9 min read By Rick Wong  Updated Mar 30, 2026

Imagine this scenario: It is 3:00 AM on a crucial shopping weekend. You are asleep, resting up for the morning rush. Your Amazon Advertising campaigns are coasting on the budgets you set the previous afternoon. You feel confident because your top-selling ASIN has held the number one organic ranking for its primary keyword for six months. Your product detail page (PDP) is a conversion machine.

But while you are offline, a competitor’s automated workflow may still be active.

Using the newly released Amazon Ads Model Context Protocol (MCP) server connected to Claude Code, your competitor has instructed their AI to monitor your specific ASIN. The AI detects a slight dip in your Sponsored Products impression share; perhaps your daily budget is running thin. Instantly, the AI triggers a JSON API request. It quickly raises its own bids by 45% exclusively on your branded keywords and launches a hyper-targeted Sponsored Display campaign specifically aimed at the ad carousel directly beneath your Buy Box.

By the time you check performance at 7:00 AM, the impact is already visible. Your competitor has siphoned off dozens of your highest-intent buyers. They pulled in high-intent traffic, converted some of those shoppers, and put pressure on your conversion rate, which can affect organic performance over time.

Selling on Amazon in 2026 looks different from even a year ago. Agentic AI tools and MCP server workflows have changed how quickly competitors can react. In many cases, you are no longer competing only with human media buyers making occasional updates. You are also competing with automated systems that can monitor conditions and react almost immediately.

If you do not have a clear protection strategy in place, your listing presence is easier for competitors to pressure. That kind of shift does not always happen in one dramatic sweep. In many accounts, it shows up first as a small drop in branded visibility or a late-day rise in CPC.

At SellerMetrics, we have spent the last several months analyzing these exact AI-driven pressure points. We have watched highly competitive brands use natural language prompts to dismantle legacy sellers who were too slow to adapt. In this guide, we will look at how these automated bidding systems work, where your product listings are most exposed, and what kind of structured response can help protect margin.

The Evolution of the Threat: From Rule-Based Software to Agentic AI

To respond well, you first need to understand how the system works.

For years, Amazon sellers have used third-party PPC software to automate their bids. But legacy software was entirely “rule-based.” You had to manually set rigid parameters. For example: If ACoS goes above 30%, lower the bid by 10%. These tools helped with scale, but they were limited. They followed rules well, but they could not interpret context or adapt strategically. If a competitor made a highly aggressive move, the rule-based software would often just lower its own bids and retreat, surrendering the market share. For many sellers, the real issue is not whether automation exists. It is whether the automation is working from the right business limits.

The paradigm shifted entirely with the launch of the Amazon Ads MCP server. As we have discussed in our previous guides, the MCP server acts as a universal translator between Large Language Models (LLMs) like Claude Code and the Amazon Advertising API.

This marked the start of what many now call “Agentic AI.”

Your competitors are no longer setting rigid rules. They are giving their AI agents overarching strategic directives. A modern competitor can open their terminal and type a prompt like:

“Claude, your goal is to steal market share from ASIN B08XXXXXXX. Monitor their Sponsored Display placements on our category keywords. If their ads disappear, assume they have exhausted their daily budget. The moment this happens, dynamically increase our bids by up to $2.50 to capture all remaining evening traffic. Report your actions to me in the morning.”

The AI can parse that instruction, monitor the Amazon Ads API, detect a change, and react far faster than a person managing the account manually.

If you are still managing your Amazon PPC mainly through occasional manual checks, you are reacting far more slowly than competitors using automation. You must evolve your strategy to protect your digital real estate.

Identifying the Vulnerabilities on Your Digital Shelf

In the physical retail world, brands pay grocery stores massive “slotting fees” to ensure their products are placed at eye level on the aisle. Your “Digital Shelf” on Amazon operates on the same principle, but the real estate is infinitely more volatile.

Your digital shelf is comprised of the search results page where you rank organically, your branded search terms, and the physical real estate on your own Product Detail Page (PDP). Automated bidding systems tend to focus on three specific vulnerabilities across this shelf.

Vulnerability 1: The Product Detail Page Hijack

The most aggressive and damaging attack vector is the PDP hijack. When a customer clicks on your organic listing or your Sponsored Product ad, they land on your detail page. You paid for that click. You earned that traffic.

