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- Amazon FBA is one way to start a side hustle or grow your business as an entrepreneur.
- Amazon does the labeling, packing, and shipping to customers on sellers' behalf.
- The top tier of sellers make millions; others find the space crowded and challenging.
Fulfillment by Amazon, or FBA, enables Amazon sellers to leverage Amazon's vast network of warehouses, order processing systems, and customer service.
Through FBA, Amazon takes on the heavy lifting of labeling, packing, and shipping to customers on the sellers' behalf. Products in FBA also get a badge that appeal more to Amazon Prime subscribers.
Last month, Amazon launched a supply-chain product suite to build upon its logistics and fulfillment offerings. Previously, the tech giant has plowed billions into the service, including building hundreds of Amazon fulfillment centers where workers pick and pack orders to be sent to customers.
That investment is not without reason. Budding entrepreneurs sell products on Amazon FBA as one of many side hustles to escape the grind of a typical nine-to-five. Charlie Chang, 29, grossed about $41,000 from FBA with a 40% profit margin in the space of five months.
Some sellers have even managed to parlay their side hustle into a full-time gig. In March, Insider spoke to Amazon FBA seller Scott Needham, who said he'd made over $30 million in gross profits.
He advises newcomers to the platform to start with easy-to-manage products like sporting goods or kitchenware and focus on researching the market for items where the demand isn't currently being met on Amazon.
Is Amazon FBA good for beginners?
London-based seller and coach Ben Alistor has made $800,000 in sales this year on Amazon FBA. Still, he says he made many expensive mistakes at the beginning of his selling journey as there isn't much information online about how the program worked.
Negative reviews and manufacturing issues resulted in a $15,000 loss for one Amazon FBA seller. Others have even opted for Etsy instead after failing to sell on Amazon FBA as they were "chasing an oversaturated market."
Fees charged by Amazon can also start to rack up. The Federal Trade Commission's September 2023 lawsuit against the firm alleges that Amazon FBA fees increased by an average of 30% between 2020 and 2022.
Still, entrepreneurs continue to use the platform to make millions in sales. Dragon Glassware, a glassware company whose colorful cups recently appeared in the Barbie film, is on track to make $5 million in sales this year.
Through its Multichannel fulfillment program, products sold on other e-commerce outlets used by Dragon Glassware, such as Shopify or Etsy, can also be fulfilled from an Amazon warehouse.
Despite his success, Dragon Glassware CEO Matt Rollens warns that it isn't a get-rich-quick scheme, despite what social media content from other Amazon sellers might tell you.
"I see a lot of content about getting rich quickly on Amazon," he said. "You see the guys on LinkedIn with the Lamborghinis, and that's just not realistic. It's going to be a slog, and you just don't know what's going to happen."