What Is Amazon FBA? How It Works, What It Costs, and Who It's For

What does FBA stand for?

FBA stands for Fulfillment by Amazon. "Fulfillment" is everything that happens after someone clicks buy: picking the product off a shelf, packing it, shipping it, and dealing with returns. With FBA, Amazon does all of that for you.

The opposite is FBM, Fulfilled by Merchant. With FBM you store the stock yourself and ship every order yourself. Same marketplace, same listings, different person doing the packing. Amazon's own FBA page describes the program from their side.

How does Amazon FBA work?

Here's the whole loop, the way it works for the sellers I coach:

1. You buy products to sell. In wholesale, that means buying real brands from authorized distributors, by the case.
2. The products go to a prep center. The prep center receives the stock, checks it, labels every unit and packs it the way Amazon requires. You can do this yourself, but with wholesale volumes it gets old fast. More in what FBA prep is.
3. You create a shipment in Seller Central and the prep center sends it to Amazon's fulfillment centers.
4. A customer buys. Amazon picks, packs and ships the order, usually with Prime delivery.
5. Amazon handles returns and customer service for those orders and pays out your sales, minus its fees, roughly every two weeks.

Your job is everything before step 3: finding products that actually sell, finding suppliers who will sell to you, and getting approved for the brands you want. That's the real work, and it's where most beginners need help.

What does Amazon FBA cost?

Selling on Amazon has two layers of fees. The selling fees you pay no matter how you ship, and the FBA fees on top:

• Professional selling plan: $39.99 a month. You need it to sell wholesale.
• Referral fee: Amazon's commission on every sale, a percentage of the price that depends on the category. You pay it with FBA and FBM alike.
• Fulfillment fee: charged per unit sold, based on the product's size and weight. Since April 17, 2026, Amazon also adds a 3.5% fuel surcharge on fulfillment fees in the US and Canada (AMZ Prep's 2026 fee breakdown).
• Monthly storage fee: charged per cubic foot of space your stock takes up, and higher from October to December.
• Inbound placement fee: depends on how your shipment gets split across Amazon's warehouses.
• Low-inventory-level fee: charged on some products when you let your stock run too low compared to how fast it sells.

On top of Amazon's fees you pay to get the stock there: shipping from the supplier, the prep center's per-unit fee, and shipping to Amazon. The fees beginners forget are exactly these last ones, inbound shipping and placement. Skip them in your math and a product that looked profitable isn't.

Before you order, run the numbers in a tool that includes every fee, like SellerAmp. Once you have real orders coming in, Sellerboard shows your actual profit after every fee, not an estimate.

Is Amazon FBA a business model?

No, and this is the part most beginners get backwards. FBA is how your products get to customers. It doesn't tell you what to sell or where to get it. The business model is a separate choice:

• Wholesale: you buy existing brands from authorized distributors and resell them. This is what I do and teach. Start with Amazon wholesale for beginners.
• Private label: you create your own brand and have it manufactured. Compared in Amazon wholesale vs private label.
• Online arbitrage: you buy discounted products from other stores and resell them. Compared in online arbitrage vs Amazon wholesale.

All three can use FBA. So when someone says "I'm doing Amazon FBA," the real question is: doing what? And FBA isn't dropshipping either: you own the stock before it sells. The full comparison is in Amazon FBA vs dropshipping.

Should you use FBA or FBM?

For wholesale, use FBA. You're buying in cases and pallets, many suppliers won't ship to a home address anyway, and FBA sellers win the Buy Box more often. There are two exceptions where FBM wins: oversized products, where FBA fees eat your margin, and hazmat products, where FBA adds restrictions.

I go deeper in Amazon FBA vs FBM for wholesale.

What are the pros and cons of FBA?

How much money do you need to start with FBA?

For wholesale, I tell people to have at least $5,000 set aside for their first orders, on top of setup costs like the selling plan, an LLC, prep and shipping. That's not a ceiling, it's the number that lets you place a real first order and still have money left to reorder what sells. The full breakdown is in how much money you need to start Amazon wholesale.

How do you get started with Amazon FBA?

1. Set up the business side. An LLC and EIN make distributors take you seriously. LLC and EIN for Amazon wholesale.
2. Open your seller account on the Professional plan. How to become an Amazon seller.
3. Pick a prep center to receive and prepare your stock.
4. Find suppliers and products. This is where the money is made or lost. How to find wholesale suppliers.

If you'd rather see the whole model before spending anything, my free minicourse walks through it in 7 short video lessons.