However, just beneath your bullet points, and directly under your Buy Box, Amazon places highly visible ad carousels: “Products related to this item” and “4 stars and above.”

Competitor automated systems are often configured to target these carousels using Sponsored Display and Sponsored Products Product Targeting (PAT). They will instruct the AI to find your top-performing ASINs and bid heavily to place a cheaper, highly-rated alternative right next to your “Add to Cart” button. If your product is $49.99, their AI will ensure a $39.99 alternative is staring your customer in the face. This can reduce your conversion rate and pull shoppers away at a late stage in the buying process.

Vulnerability 2: Branded Search Conquesting

There is a pervasive, dangerous myth among legacy Amazon sellers: “I don’t need to bid on my own brand name because I already rank number one organically for it.”

In 2026, this mindset can become expensive very quickly. Amazon’s search engine results page (SERP) is heavily monetized. The top three to four slots on mobile are almost entirely sponsored placements.

If a customer types your specific brand name into the search bar, AI bidding bots will recognize the high purchase intent of that query. Competitors will bid massive amounts on your exact brand name. Because you are not defending it, their Sponsored Brand Video or top-of-search Sponsored Product ad will appear above your organic listing. The customer, inherently trusting the top result, clicks the competitor’s ad. You just lost a loyal customer who was actively trying to find you.

This is one of those areas where brands often assume organic rank is enough, until they see a competitor sitting above them on their own search.

Vulnerability 3: The Budget Exhaustion Blindspot

AI bots are exceptionally good at finding chronological vulnerabilities. Human sellers typically set daily budgets that reset at midnight Pacific Time. If your campaigns are highly successful, they might run out of budget by 4:00 PM.

Competitor AIs use “Micro-Dayparting” algorithms to monitor the ecosystem. When the bot detects that your ads have vanished from the SERP, it knows your budget is exhausted. The bot then dramatically increases its own bids for the evening hours, buying up all the late-night shoppers at a premium because it knows the primary category leader (you) is no longer in the auction to drive up the CPC.

Building a Stronger Defensive Perimeter

Now that we understand how competitors use these systems, the next step is to build a practical response. You cannot stop competitors from using AI, but you can make attacking your brand so mathematically expensive and structurally difficult that their AI algorithms determine the cost is not worth it and shift attention elsewhere.

This requires a multi-layered protection setup.

Defense Layer 1: The ASIN Moat (Self-Targeting)

One of the most important steps in protecting your listing presence is building a “moat” around your own Product Detail Pages. You must actively buy the ad space on your own listings to block competitors from showing up.

The Strategy: You need a dedicated Sponsored Display campaign and a Sponsored Products (Product Targeting) campaign built specifically for brand protection.

If you sell a line of premium yoga mats, you do not want a competitor’s cheap yoga mat showing up under your Buy Box. Instead, you want to target your own ASINs with your other ASINs. You instruct your campaigns to display your yoga blocks, your stretching straps, and your premium water bottles directly on the PDP of your yoga mat.

The Execution: This is where automation becomes useful on your side as well. You can use your own MCP server integration (or partner with SellerMetrics to handle the infrastructure) to automate this defense.

You would prompt your AI agent: “Claude, create a Sponsored Display product targeting campaign named ‘DEFENSE_Brand_Moat’. The target audience is all of our top-20-selling ASINs. The ads to display are our highly-rated complementary products. Set the bids at a strong $2.00, and ensure this campaign has a daily budget that never exhausts. Our goal is 100% share of voice on our own detail pages.”

By doing this, you achieve two things. First, you physically block competitor AI bots from hijacking your page because you are outbidding them for the placements. Second, you dramatically increase your Average Order Value (AOV) because customers end up buying your yoga mat and your yoga blocks. You turn a defensive cost into a profitable cross-selling engine.

Defense Layer 2: Branded Keyword Lockdown

You should aim to control the search results page for your own brand name as consistently as possible. This matters even more now that agentic AI tools can move quickly on branded terms.

The Strategy: You need to create highly defensive Exact Match campaigns targeting your brand name, your brand name plus your top product identifiers, and common misspellings of your brand name.

