll need your input on certain decisions.

What You're Still Responsible For

Don't think Amazon handles everything—you've still got important work to do. Here are the main areas that remain your responsibility:

Product Selection and Sourcing
Amazon won't tell you what to sell or where to find it. You need to research which products have good demand, figure out your profit margins, and establish relationships with suppliers. One tip: focus on fast-moving inventory since you're paying for storage space.

Inventory Management
You need to stay on top of your stock levels. Since your products are sitting in Amazon's warehouses, it's easy to lose track of what you have available. Amazon will send low-stock alerts, but being proactive about reordering is crucial.

Marketing Your Products
If you're reselling popular brand-name items, you might not need much promotion since those companies already spend millions on advertising. But if you're launching your own private label products, you'll need to make sure people can find them among Amazon's millions of listings.

The Main Benefits of Using FBA

Better Shipping and Logistics
If you're just selling a few items, handling everything yourself makes sense. But if you want to scale up and make this a real business, Amazon's infrastructure becomes incredibly valuable.

They've mastered the complexities of shipping—weight calculations, size restrictions, international regulations, insurance requirements, and partnerships with major carriers. Instead of figuring all this out yourself, you're leveraging their expertise.

The speed advantage is significant too. Since your products are already in their warehouses nationwide, they can often deliver orders within a couple days. Amazon doesn't necessarily ship the exact item you sent them—they group similar products together, so a customer in Canada buying your product might receive an identical item from a warehouse closer to them.

This system also makes shipping cheaper for everyone. Amazon's volume gives them better rates with carriers, and they pass some of those savings along. FBA products often qualify for free shipping, especially for Prime members.

Time Freedom
Running an e-commerce business touches every aspect of operations—sourcing, photography, inventory management, packaging, shipping, customer service. FBA eliminates the most time-consuming parts, letting you focus on the activities that actually grow your business.

You can spend your time researching new products, improving your photography, or scaling up your operations instead of dealing with shipping labels and customer complaints. Many sellers even keep their day jobs while building their FBA business on the side.

Massive Storage Capacity
You could live in a studio apartment and still sell large items or maintain significant inventory. Amazon's fulfillment centers handle all storage, and there's no minimum requirement—you can literally send them one product if that's all you have.

They also provide the right storage conditions for different types of products. Leather goods, for example, need specific humidity and temperature controls that most people can't provide at home.

Amazon's Brand Trust
Amazon has built tremendous credibility with online shoppers. When you sell through FBA, you benefit from that reputation. Customers trust that their orders will be handled professionally, which often translates to higher sales than you'd get selling through your own website as an unknown brand.

Customer Service Handled
Amazon's customer service operates 24/7 through phone, email, and chat. Their representatives are trained to handle difficult customers and complex situations—something many sellers find stressful to deal with directly.

Returns are another hassle they take off your plate. The logistics of processing returns, inspecting items, and issuing refunds can be complicated, but Amazon's systems handle all of it.

Sales Growth Potential
All these benefits combine to increase your sales velocity. Yes, you're paying fees to Amazon, but the efficiency gains often result in higher overall profits because you can move more inventory faster.

The Downsides You Need to Know

Storage Fees Add Up
Amazon charges for storage, and those fees increase the longer your products sit unsold. After six months, storage costs jump significantly. This makes product selection crucial—you want items that sell quickly, not inventory that sits around.

Large, heavy items are especially expensive to store, so you need to factor storage costs into your profit calculations.

Inventory Tracking Challenges
When your products are out of sight in Amazon's warehouses, it becomes harder to track what you have, what's selling well, and what needs to be reordered. This is particularly challenging during busy seasons when sales spike unpredictably.

Co-Mingling Risks
Amazon groups identical products from different sellers together for efficiency. While this speeds up fulfillment, it means customers might receive an item from a different seller's batch.

The risk is that if another seller sends damaged or counterfeit products, and a customer receives one of those items after buying from your listing, you could get negative feedback. It's rare, but it has resulted in some legitimate sellers getting banned.

Less Control Over Your Business
Amazon handles packaging and shipping their way—you can't add personal touches like thank-you notes, custom packaging, or branded materials. Everything goes out in standard Amazon packaging.

Complex Preparation Requirements
Getting your products ready for Amazon's warehouses involves following detailed guidelines that can be time-consuming, especially when you're starting out. Different product types have different prep requirements, and mistakes can result in your shipment being rejected.

Different Ways to Sell on Amazon

Private Label
This is where you source generic products from manufacturers (often overseas) and sell them under your own brand name. You're responsible for market research, finding suppliers, and building your brand, but you have complete control over the product and pricing.

Retail Arbitrage
You find discounted brand-name products at retail stores and resell them on Amazon at higher prices. This requires constant hunting for deals and doesn't build long-term brand value, but it requires less upfront investment.

Wholesale
You buy brand-name products in bulk directly from manufacturers and resell them on Amazon. You keep the original branding but get better pricing through volume purchases.

Used Books
This is one of the easiest ways to start with minimal risk. You can begin by selling books you already own and gradually build up inventory from garage sales, thrift stores, and clearance sections.

Private Label vs Other Methods

Private label offers the highest growth potential because you're building your own brand. While retail arbitrage and wholesale involve less risk, they also limit your long-term earning potential since you're always dependent on other people's products and pricing.

With private label, you can eventually build a valuable brand that could be sold to another company. You're not just reselling—you're creating something that belongs to you.

The tradeoff is higher upfront costs and more complexity. You need to research markets, manage supplier relationships, and invest in marketing since you don't have existing brand recognition.

Key Players in the Private Label Business

You (The Business Owner)
You're responsible for market research, finding profitable niches, establishing supplier relationships, managing your Amazon account, creating your brand, and handling the financial aspects of the business.

The Manufacturer
Usually located overseas, they produce your products according to your specifications. They handle sourcing materials, manufacturing, and initial shipping.

Amazon
Provides the marketplace, warehousing, fulfillment, customer service, and payment processing.

Shipping Companies
Handle transportation from manufacturers to Amazon's warehouses and from warehouses to customers.

Optional Service Providers

Inspection and prep companies that ensure your products meet Amazon's standards
Graphic designers for creating your brand and packaging
Accountants for managing your business finances
Freight forwarders for international shipping

Getting Started Considerations

If you're thinking about starting with Amazon FBA, begin by understanding your goals and budget. Private label requires more upfront investment but offers better long-term potential. Retail arbitrage is easier to start but harder to scale.

Consider starting small with one product category to learn the system before expanding. Many successful sellers began with just a few hundred dollars and grew their businesses over time.

The key is treating this as a real business that requires research, planning, and consistent effort rather than a get-rich-quick scheme.