My wife and I decided to start a side hustle of selling on Amazon. We thought it would be fun to work together on something, and our intent was to spend a few hours per week on the business and hopefully bring in between $1,000 and $2,000 per month in profit.
Little did we know that our side hustle would generate six figures of profit in our first 12 months.
There are a lot of different approaches to making money with Amazon, and our choice was to sell private label products through FBA (Fulfillment by Amazon).
In this article, we will walk through how Amazon FBA works and the steps beginners can take to start and grow a successful FBA business.
But first, I would like to share a little bit about our story, because I think it can be motivating if you are looking for a way to earn extra money.
Editor's Note: This guide was originally written by Marc, who built and sold a six-figure Amazon FBA business between 2015 and 2017. Amazon has changed a lot since then in terms of fees, competition, and seller policies, but the core fundamentals of choosing a solid product, creating a quality listing, and managing inventory have stayed surprisingly consistent. We have gone through this entire guide and updated the details, examples, and recommendations so the information reflects the current environment, while keeping Marc's story as a helpful case study.
Building a Six-Figure Amazon Side Hustle
In the summer of 2014, I came across a few blog posts and podcast episodes focused on the topic of selling private label products through Amazon's FBA program.
I was aware of the possibility to sell private label products, and I was aware that third-party sellers could offer their products on Amazon, but I had never thought about the power that exists when those two factors are combined.
If you're not familiar with the term “private label,” all it means is that someone else manufactures the products and then puts your logo and branding on the product.
As for FBA, it's a service Amazon offers that's really a game-changer for small businesses and individual sellers. Through the FBA program, you can send your inventory in bulk to an Amazon warehouse. Then, when a customer buys your product, Amazon will pack up the item and ship it on your behalf.
When you sell products via FBA, you don't need to fulfill individual orders, handle returns, or deal with customer service on issues related to shipping. And you can send in hundreds or thousands of items at once, instead of running to the post office every day to ship your orders.
When you sell private label products, you're essentially outsourcing all of the manufacturing. And when you sell products via Amazon FBA, you're essentially outsourcing all of the order fulfillment and shipping (as well as most of the customer service).
What do you get by outsourcing all of these things?
You get the possibility to build a passive income business that largely runs itself.
This is an attractive idea in principle, but it also actually works very well in practice for many sellers. In fact, more than 60% of sales on Amazon are made by third-party sellers (as opposed to being products sold by Amazon).
As someone who had been working online and blogging for several years, the possibility of making money passively by selling on Amazon was very enticing to me. For a long time, my wife and I had been talking about starting a business together, so I told her about it and she was in!
Over the next couple of months, we learned more about selling on Amazon and tried to come up with an idea for our first product. We had a few, but everything we considered was either too competitive or the startup costs for inventory were too high.
After a while, we gave up.
A few months later, in the spring of 2015, I came across a course (Amazing Selling Machine) that specializes in teaching people how to sell private label products on Amazon. My wife and I watched a webinar together and decided to invest in the course and commit to giving it a shot.
The course was eight weeks long. A few weeks into it, we had decided on our first product and ordered samples from a few manufacturers in China. By the end of the eight weeks, we had chosen a manufacturer and had placed our first inventory order.
Editor's Note from R.J. Weiss, CFP: I also experimented with Amazon FBA a few years after Marc's experience. In 2018, I launched a small private label brand selling travel yoga mats. We broke even for a while but never gained real traction, and when the pandemic shifted supply chains and demand, my partner and I decided to shut it down. We lost money, but the startup costs were relatively small. The experience of creating a product from scratch was still valuable, and it gave me a firsthand understanding of how challenging FBA can be today.
Our Product is Live!
In August of 2015, our inventory arrived and our first product was live for sale on Amazon! We figured it would take a while to start making sales, but we actually sold out of our inventory (1,000 units) in about three weeks.
Our second order of 1,000 units also sold out in three weeks. By this time, we had a number of four-star and five-star reviews on our product, and we started looking into possibilities for a second product under the same brand.