The Execution: Because Amazon’s relevance algorithm heavily favors the actual brand owner (your product is highly relevant to your own brand name), your Cost Per Click (CPC) to win these top-of-search placements will be significantly lower than what a competitor has to pay to steal them.

You need a campaign structure that helps you maintain a strong Top of Search impression share.

Your automation prompt should look like this: “Claude, monitor our ‘Branded_Exact_Defense’ campaign. Pull an hourly report on the Top of Search Impression Share for these branded keywords. If our impression share drops below 95%, immediately increase the exact match bids by 15% and increase the Top of Search placement multiplier. Do not allow competitors to win our branded search terms.”

Yes, you are paying for clicks that you might have gotten organically. But consider this an insurance policy. It is vastly cheaper to pay a $0.30 CPC to defend your loyal customer than it is to let a competitor steal them and then have to pay a $3.00 CPC to acquire a net-new customer to replace them.

In practice, many brands do not need to dominate every branded variation at all hours. They do need to stay visible enough that competitors cannot take the easiest clicks.

Defense Layer 3: Dynamic Budget Allocation and Dayparting

To defend against the “Budget Exhaustion Blindspot,” you must ensure your defensive campaigns never go dark.

The Strategy: You cannot treat your defensive campaigns the same way you treat your offensive discovery campaigns. If your non-branded, generic keyword campaigns run out of budget at 5:00 PM, that is unfortunate but acceptable. If your Branded Keyword Lockdown or ASIN Moat campaigns run out of budget at 5:00 PM, competitors have a clearer opening to take those placements.

The Execution: You must separate your budgets into “Offensive” and “Defensive” portfolios within the Unified Campaign Manager.

Using advanced AI automation, you can implement dynamic budget shifting. You instruct your AI agent to monitor the budget pacing of your defensive portfolio. If your protection portfolio reaches 80% budget consumption by 3:00 PM, the AI should automatically siphon budget away from a lower-performing offensive campaign and inject it into the defensive portfolio to ensure it stays live until midnight.

This makes it much less likely that a competitor checking late in the day will find an easy opening.

The Danger of the “Infinite AI Bidding War”

While setting up an automated AI defense is mandatory, there is a massive, existential danger that you must avoid: The Infinite Bidding War.

When your AI bot goes head-to-head with a competitor’s AI bot over a specific keyword or a specific ASIN placement, neither AI has an ego. They simply follow their logic trees. If both bots are instructed to “Always win the top placement, regardless of cost,” they will rapidly bid each other up into the stratosphere.

Within minutes, a keyword that normally costs $1.50 per click can skyrocket to $15.00 per click. In that scenario, Amazon is usually the clear winner because rising CPCs increase ad spend for both sides.

The Solution: Profit-Aware Guardrails

To keep your protection setup from becoming unprofitable, your AI must have strict, profit-aware guardrails.

This is the exact problem we highlighted in our previous discussions about the MCP Blindspot. The basic Amazon Ads MCP server only sees ACoS; it does not see your actual profit margins or your Selling Partner API (SP-API) data.

If your AI does not know your True Net Margin, it doesn’t know when to surrender a battle to win the war.

You must feed real-time Cost of Goods Sold (COGS) and FBA fee data into your AI’s context window. Your defensive prompt must include a logical “walk-away” point.

The Profit-Aware Prompt Constraint: “Claude, fiercely defend ASIN B08XXXXXXX from competitor targeting. Continually increase bids to maintain the top Sponsored Display placement. HOWEVER, you must cross-reference our local sellermetrics_margin.json file. The maximum allowable CPC for this defense cannot exceed our True Net Profit per unit ($8.50). If the competitor’s AI pushes the required CPC to $8.51, immediately cease bidding, surrender the placement temporarily, and alert me. Do not bid at a net loss.”

By implementing this profit-aware constraint, you can stay active up to the point where defending that placement stops making financial sense. You let the competitor’s AI win the placement, but you force them to pay such an exorbitant CPC that they actively lose money on every unit they sell. This forces the competitor to absorb the cost of pushing the auction past a sensible limit. At that point, the challenge stops being campaign setup alone. It becomes a data and oversight problem.

How SellerMetrics Bridges the Gap

Building this kind of profit-aware automation takes time, system access, and close oversight. It requires maintaining secure SP-API connections, managing local JSON data feeds, and writing prompts carefully enough that the automation does not make poor decisions or overspend.

