Selling on Amazon is one of those opportunities that sounds almost too good to be true. Access to hundreds of millions of customers. A logistics network that handles storage, packing, and shipping for you. Independent sellers averaging over $290,000 in annual sales.
Those numbers are real. So is the other side of the story — the side where new sellers lose $5,000 to $20,000+ on inventory that doesn’t move. Where Amazon fees eat 30 to 40% of your revenue. Where you’re competing with thousands of other sellers, including Amazon itself, on every single product listing.
Amazon selling can absolutely be profitable. But it’s a real business with real costs, real competition, and real risks. This guide gives you the complete picture — not just the highlight reel.
First — This Is Important…
Hey, my name is Mark.
I’ll also be honest about this: selling on Amazon isn’t the model I personally use to generate online income.
I build simple “two page” websites that show up in Google and generate leads for local businesses. They produce $500 to $1,200/month each in recurring revenue — without inventory, without Amazon fees, and without competing with millions of other sellers.
Go here to see the exact system I use.
How Selling on Amazon Actually Works
At its core, selling on Amazon is straightforward. You list products. Customers buy them. Amazon (or you) ships the products. You collect the difference between what you charge and what it costs you.
In practice, it’s more complex. There are two main fulfillment models, multiple business models for sourcing products, layers of fees to account for, and a competitive landscape that rewards optimization and punishes complacency.
Fulfillment Options: FBA vs. FBM
Fulfillment by Amazon (FBA) is the most popular choice for new sellers. You ship your inventory to Amazon’s warehouses. When a customer orders, Amazon picks, packs, and ships the product. They also handle customer service and returns.
FBA products are eligible for Prime shipping, which dramatically increases your conversion rate. The tradeoff is cost — FBA fees include storage fees (which increase during Q4), fulfillment fees per unit, and long-term storage penalties for slow-moving inventory.
Fulfilled by Merchant (FBM) means you handle everything yourself — storage, packing, shipping, and customer service. You save on FBA fees but lose the Prime badge, and you’re responsible for meeting Amazon’s shipping performance standards.
Most beginners start with FBA because the logistics advantages outweigh the additional costs — especially when you’re learning the platform.
Amazon’s Fee Structure
Understanding fees is critical because they determine your actual profitability.
| Fee Type | Typical Amount |
|---|---|
| Professional seller plan | $39.99/month |
| Referral fee (per sale) | 8–15% of sale price (varies by category) |
| FBA fulfillment fee | $3.00–$7.00+ per unit (varies by size/weight) |
| FBA storage fee | $0.78–$2.40/cubic ft per month |
| Long-term storage fee | $6.90/cubic ft (items stored 365+ days) |
| Advertising costs | Variable (typically 15–30% of revenue) |
When you add it all up, Amazon fees typically consume 30 to 45% of your revenue. On a product that sells for $25, you might keep $8 to $12 after all fees. That means your product sourcing cost needs to be well under that to maintain a healthy margin.
Choosing a Business Model
Before you source a single product, you need to decide how you’ll approach selling. Each model has different capital requirements, risk profiles, and income potential.
Private Label
You create your own branded product — typically sourced from manufacturers in China through Alibaba — and sell it under your own brand name on Amazon.
This is the highest-potential but also highest-risk model. Startup costs for a single product typically range from $2,000 to $10,000+ including samples, initial inventory, product photography, brand design, and launch advertising.
The advantage is that you own the brand and the listing. You’re not competing with 15 other sellers on the same product page. The risk is that you might invest $5,000 in a product nobody wants.
Wholesale
You buy existing branded products in bulk from manufacturers or distributors at below-retail prices, then sell them on Amazon at a markup.
Wholesale requires negotiating supplier relationships and typically needs $2,000 to $5,000+ in initial inventory investment. Margins are thinner than private label (typically 20 to 30%), but the risk is lower because you’re selling products with proven demand.
Retail Arbitrage
You find products at local retail stores — clearance bins, sales, liquidation — and resell them on Amazon at a higher price. The Amazon Seller app lets you scan barcodes in stores to instantly check the Amazon selling price and estimate your profit.
This is the lowest-cost entry point. You can start with as little as $100 to $500. But it’s time-intensive, hard to scale, and margins can be unpredictable. Many beginners use retail arbitrage to learn the platform before transitioning to wholesale or private label.
Online Arbitrage
Similar to retail arbitrage, but you source products from online retailers instead of physical stores. Tools like Keepa and Tactical Arbitrage help identify price discrepancies between online retailers and Amazon.
More scalable than retail arbitrage since you’re not limited by physical store visits, but competition is intense because everyone has access to the same tools and deals.
Dropshipping on Amazon
You list products on Amazon without holding inventory. When a customer orders, you purchase from a supplier who ships directly to the customer.