In early November we received an order of 5,000 units of our first product, hoping to make a lot of sales from holiday shoppers. We actually sold out of that inventory a few days before Christmas and were out of stock for about a week until our next order came in.
During a 30-day period between Thanksgiving and Christmas, we made more than $50,000 in gross sales from a single product that sold for about $16, and we were doing no advertising at that time. All of those sales were the result of creating a quality product, doing a better job with the photos and listing than our competitors, and benefiting from the massive exposure that Amazon can provide.
Growing the Business
Throughout 2016, we were focused on adding new products. Originally, we had only intended to sell one or two different products. However, we decided to try and grow our product line so that our business wouldn't come crashing down if a single product stopped selling.
By the end of 2016, we had seven different products under our brand and each of those had two or three color variations. None of our other products matched the success of our first product, but they were all profitable. Two of them sold quite well, even though they weren't home runs, and the others averaged a few sales per day.
Selling the Business
Although the business had grown nicely and we were making more than $100,000 in profit from a part-time side hustle, we decided to sell the business.
In order to keep growing, we would have needed to invest more money into inventory for other new products, and we decided we'd rather sell the business to someone who could take it to the next level.
So in 2017 we sold the business for a six-figure amount, and our experiment with an Amazon FBA business was complete.
A Step-by-Step Guide to Amazon FBA
Now that we've taken a quick look at some of the different ways you can make money with Amazon, let's take a deep look specifically at how to sell private label products through Amazon's FBA program.
Step #1. Decide On a Product
The first thing you need to do is choose a product that you want to sell. There are basically two different approaches you can take:
The Standard Approach
Most articles and courses related to selling private label products on Amazon will advise you to use criteria that will help you avoid some headaches and expenses.
With the standard approach, here are some attributes that you want to find in an ideal product:
- Priced between $15 and $50 on Amazon. After the Amazon fees for FBA, it's hard to make much of a profit with products that sell for less than $15. Purchases under $50 tend to be impulse buys, so the sweet spot is between $15 and $50.
- Small in size. Typically, you'd want to sell a product that could fit inside a shoebox. The storage fees that you'll pay to keep your products in Amazon's warehouse are higher if you're selling oversized products. Higher fees obviously cut into your profit.
- Lightweight. If you're sourcing products from China, your cost will be influenced by the weight of the product. My wife and I had our inventory shipped by air express with DHL, UPS or FedEx. That's the most expensive shipping option, but our products were very lightweight so it still worked out.
- Nothing with electronics or batteries. These types of products have a greater defect rate, and will probably require more customer service. Batteries can also be an issue when coming through customs.
- Simple products that people already know how to use. Ideally, you don't want to have to train customers on how to use your product. Simple products require much less customer service.
There are obviously many legitimate and convincing reasons to follow these criteria, and this is the approach my wife and I took when choosing our products.
The Opposite Approach
If there are convincing reasons to follow the standard approach, why would you want to take a different route?
The vast majority of private label sellers are following the same criteria and looking for the same types of products. This leads to heavy competition.
If you go against the common logic, you may be able to find a product that you can sell with far less competition.
To take this approach you'll need to be willing to jump through a few hoops, or potentially to invest more money. But the end result might be worth it.
If I were starting a new Amazon FBA business today, I would probably look for an unconventional product that most private label sellers don't want to deal with.
If you choose an oversized product or a heavy product, you may need to have it shipped by sea (you can hire a freight forwarder to help). It's inconvenient and intimidating to most new sellers, and you can avoid a lot of competition if you're willing to do what other people won't.
Similarly, if you choose a product that sells for $100 instead of $15 to $50, you'll need to invest more money into startup inventory. But since most sellers aren't willing to do this, you'll probably have less competition.
How to Spot a Good Product Opportunity
When you're deciding on the first product that you want to create (or have manufactured) and sell, you're basically looking for an opportunity.
There are a few possibilities:
#1. Low Competition
Most sellers look for an existing product that's selling well on Amazon but doesn't have a lot of direct competition. Then you'll create your own version of this product.