For the vast majority of Amazon brands, trying to build this infrastructure in-house is a distraction from their core competency of product development and brand building.

This is exactly why sophisticated brands partner with an advanced data and advertising agency like SellerMetrics.

We do more than install automation. We help brands connect the data, campaign structure, and oversight needed to use these systems more responsibly.

1. The Data Infrastructure: We connect your Ads API and your SP-API, continuously calculating your dynamic FBA fees, COGS, and real-time inventory levels. This gives the automation better business context for decision-making.
2. The Defensive Blueprints: We deploy our proprietary, pre-tested campaign architectures. We build your ASIN moats, lock down your branded search terms, and configure the dynamic budget shifting required to keep your defenses online 24/7.
3. The Human Oversight: We implement the critical “Human-in-the-Loop” safeguards. Our senior PPC strategists review the AI’s proposed defensive maneuvers, ensuring that no infinite bidding wars trigger without our explicit approval.

The digital shelf is becoming more competitive. Your competitors now have tools that let them automate bid changes and campaign responses. If you rely on manual adjustments and older rule-based systems, it becomes harder to hold share against competitors using faster automation.

The better approach is to respond with automation that is grounded in margin data and clear operating limits.

Are your product listings currently bleeding sales to competitor AI bots? Contact SellerMetrics today for a comprehensive Digital Shelf Vulnerability Audit. We will show you where competitors are putting pressure on your listings and how to reduce that exposure.

FAQ: AI Bidding Bots Explained

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10 min read By Rick Wong  Updated Mar 29, 2026

If you have been selling on Amazon lately, you already know the harsh reality: Amazon PPC costs are rising, and organic real estate is shrinking. But what if, instead of fighting for expensive clicks in the Sponsored Products carousel, you could get Amazon to actually pay you to bring in your own traffic? Enter the Amazon Brand Referral Bonus (BRB).

The genesis of this can be seen in their Amazon Associates program, which allows affiliate marketers to drive non-Amazon traffic into Amazon marketplace products. For Amazon sellers, we see progressively how the Amazon A9 algorithm is updated to give stronger weights to off-Amazon traffic.

In 2026, this program is a vital lifeline for protecting your margins. By rewarding you with an average 10% credit on sales driven by external traffic, Amazon is literally subsidizing your off-platform marketing. Whether you are running Meta ads, building an email list, or working with TikTok creators, here is everything you need to know to set up your attribution tags, drive high-converting external traffic, and scale your profits this year.

What is Amazon Brand Referral Bonus?

The Amazon Brand Referral Bonus program allows Amazon merchants to earn bonuses from off-Amazon marketing activities.

Brands/Sellers receive an average of 10% on sales from visitors they generate to Amazon through the Brand Referral Bonus program.

This program will attribute the Amazon sale generated from off Amazon traffic from up to 14 days. The one drawback is that this bonus will not be in a form of cash, but will be a credit against their Amazon fees.

As mentioned Brands can earn a 10% bonus on their qualifying sales on average. Estimate your bonus by multiplying your qualifying sales by the minimum bonus rate in the respective product category. Your real bonus rate may differ depending on factors like additional shipping and gift-wrapping fees, which may differ amongst sellers.

The bonus applied to your off Amazon attributed sales can be seen in your weekly report. You can see the exact bonus schedule here.

So how can Amazon figure out what sales you have driven for them? You will need to set up Amazon attribution tags, more on that later.

Why You Should Leverage the Brand Referral Bonus in 2026

Earning a credit on your referral fees is just the tip of the iceberg. Forward-thinking brands are utilizing the Brand Referral Bonus (BRB) program as a cornerstone of their 2026 growth strategies for several strategic reasons:

• Recapture Lost Margins: Amazon’s referral fees typically range from 8% to 15%. By earning an average of 10% back on sales driven by your external efforts, you are effectively neutralizing a massive portion of your platform overhead.
• The Amazon “Halo Effect” on Organic Ranking: The Amazon A9 algorithm (and its newer semantic AI engines like Cosmo and Rufus) aggressively rewards listings that bring outside traffic into the ecosystem. External sales increase your sales velocity, which in turn boosts your Best Sellers Rank (BSR) and algorithmic relevance for conversational search queries.
• Lower Customer Acquisition Costs (CAC): Advertising directly on Amazon is becoming increasingly saturated and expensive. By leveraging off-Amazon channels where CPCs (Cost Per Clicks) might be lower, and then applying the BRB credit to the resulting sales, you drastically reduce your overall blended Customer Acquisition Cost.
• Diversified Traffic Streams: Relying solely on Sponsored Products makes your business vulnerable to platform changes. Building external funnels creates a more resilient, defensible business model.