Amazon allows this with restrictions — the product must be shipped in neutral packaging, you must be identified as the seller, and you can’t ship from another marketplace (like buying from Walmart.com and shipping to Amazon customers). Margins are typically thin, and quality control is difficult since you never handle the product.
Finding Products to Sell
Product selection is the single most important decision you’ll make. A great product with mediocre marketing will outperform a mediocre product with great marketing every time.
What Makes a Good Amazon Product
There’s no perfect formula, but profitable products tend to share certain characteristics. They’re small and lightweight (lower FBA fees). They sell for $15 to $50 (impulse purchase range with decent margins). They have consistent demand, not just seasonal spikes. Competition is moderate — not so low that there’s no market, but not so high that you can’t break through.
Tools like Jungle Scout, Helium 10, and AMZScout help analyze demand, competition, and profitability. Amazon’s own Best Sellers lists and Product Opportunity Explorer provide free data on what’s trending.
Red Flags to Avoid
Products dominated by major brands are extremely difficult to compete with. Categories requiring FDA approval, safety certifications, or gated Amazon categories add complexity and cost. Fragile products lead to higher return rates. Seasonal products create feast-or-famine cash flow.
Optimizing Your Listings
Your product listing is your storefront. In a marketplace where customers can’t touch or try your product, your listing does all the selling.
Title: Include your primary keyword, brand name, key features, and size/quantity. Make it readable, not just keyword-stuffed.
Images: Amazon allows up to 9 images. Use high-resolution product photos on white backgrounds, lifestyle images showing the product in use, infographics highlighting key features, and comparison charts if applicable. Product photography quality directly correlates with conversion rates.
Bullet points: Focus on benefits, not just features. Instead of “Made from 18/8 stainless steel,” say “Keeps your coffee hot for 12 hours — no metallic taste, ever.”
Product description / A+ Content: If you’re enrolled in Brand Registry, use A+ Content for enhanced visuals and formatting. This can increase conversion rates by 3 to 10%.
Backend keywords: Fill in your search terms field with relevant keywords customers might use to find your product. Don’t repeat words already in your title.
Launching and Marketing Your Products
Getting your first sales on Amazon is the hardest part. The algorithm favors products with sales history and reviews — which new products don’t have. This is the “cold start” problem every new seller faces.
Strategies for Your First 30 Days
Amazon PPC (Pay-Per-Click) advertising is almost mandatory for new products. Start with automatic campaigns to discover which keywords convert, then build manual campaigns targeting your best-performing keywords. Budget $10 to $30/day initially and adjust based on results.
Competitive pricing during launch helps generate initial velocity. Some sellers price at cost or even at a small loss initially to generate sales and reviews. Once you’ve established momentum, gradually increase your price.
Amazon Vine (for Brand Registry sellers) provides free products to trusted reviewers. This is one of the fastest legitimate ways to get early reviews, though it costs $200 per enrolled product.
External traffic from social media, email lists, or content platforms can jumpstart sales. Amazon rewards external traffic with better organic ranking, so driving buyers from YouTube, TikTok, or a blog can give you a competitive advantage.
The Realistic Financial Picture
Here’s what a moderately successful Amazon business actually looks like after the first year.
| Metric | Realistic Range |
|---|---|
| Monthly revenue | $3,000–$15,000 |
| Gross margin (after Amazon fees) | 25–40% |
| Advertising cost | 15–30% of revenue |
| Net profit margin | 10–20% |
| Monthly net profit | $300–$3,000 |
| Initial investment to reach this point | $3,000–$15,000 |
The top performers do much better — Amazon reports that over 55,000 independent sellers exceeded $1 million in annual sales in 2024. But getting there typically requires multiple products, significant advertising budgets, and 1 to 2+ years of optimization.
Scaling Your Amazon Business
Once your first product is profitable, the natural question is how to grow. Scaling on Amazon typically follows a predictable pattern.
Add complementary products. If your first product is a yoga mat, your second might be yoga blocks, resistance bands, or a carrying strap. Customers who buy one product in a niche often buy related products. This increases your average order value and builds brand loyalty.
Expand to additional marketplaces. Amazon operates in the US, Canada, UK, Germany, Japan, and many other countries. Products that sell well domestically often perform well internationally. Amazon’s Global Selling program simplifies this expansion.
Build your brand outside Amazon. The most resilient Amazon sellers also sell through their own Shopify store, social media, and other marketplaces. This diversifies your revenue so you’re not 100% dependent on Amazon’s platform — a risk that increases as your business grows.
Leverage Amazon’s advertising tools. As your budget grows, expand from Sponsored Products to Sponsored Brands and Sponsored Display ads. Brand-registered sellers can also use Amazon Posts (free social-style content), Amazon Live (livestream selling), and Amazon Attribution (track external traffic).