This is how my wife and I decided on our first product that turned out to be very profitable. Although, I have to be honest: it's not that easy to find a product like this. There's a lot of competition on Amazon, and we looked at many different products before finding one that we thought was a good opportunity.
You can use Amazon's best sellers list to find products that are moving well. From that page, you can click through to specific categories and subcategories to see the top sellers in each. Or you can use a tool like JungleScout to give you an estimate as to how many units of a product are being sold each month.
To check out the competition, search on Amazon for the main keywords that people would use to find this product. If there's not much competition, you may have found a good opportunity.
#2. Flawed Products
Maybe a product you're considering has a lot of competition, but the competing products all suck. If all of the competitors have bad overall ratings and reviews, there may be some opportunity for you to jump in.
Read through the negative reviews of the competing products and see what people don't like. This could be things related to the product's design, quality of materials, size, colors, smell, or anything else.
Take note of what seem to be the major issues. If you can find a manufacturer who will make a product that addresses these issues, you could have a product that's better than all of your competitors.
Use your listing to point out how your product is well-designed and made from quality materials, and you may be able to sell a lot.
#3. Poor Listings From Competitors
The quality and price of a product aren't necessarily what determines how well it sells. Some products on Amazon are presented very well, and others are not.
If you find a product where all of the competitors have bad listings, you may be able to come in and outsell them all with a good listing.
A bad listing will usually have poor quality photos, not enough photos, and/or a lack of information in the bullet points and product description. On top of all that, it may not be optimized for the right keywords.
Step #2. Find a Manufacturer
Once you've found a product that you think may be a good opportunity, the next step is to find a manufacturer.
The easiest starting point is still Alibaba, where you can search for manufacturers that already make the type of product you want to sell. Most private label sellers begin their sourcing here.
With that in mind, it's important that you customize the product in some way. Otherwise, it's too easy for someone else to sell exactly the same product as you.
Most manufacturers are willing and able to change or customize products. Some will even create a completely custom product just for you.
The reason most private label sellers use Alibaba is that it's easy.
However, some sellers actually travel to China and go to the Canton Fair, where supposedly (I haven't been there) you can find much more than you can find on Alibaba.
When you've identified a few potential manufacturers, you can contact them through Alibaba to get pricing on the product. Be sure to tell them that you'll be selling the product on Amazon and that you plan to place repeat orders (they want repeat business, so they will be more eager to work with you).
If you're a new Amazon seller, it's helpful to work with a manufacturer that has experience with other Amazon sellers (which is increasingly common). So don't be afraid to ask them if they're familiar with Amazon's rules and if they can prep the products for FBA, which includes a barcode on the packaging.
The price and minimum order quantity that you get from the manufacturer is negotiable.
Some of them will also make a one-time concession to give you a small minimum for your first order. If you need a small quantity, ask if they would be willing to do a “test order” so that you can be sure that the product will sell before committing to a larger quantity.
Keep in mind that the smaller quantity you order, the higher price you'll pay per unit. As your business grows, one of the best ways to increase your profit margin is to order larger quantities and decrease the cost of each unit.
Be sure to get a sample sent to you before placing an inventory order. I recommend getting samples from several manufacturers so you can compare them. I also like to buy competing products that are selling on Amazon so I can compare them to the samples.
Quality Is Critical
When you're deciding on a manufacturer, don't simply go with the lowest price. In order to have long-term success selling private label products on Amazon, you will need to prioritize quality.
Product reviews are extremely important for selling on Amazon. If your product is low-quality, you'll get bad reviews and your sales will dry up. But if you have positive reviews, the product can continue to make money for a long time.
Manufacturers will often default to using cheap materials so they can give you the lowest price possible. But in most cases, they're able to use higher-quality materials if you ask — and a lot of times, the price difference will be relatively small.
Step #3. Create the Product Listing
After you decide on a manufacturer and place your order, you will probably have at least a few weeks — and possibly a couple of months — until the product is in Amazon's warehouse and ready to sell.
During this time you should be working on your listing.
Listing Key #1: Use Good Photos
Your listing's photos are one of the biggest factors in whether your product succeeds or fails. Many Amazon customers buy based on the images alone without ever reading the description. That means poor photos make it very hard to get sales, and strong photos help your product stand out immediately.