Who is Eligible for Amazon Brand Referral Bonus?

Only brand-registered merchants are eligible for the Amazon Brand Referral Bonus. Your brand’s intellectual property (i.e., your trademark or logo) must be registered with government trademark offices in eligible countries, such as the United States, Canada, Mexico, the United Kingdom, and the European Union to qualify for enrollment in the Amazon Brand Registry.

Pro Tip for 2026: You do not necessarily need to wait months for a fully approved trademark. By filing through an Amazon-approved law firm via the Amazon IP Accelerator, you can gain early access to Brand Registry (and the Brand Referral Bonus program) with a pending trademark.

If you are not the brand owner, you cannot use the BRB program, but you may still be able to join the Amazon Associates program to earn commissions from the sales you generate. Notably, Amazon allows eligible sellers to participate in both the Amazon Brand Referral program and the Amazon Associates program simultaneously. You can essentially “double dip” and earn rewards from both channels for the exact same traffic.

Bonus Rate Breakdown by Category

While Amazon advertises an “average of 10%” bonus, the actual credit you receive is heavily dependent on the specific product category you are selling in. It is crucial to factor these minimum bonus rates into your advertising margins. Here is a look at the typical breakdown:

Note: Your exact bonus is calculated by multiplying your qualifying sales by the category’s minimum bonus rate, factoring in variables like shipping and gift-wrapping fees.

How and When Do You Receive Your Referral Bonus?

As mentioned it will not be a cash bonus, but a credit against your Amazon fees.

To allow for order cancellations and customer returns, there is a two-month wait before the credit will appear in your account. If an eligible sale was made in July, the bonus will be credited to your account in September. In September and beyond, the bonus will be utilized to deduct referral fees until the all the attributed bonus is credited.

To find the report for Amazon Referral Bonus, you can download a report within Seller Central. On the Seller Central home you can go to Brands>>Brand Referral Bonus. Every Friday, the system provides a report that summarizes the estimated bonus amount earned over the preceding 90 days.

How to Set Up the Amazon Attribution Tag

You will need to create tags with Amazon Attribution to track your non-Amazon marketing efforts. To begin creating tags with Amazon Attribution, click here, or register if you are not already a member of the Amazon Attribution program.

We have a very detailed how-to tutorial on the Amazon Attribution set up here.

Proven Strategies to Drive External Traffic to Amazon

To truly capitalize on the Brand Referral Bonus, you need a multi-channel marketing approach. Here are the most effective strategies to generate external traffic that converts:

• Google Ads (Search Intent): Capture high-intent shoppers actively searching for solutions. Sending Google Search traffic directly to a well-optimized Amazon storefront or product listing often yields high conversion rates because the buyer already trusts the Amazon checkout process.
• Meta Ads (Facebook & Instagram): Use targeted video ads and carousel formats to build brand awareness. Meta ads are excellent for visually appealing products or impulse buys.
• TikTok & Influencer Marketing: Leverage creators in your niche to demonstrate your product in action. By providing influencers with your specific Amazon Attribution links, you can track exactly which creator is driving the most profitable sales and scale your partnerships accordingly.
• Email & SMS Marketing: Your existing subscriber list is a goldmine. When launching a new product or running a seasonal promotion, push your email list to your Amazon listing using an attribution tag. This provides a massive, immediate spike in sales velocity that the algorithm loves.
• Generative Engine Optimization (GEO): As search engines evolve, ensuring your brand is recommended by AI overviews and chatbots can drive highly qualified, organic external traffic directly to your Amazon listings.

