Amazon FBA Guide: Starting, Fees & Profitability
What Is Amazon FBA?
Fulfilment by Amazon (FBA) lets you store products in Amazon's warehouses. When customers order, Amazon picks, packs, ships, and handles returns. You focus on sourcing products and managing listings.
FBA Fees
- Referral fee: 8-15% of sale price (varies by category, most are 15%)
- FBA fulfilment fee: £2.50-5.00+ per unit depending on size and weight
- Monthly storage: £0.75-2.40 per cubic foot (higher Oct-Dec)
- Long-term storage: Extra fees for inventory stored over 365 days
- Professional seller account: £25/month
On a £20 product, expect £6-8 in total Amazon fees (30-40% of revenue).
Realistic Profitability
Aim for at least 30% profit margin after all costs. On a £20 product: Amazon fees £7 (35%), product cost £5 (25%), shipping to FBA £1 (5%), other costs £1 (5%) = £6 profit (30%). Most successful FBA sellers operate at 25-40% margins.
Getting Started
- Research products using tools like Jungle Scout or Helium 10
- Find suppliers (Alibaba for private label, UK wholesalers for arbitrage)
- Create your Amazon seller account
- List products with optimised titles, images, and descriptions
- Ship inventory to Amazon's warehouses
- Launch with PPC advertising
Common Mistakes
Choosing oversaturated markets, underestimating fees, poor product photography, ignoring PPC advertising, ordering too much initial inventory, and not understanding seasonal demand.
Related Calculators
Frequently Asked Questions
How much does it cost to start Amazon FBA?
Budget £1,000-5,000 minimum: £500-3,000 for initial inventory, £25/month seller account, £100-500 for product photography and listing optimisation, plus working capital for PPC advertising.
What profit margin should I aim for on Amazon FBA?
Aim for at least 30% net profit margin after all Amazon fees, product costs, and shipping. On a £20 product, that means at least £6 profit per unit. Below 25% margin makes it difficult to sustain.