How to start an ecommerce business on Amazon

Amazon gives you a shelf in the world’s busiest store. With a few clicks, you can set up shop and instantly tap into hundreds of millions of potential customers. That ease is why so many first-time entrepreneurs turn to Amazon when they’re ready to launch an ecommerce business.

More than 60% of the sales in Amazon’s store come from independent sellers, and, in 2024, over 55,000 of these sellers generated more than $1 million in sales, according to Amazon’s 2024 Small Business Empowerment Report.

But there’s a catch: When you sell on Amazon, you don’t own the store or your relationships with your customers. Success on Amazon depends on how well you navigate its systems, fees, and rules. For some founders, it’s a smart launchpad. For others, it can be a costly detour.

This guide walks you through the step-by-step process of starting an Amazon business, paired with tips to help you think like a business owner. Along the way, we’ll highlight what Amazon can (and can’t) do for you, so you can decide if it’s the right fit for your entrepreneurial goals.

Before getting too deep into how to start a business on Amazon, it’s important to understand the two main ways you can sell on Amazon: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). 

Fulfillment by Amazon (FBA)

With Fulfillment by Amazon (FBA), Amazon handles storage, packing, shipping, and even customer service. It’s the “hands-off” option that lets you lean on Amazon’s logistics network, but you’ll pay higher fees for that convenience. This model is popular with new sellers who want speed and scale without managing warehouses.

Fulfillment by Merchant (FBM)

With the Fulfillment by Merchant (FMB) model, you manage storage, shipping, and customer service yourself or through a third-party logistics partner, often called a 3PL. FBM gives you more control and often lower fees, but it also means more operational complexity. 

Think of it this way: FBA is like renting a fully staffed storefront, and FBM is like running your own warehouse. Both models can work, but the right choice for you depends on how much control you want, how much effort you can put in, and what margins your product allows.

Below is a practical roadmap you can follow from idea to first sale. Remember, the goal is to bring an ecommerce business to life, not just sell a few products. Treat each step as a decision gate, and don’t advance until the numbers and requirements make sense.

1. Choose your niche and product

Look for demand signals in reviews and forums, and avoid categories dominated by listings with thousands of reviews. Prioritize small, light, and durable items to keep costs down, then validate interest with keyword tools and search results.

2. Set up your Amazon seller account

Decide between the individual plan (per-item fee) or the professional plan (monthly subscription). Register with your business name, employer identification number (EIN), or social security number (SSN), and provide your bank account details. You’ll also want to check category compliance and consider enrolling in Amazon’s Brand Registry program if you own a trademark.

3. Source or manufacture your product

Request samples from multiple suppliers and negotiate order sizes and lead times. Calculate your landed cost per unit — the total of your product (including product, freight, duties, and prep) divided by the number of units in a shipment — and plan for 60- to 90-day lead times to avoid stockouts. Some founders test demand with dropshipping before committing to bulk orders. If you go that route, be prepared to invest some time finding a reliable dropshipping supplier.

4. Create a high-converting listing

Strong visuals are essential to high-converting listings, so include a crisp main image, lifestyle shots, and clear feature callouts and closeups. Use the title and bullets to highlight benefits, enrich your description with visuals or Amazon’s A+ Content tool, and place keywords naturally to boost search visibility.

5. Launch and drive traffic

Price competitively, run sponsored products ads with both automatic and manual targeting, and use coupons or launch deals to build momentum. Focus on excellent service to encourage reviews, which are vital for ranking.

6. Manage fulfillment and returns

With FBA, Amazon handles logistics, but you’ll need to follow labeling and storage rules. With FBM, you (or a 3PL) control operations, and you’re in charge of setting clear shipping times and managing returns.

7. Track financial performance

Monitor conversion rate, click-throughs, advertising cost of sales (ACOS), return on ad spend (ROAS), and total advertising cost of sales (TACOS). Calculate profit per unit each week, plan inventory carefully (especially headed into peak seasons), and forecast cash flow, so you can reinvest based on data rather than guesswork. 

One of the biggest surprises for first-time sellers is how quickly Amazon’s fees add up. While the platform makes setup and fulfillment simple, you’ll need to keep a sharp eye on margins to determine if an Amazon business is worth it for you. 

Here’s the typical cost stack:

• Product costs: Manufacturing, freight, and customs duties are usually theyour largest upfront investment.
• Storage fees: Storage fees are charged monthly per cubic foot, with surcharges for long-term or high-volume storage.
• Referral fee: A referral fee is the commission Amazon charges for each item sold on its platform. This could be as much as 8% to 15% of the sale price, depending on the product category.
• FBA fees: Pick, pack, and shipping charges vary by product size and weight. Small items can cost $3 to $5 per unit; oversized products can be far more.
• Advertising: Sponsored products and other ad types often represent a major ongoing expense.
• Tools and software: Many sellers use third-party tools, such as Helium 10 or JungleScout, for research and tracking.

Amazon gives ecommerce business owners immediate access to the world’s largest online customer base, but that convenience comes with trade-offs. Before committing, weigh both sides to consider what suits you best.

Pros of selling on Amazon:

• Massive audience
• Built-in trust
• Fulfillment handled (with FBA)
• Lower upfront barrier

Cons of selling on Amazon:

• Fee-heavy
• Algorithm dependent
• Limited customer relationship
• Competitive risks

Ultimately, the question isn’t, “Can I sell on Amazon?” but “What kind of business do I want to build?” If your goal is quick access and volume, Amazon can be powerful. If you want deep customer relationships and brand control, you may eventually outgrow it.

Amazon is often best viewed as a starting point. It helps validate demand and generate early revenue. But, for long-term brand building, you’ll likely want your own storefront where you own the customer relationship.

Platforms like Shopify or WooCommerce give you control over data, storytelling, and retention. For building customer loyalty and better margins, many founders leverage Amazon's reach while also developing their own sites.

The smart move: Use Amazon to get started, but, from day one, plan how to diversify channels and build a brand that lasts.

Amazon can get you your first customers faster than almost any other platform. But it’s not a magic shortcut. Fees are high, competition is tough, and you don’t control the customer relationship.

Successful Amazon sellers focus on margins, not just sales. If you go in with clear eyes and track margins, build systems, and plan for the future, Amazon can be a powerful launchpad. Just don’t mistake it for the finish line.

Do you need a business license to sell on Amazon?

No, you don’t necessarily need a business license to sell on Amazon. You’ll need a tax ID and bank account, but licenses and permits depend on your state and product category.

What is an Amazon FBA business?

Fulfillment by Amazon (FBA) is  a model in which Amazon handles storage, shipping, and customer service for a fee, making it easier to scale.

Is an Amazon business worth it in 2025?

Yes, if you treat it like a business, not a side hustle, running storefront on Amazon can pay off. Profitability depends on knowing your costs, optimizing your listings, and treating your Amazon business as one part of a bigger strategy.

For more perspective on the logistics of running an ecommerce business, watch this video: