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How Do Amazon Sellers Make Money?

It's no secret that Amazon is one of the world's most successful and profitable companies, with nearly 75% of online shoppers relying on it for their shopping needs. But do you ever wonder how Amazon sellers make money?

Whether you're an experienced seller or just getting started, understanding how Amazon sellers make money can help you maximize your profits and stay competitive.

Types of Amazon Sellers

There are three primary types of Amazon sellers: individual, professional, and business-to-business.

Any person can sign up to be an individual seller on Amazon. With this status, you can sell products on a case-by-case basis. Fulfillment by Amazon (FBA) is not available to individual sellers. There is also a $0.99 per item plus other selling fees.

Professional sellers pay a monthly subscription fee of $39.99 and don't have to pay the $0.99 per item fee. This status is best for those who plan on selling more than 40 items per month, as it will likely save you money in the long run. Fulfillment by Amazon is available to professional sellers.

Businesses of all sizes can subscribe to Amazon Business Seller (B2B) plans at $39.99 monthly plus other selling fees. They sell their products exclusively to other businesses. As a business seller, you can access features that help streamline selling to businesses, such as bulk listing and purchasing tools, pay-by-invoice, and volume pricing plans. Fulfillment by Amazon is available to business sellers enrolled in a paid subscription plan.

How Do Amazon Sellers Make Money?

Fulfillment by Amazon (FBA) and Merchant Fulfilled Network (MFN)

There are two key distribution methods to make money selling on Amazon: through Fulfillment by Amazon (FBA) or by utilizing Amazon's Merchant Fulfilled Network (MFN). FBA is the more popular of the two, as it offers more benefits to sellers.

With FBA, sellers ship their products to an Amazon fulfillment center, and Amazon handles the rest – including storage, customer service, and shipping. This hands-off approach appeals to many sellers, as it frees up their time to focus on other aspects of their business. And because customers trust Amazon implicitly, they're more likely to buy products fulfilled by Amazon.

Another advantage of FBA is that it makes sellers eligible for Prime shipping. Buyers get their products faster and are more likely to be satisfied with the purchase. More customer satisfaction means increased sales and more positive feedback for sellers.

The main downside of FBA is the cost – both in terms of the fees charged by Amazon and the cost of shipping products to Amazon's fulfillment centers.

With MFN, merchants list their items on Amazon but handle all other aspects of selling themselves, such as storage, packing, shipping, and returns. This way, merchants have more flexibility with how they want to handle these processes. Sellers who want more control of the entire process may prefer MFN over FBA, despite its drawbacks and potentially lower customer engagement.

Business Methods for Selling on Amazon

We've looked at the types of sellers who list their merchandise on Amazon and Amazon's methods of selling and delivering said inventory. Next, we will overview some business models and services that can answer how Amazon sellers make money.

Merchants can create and sell their products or resell them in different ways. Retail arbitrage or Amazon arbitrage is reselling products from brick-and-mortar retailers on Amazon at a higher price. You can also resell products from various manufacturers under your label by either white or private labeling. Some Amazon sellers make money through drop-shipping. In this case, they do not physically have the products in stock. Instead, they source directly from the manufacturer or supplier.

Amazon Handmade

Handmade products are those that the artisan merchant entirely handcrafts personally. These products can range from jewelry to furniture to clothing. Amazon Handmade is a section of the Amazon website dedicated to selling these crafts.

When selling on Amazon Handmade, there are no listing fees. Sellers pay a referral fee and a variable closing fee when their product sells. The referral fee is a percentage of the total sale price, and the item's category determines the closing fee.

To be eligible to sell on Amazon Handmade, you must apply and have your products approved by Amazon. Once your products are approved, you can start listing them for sale on the site.

Kindle Direct Publishing

If you want to self-publish your book, Kindle Direct Publishing (KDP) may interest you. With KDP, you can publish your book electronically on Amazon's Kindle platform. You'll retain control of your book's rights and pricing and get 70% of the royalties earned on each sale. KDP is an excellent option if you're looking for a hands-off approach to publishing your book.

**Private Label Products

Private-label selling is when a seller sells products another company manufactures. The seller sells these items under their brand name rather than the manufacturer. The product must sell exclusively through one retailer to be considered private-label selling rather than white-label selling. It shouldn't be a generic product (such as ibuprofen) that multiple retailers can sell simultaneously.

Private-label products usually cost less than branded products. They can help save money while still getting quality products. There are many different types of private-label products on Amazon, so sellers can find products that fit their niche and target market.

White Label Selling

Many Amazon sellers make money by white-labeling products. White labeling is when a seller takes a generic, no-brand item and puts their branding on it. The seller can add their label, packaging, design, or combination.

White-label selling can be a beginner-friendly way to start on Amazon without investing in product development and manufacturing. It can be a way to diversify your product offerings and reach a broader range of customers.

White-label and private-label selling appear relatively similar. Many aspiring sellers may find themselves confusing the two. The keywords to remember when distinguishing the two are "exclusive" and "generic."


Dropshipping is a business model in which e-commerce entrepreneurs sell products without carrying any inventory. When a store owner receives an order from a customer, they contact the supplier. The supplier will then ship the products directly to the customer's doorstep.

There are several reasons why retailers would choose drop shipping.

  • Start an online business with little upfront investment
  • Test different products and suppliers to see what works
  • Low overhead costs
  • No need to hire staff to pick, pack, and ship orders
  • This business model is not without its issues.
  • Seller has no control over the production or shipping process
  • Cannot guarantee the quality of the product or service
  • Responsible for customer service
  • May have a low-profit margin

Some have expressed ethical concerns about dropshipping. The reason is low involvement from the merchant and the model's simplicity appealing to dishonest merchants who care more about raw profit than the customer or merchandise.


These points should give you good insight if you've ever wondered how Amazon sellers make money. With these fulfillment options and retail methods, you may find a business strategy that works for you and your creative and financial expectations.