How to Start an Amazon FBA Business: A 101 Guide (2025)
- Private Label: Sellers who use the private label business model must purchase goods straight from manufacturers. However, in this instance, the goods are produced in accordance with your instructions and are branded with your company name rather than the manufacturers'.
- Wholesale: You buy goods in large quantities from manufacturers and then resell them on Amazon at retail rates. Under this model, you offer existing, already-branded products as opposed to the private label model.
- Retail Arbitrage: People who use this business model will need to purchase goods from brick-and-mortar and internet retailers, then resell them with a markup on Amazon.
- Dropshipping: This model enables sellers to ship goods to customers directly after fulfilling orders from a third party.
- Handmade: You make stunning, handcrafted, and unique items and sell them on Amazon. It works best for artists who want to profit from the sale of their creations.
- Product profitability: It is best to choose a product from the most lucrative categories. You should carefully calculate the revenue of a product and keep in mind to pick products with a profit margin of $20 to $70.
- Market demand: The level of demand for a product typically indicates how profitable it can be. As a result, be careful to consider product demand when conducting your product research. Besides, you should avoid seasonal products since the demand for them is often “seasonal”.
- How many products are exactly like yours: This will show whether there are any chances for new sellers. You can research the brands in that market to determine the level of competition you may encounter.
- Product size and weight: If you want to save money on delivery, it is ideal to select compact, light items.
- Product availability and ease of sourcing: You don't want to lose customers by having a prolonged stock shortage. So make sure you sell a product that is always available to restock quickly.
- You need to register your business with the Internal Revenue Service (IRS) to receive an Employer Identification Number (EIN) as most banks will require that you have an EIN to create an account. Additionally, since the IRS uses your EIN to monitor your payroll tax payments, you will need one in order to hire workers.
- You can open a bank account with your EIN under the name of your company.
- After that, you should obtain a business credit card for your Amazon business to help you distinguish between personal and business expenses. You can register for a business credit card either through a bank or through a credit card company.
- Finally, you will need to obtain the necessary business licenses and permits. Again, the requirements vary by city, state, and county. Yet, the following requirements exist in almost all cities, states, and/or counties, including:
- General Business License
- Sales Tax License or Seller’s Permit
- Zoning Approval
- Food Service, Processing, and/or Warehouse Licensing
- Health Facility Licensing & Certification
- Fire Department Approval
- Individual account: For anyone who plans to sell <40 items per month. You will have to pay $0.99 per transaction, which is deducted post-sale rather than up-front.
- Professional account: For anyone who plans to sell >40 items per month. There will be a monthly fee of $39.99 for professional sellers.
- Create a name that reflects the essence of your brand and the goods you offer
- Keep it simple
- Verify that your desired name is available by checking it against trademark databases and your state's list of registered business names
- Product title: The goal or use of the product should be clearly stated in the title.
- Product descriptions: Clearly state how your products will help your customers. Remember to add relevant keywords to your descriptions.
- Product images: You can use more than one product image but they should be beautiful and of high quality.
- Product reviews: Display product reviews from current customers to help persuade new ones.
- General liability insurance
- Auto insurance
- Workers’ compensation insurance
- Commercial property insurance
- Business interruption insurance
- Amazon seller software: Many aspects of your business, including pricing, inventory control, and customer service, can be automated with the aid of this software.
- Inventory management software: You can handle inventory effortlessly with the aid of this kind of software. If you sell goods outside of the Amazon platform, it can also assist with order fulfillment and product returns.
- Accounting software: If you want to keep track of revenue, costs, taxes, and other financial factors closely, accounting software is a must.
- Selling top-notch goods
- Competitive pricing for your goods
- Providing prompt shipping
- Addressing customer's issues immediately
Tracy Ng
Senior Content Executive at TrueProfit & SEO/Content Specialist
Tracy is a senior content executive at TrueProfit – specializing in helping eCommerce businesses scale profitably through content. She has over 4 years of experience in eCommerce and digital marketing editorial writing. She develops high-impact content that helps thousands of Shopify merchants make data-driven, profit-focused decisions.