When we launched our first product, we took all of the photos ourselves. I shot everything in natural light, usually outside on an overcast day, and placed the product on a simple piece of cardboard for a clean background. It was basic but effective.
At the time, I would upload the photos and hire someone on Fiverr to remove the background and turn it pure white. It was inexpensive and it helped us meet Amazon's requirements for the main image.
Today, this process is much easier. Tools like Canva, PhotoRoom, and Google's Nano Banana image editing features allow beginners to remove backgrounds, adjust lighting, and create clean product photos in minutes. You can still hire someone if you prefer, but these tools make it possible to handle most of the work on your own.
Whatever method you choose, make sure you:
- Photograph the product from every angle
- Use all of Amazon's available image slots
- Include at least one lifestyle photo showing the product in use
Amazon still requires a pure white background for your main image. Your secondary images can be lifestyle or contextual photos that help shoppers understand how the product fits into their everyday life.
If taking photos is not your strength, you can hire a photographer who specializes in e-commerce product images. The cost is higher, but strong photos can significantly improve your conversion rate.
Listing Key #2: Use Keywords In the Product Title
Your product title is extremely important for Amazon SEO. You want the most important keywords to be in your title so that potential customers can find you.
Browse through your competitor's listings and jot down all of the keywords you find. You can use a tool like Helium 10 to see which keywords get the most search volume.
It's also important that you use keywords that accurately describe your product. Don't just choose keywords because you think people will search for them. Amazon will use your conversion rate as a major factor in determining where you rank in searches, and if you're ranking for irrelevant keywords your conversion rate will be low.
Listing Key #3: Use Benefit-Driven Bullet Points
Aside from the photos and the title, the bullet points are the next most important part of the listing. Make sure that your bullet points focus on the benefits of the product and how it will help customers.
Focus on what makes your product unique and better than the competition. The bullet points are the best place to sell your product.
Use all of the bullet points that Amazon gives you.
Listing Key #4: Fill Out as Much Info as Possible
When you're creating a product listing in Amazon Seller Central, there are a ton of different fields. Fill out as many of them as possible. This will give the customer the most information, and it will also give you the best chance to rank in searches.
Step #4. Make Sales
Once your product is live, the next step is to make sales. If you were able to choose a product with low competition you may be able to start making sales within a few days, just by visitors finding your listing through a search on Amazon.
Getting traction and making the first few sales can be one of the hardest parts of the process. At first, you won't have any customer reviews, which makes it harder to sell if your competitors have a lot of reviews.
Once you've proven to Amazon that you can make sales, they'll rank you higher in the search results. So at first, you just need to focus on getting the ball rolling.
Here are a few things you can do.
Strategy #1: Pay for Amazon Ads
When you do a search on Amazon, you probably notice that the first few listings on the page say “sponsored.” If you're willing to pay, you can get exposure even for a new product.
You can bid a maximum amount that you're willing to pay per click, and you can set a max daily budget.
Amazon will give you reports to show your average cost per sale, so if you know your profit margin, you can work to keep your bids at a level that allows you to break even.
Even if you're not making any profit from your ads, the conversions can help you to rank higher in searches and the result will be more organic (free) sales.
Strategy #2: Run Ads on Other Sites
A lot of sellers pay to run ads on other sites (like Facebook). Depending on your profit margin and the cost that you have to pay per click, this can be a good way to start making some sales.
Some sellers will use discount codes or special offers to generate more sales from these ads.
Strategy #3: Use Your Email List
If you have an existing email list, you can use it to help launch your new products or to promote limited-time offers.
Most new sellers won't have an existing email list, but this is something that you can work to build over a period of time. A quality email list will make it much easier for you to launch new products and get reviews for those products.
How to Scale Your Amazon FBA Business
Once you're making some sales with your first product, you may want to consider adding a second product. Scaling up and adding more products is the best way to grow your overall revenue and profit.
There are a few different approaches that you can take for scaling up. The first approach is to build a brand in a particular niche where all of your products will be related.