Automate operations. Inventory management tools, repricing software, and virtual assistants can handle the operational complexity as you scale. Most six-figure Amazon businesses have some level of automation or outsourced support.
The Amazon Landscape in 2026
Several trends are shaping Amazon selling this year.
AI-driven listings. Amazon now uses AI to suggest — and sometimes automatically apply — changes to product titles, bullets, and images. Sellers need to monitor their listings actively to ensure AI-generated content accurately represents their products.
Rising advertising costs. Average cost-per-click on Amazon PPC has increased year over year. This makes product selection even more critical — you need margins that can absorb higher advertising costs and still remain profitable.
Increased competition from Chinese sellers. Direct-from-manufacturer sellers based in China continue to grow on Amazon, often with lower costs and aggressive pricing. Differentiating through branding, quality, and customer experience is more important than ever.
Supply chain considerations. Tariff changes and shipping costs continue to fluctuate. Successful sellers maintain relationships with multiple suppliers and build buffer stock to weather disruptions.
Common Mistakes New Amazon Sellers Make
Choosing products based on passion instead of data. Just because you love a product doesn’t mean it sells well on Amazon. Let the numbers guide your decisions.
Underestimating total costs. When you add product cost, shipping to Amazon, FBA fees, advertising, returns, and storage fees, your actual margins are much thinner than they appear on paper.
Running out of stock. Stockouts kill your organic ranking. Amazon’s algorithm drops you fast when you’re out of stock, and recovering that ranking takes weeks. Inventory forecasting is a critical skill.
Ignoring advertising. Organic traffic alone rarely sustains growth on Amazon. PPC advertising is a necessary cost of doing business on the platform.
Not protecting your brand. Amazon Brand Registry provides essential protections against counterfeiters, hijackers, and unauthorized sellers. If you’re building a private label brand, register it early.
Amazon Selling vs. Other Online Business Models
| Factor | Amazon FBA | Shopify | eBay | Digital Real Estate |
|---|---|---|---|---|
| Startup cost | $2,000–$10,000+ | $500–$5,000 | $100–$500 | $100–$500 |
| Ongoing fees | 30–45% of revenue | $39/mo + transaction | 13–15% | Minimal |
| Traffic source | Amazon’s audience | You drive traffic | eBay’s audience | Search engines |
| Inventory required | Yes | Yes (usually) | Yes | No |
| Income ceiling | Very high | Very high | Moderate | High |
| Passive potential | Moderate (with FBA) | Low–Medium | Low | High |
| Competition level | Very high | Moderate | High | Low–Medium |
Amazon gives you instant access to millions of buyers. That’s its biggest strength. But you’re renting that access — Amazon controls the fees, the algorithm, the customer relationship, and the rules. When Amazon changes something, you adapt or lose.
Frequently Asked Questions
How much does it cost to start selling on Amazon? Retail arbitrage can start at $100 to $500. Private label products typically require $2,000 to $10,000+ for a proper launch including inventory, photography, and initial advertising.
Can you really make money selling on Amazon? Yes, but it’s a real business with real costs. Average independent sellers report over $290,000 in annual sales, but revenue isn’t profit. After all fees and costs, net margins of 10 to 20% are typical.
Is selling on Amazon still worth it in 2026? The opportunity is still enormous — Amazon’s US e-commerce sales are projected to exceed $530 billion. But competition is fiercer and costs are higher than five years ago. Success requires better product selection, more advertising budget, and sharper execution.
How long until I’m profitable? Most sellers take 3 to 6 months to become profitable and 12 to 18 months to generate consistent meaningful income. Some private label launches take even longer if initial product choices don’t perform.
Is Amazon Right for You?
Selling on Amazon is a legitimate way to build a profitable business. The infrastructure is incredible — FBA alone solves logistics problems that would cost you tens of thousands to handle independently.
But it’s not the low-effort, high-reward opportunity some YouTube gurus portray it as. It requires meaningful upfront investment, ongoing advertising spend, constant optimization, and the willingness to adapt when Amazon changes the rules (which they do regularly).
If you want the high revenue potential and don’t mind the investment and complexity, Amazon is worth pursuing. If you prefer lower startup costs, simpler operations, and income you fully control, there are other models worth considering.
Here’s the one I use — building simple websites that generate $500–$1,200/month each without inventory, fees, or platform dependency. For the complete breakdown, see local lead generation.
Whatever you choose, treat it as a real business from day one. The sellers who succeed on Amazon — and anywhere else — are the ones who do the research, manage their numbers, and commit to the long game. For more ways to earn online, browse our guides to making money online, side hustles, and passive income ideas.
Mark is the founder of MarksInsights and has spent 15+ years testing online business programs and tools. He focuses on honest, experience-based reviews that help people avoid scams and find real, sustainable ways to make money online.