For example, if you want to build a brand in the camping niche, your first product might be a tent. Options for future products would include things like other styles of tents, sleeping bags, hammocks, hammock straps, backpacks, or any other type of camping gear.
The other approach is to sell a wide variety of products based simply on whichever products give you the best opportunity to make money. Those that take this approach usually go with a very generic business name like Best Quality Products that will allow them to sell just about anything.
In this case, your first product might be a tent and your next product might be a baking mat. There is really no correlation between the products, so you're not building a recognizable brand.
Although both approaches can work, my preference is to try to build a brand in a particular niche where all of your products are at least somewhat related. This will give you the best chance to sell multiple products to your customers and it will give you the best options for branding your business over the long run.
As you add more products, not all of your products will need to be a home run. My wife and I had several products that averaged around 5 to 10 sales per day. None of those products made us a significant amount of money individually, but the cumulative result was a successful business that didn't rely too heavily on any one product.
Products that make a few sales per day can also fly under the radar of some of your competitors, whereas top-selling products tend to inspire a lot of copycats.
Probably the biggest challenge that you'll face related to scaling up involves cash flow. As you add new products, you'll need to invest money into the initial inventory for each product, and it can be a while before you start to recoup that investment. This can limit how fast you're able to grow your business.
Some Words of Caution for Amazon Sellers
Although selling on Amazon presents some great opportunities, there are also some details that I want to point out for anyone who is considering this. I don't do this to discourage you from trying it, but I want you to be informed of some of the downsides instead of learning them the hard way.
Sales Tax Laws are Changing Quickly
A few years ago, Amazon sellers had to deal with complicated sales tax rules because having inventory in multiple states created a tax obligation. That is no longer the case for most sellers.
Today, almost every state has a marketplace facilitator law. This means Amazon is required to collect and remit sales tax on your behalf for orders placed through the Amazon marketplace. For most FBA sellers, this removes the need to register in multiple states or file dozens of separate sales tax returns.
You may still have sales tax obligations if you sell on your own website, or if your home state requires all businesses to register. But for Amazon-only sellers, the process is far simpler than it used to be.
I am not a sales tax expert, so I recommend speaking with a CPA or an e-commerce sales tax professional for advice based on your specific situation.
Liability Insurance
If you plan to sell private label products through Amazon FBA, it is important to have liability insurance. Amazon requires sellers to carry at least $1 million in coverage once they reach certain sales thresholds, and even smaller sellers benefit from having protection in place.
The key coverage you need is product liability insurance. This protects you if your product causes an injury or property damage. Amazon treats private label sellers as the manufacturer, so you are responsible if something goes wrong.
Most policies designed for Amazon sellers bundle general liability and product liability together, and the cost is usually a few hundred dollars per year for low-risk products. Your policy must also list Amazon as an additional insured in order to meet Amazon's requirements.
If you are unsure which policy you need, speak with an insurance provider that works with e-commerce sellers. They can point you in the right direction and help make sure your coverage meets Amazon's rules.
Don't Rely on Amazon
When you sell on Amazon's platform, you're at Amazon's mercy. They can take down your listings, restrict your seller account, or permanently close your seller account — and there's not much you can do about it.
Amazon is a great platform for sellers, but you need to keep in mind that your control is limited. If you plan to make this a long-term business, I would highly recommend that you also work to build up your business on other platforms, most specifically your own e-commerce website.
You can use Shopify or another e-commerce platform to start selling on your own website. It will take time and effort to build up your business, but you'll have more control and you won't need to split revenue with another party.
Conclusion: How to Make Money on Amazon
If you're serious about FBA, the next steps are choosing a product, validating demand, and understanding Amazon's fees so you can estimate your margins. From there, your job is to keep improving your listing and maintain inventory.
If you want to compare FBA to other Amazon opportunities, these guides can help:
- Amazon Influencer Program: How creators earn commissions with short videos and curated storefronts.
- Amazon Flex: How delivering Amazon packages works, how much you can earn, and whether it's worth it.
You might also like: The best things to sell online.