Common Brand Referral Bonus Mistakes to Avoid

While the BRB program is highly lucrative, sellers frequently leave money on the table by making these common operational errors:

• Failing to Use Amazon Attribution Tags: If you simply paste your standard Amazon URL into a Facebook ad, Amazon has no way of tracking the origin of the sale. You must generate and use an Amazon Attribution tag for every external campaign to get credited.
• Ignoring the 14-Day Attribution Window: The program credits sales made within 14 days of the user clicking your link. If your marketing funnel requires a 30-day nurturing process before the purchase, those initial clicks will not qualify for the bonus.
• Driving Traffic to Unoptimized Listings: External traffic is useless if your listing doesn’t convert. Before spending money on off-Amazon ads, ensure your listing boasts high-quality images, compelling A+ content, and a strong review profile.
• Overlooking Inventory Levels: A sudden influx of external traffic can deplete your inventory rapidly. Stocking out not only pauses your ads but severely damages your organic Amazon ranking.

How External Traffic Creates a Win-Win for the Amazon A9 Algorithm

By driving off-Amazon traffic to your Amazon product will be the ultimate win-win between yourself as a seller and Amazon.

A lot of sellers seem to lose sight of the bigger plot, and that is Amazon is in a long-term struggle with Google and Facebook for the audience’s attention. Yes I know Amazon seems, at times, very antagonistic towards its sellers. But if Amazon can win the battles against its competitors, it can only benefit the Amazon sellers as the overall pie gets bigger.

If you can create a situation where you can improve your Amazon SEO, get credit for sales, and help Amazon increase its marketplace presence at the same time then you are aligning your goals with Amazon’s. The sellers that are successful in doing this will be rewarded with tangible and intangible benefits that allow your brand to be more competitive on Amazon over time.

How SellerMetrics Can Help You Scale

Navigating the intersection of off-Amazon advertising, Amazon Attribution, and the Brand Referral Bonus can be overwhelming. At SellerMetrics, we help Amazon sellers and brands orchestrate this exact ecosystem. We provide comprehensive Amazon PPC audits, advanced keyword targeting, and holistic advertising management to ensure that every dollar you spend (both on and off Amazon) is driving maximum profitability. By aligning your external traffic strategies with your internal Amazon PPC campaigns, we help you lower your ACoS, recapture referral fees, and dominate your category.

Conclusion

There is a lot to consider when implementing the Amazon Brand Referral Bonus, but the payoff is undeniable. If you already have a brand website, an email list, or are running external ads, adding Amazon Attribution tags is a low-effort, high-reward optimization that instantly boosts your bottom line. It incentivizes you to finally build those off-Amazon funnels, diversifying your traffic and protecting your brand from rising PPC costs.

As the marketplace matures, the blueprint for a successful Amazon business is evolving. We are seeing Amazon enforce much stricter supplier and supply chain requirements in 2026, making formal business structures (like having a registered LLC and a valid Resale Certificate) more vital than ever to verify and protect your brand. However, do not let that intimidate you. The barrier to entry remains low enough for anyone willing to put in the work to get started. By legally formalizing your business and leveraging profitability programs like the Brand Referral Bonus, you are building a defensible, highly lucrative brand that thrives both on and off the platform.

FAQ: All about Amazon Brand Referral Bonus

The post Amazon Brand Referral Bonus 2026: Complete Guide appeared first on SellerMetrics.

18 min read By Rick Wong  Updated Mar 29, 2026

If you are starting up your e-commerce journey, you are likely asking yourself a critical question: Do I actually need a business license to sell on Amazon? The short answer is no, you do not strictly need one just to open an account.

However, the days of the “Wild West” in online retail are long gone. E-commerce tax compliance, state regulations, and Amazon’s own terms of service have evolved significantly over the last few years, making it absolutely crucial to understand the 2026 legal landscape before launching a storefront. 

Depending on your chosen business model, your physical location, and the specific products you plan to sell, skipping the right documentation could lead to missed wholesale opportunities, suspended accounts, or unexpected tax liabilities. Let’s dive into exactly what you need to stay fully compliant, protect your assets, and set your Amazon business up for scalable success this year.

Why you don’t need a Business License to Sell on Amazon

In most cases, you don’t need a business license if you sell your items online. Consumers regularly sold on e-commerce platforms such as do not need to pay any fees or obtain any permits from the federal government.

Basically, Amazon does not prevent you from listing your product on their platform or use their services such as Amazon FBA.

You can see that you don’t need an LLC nor a business license during the seller account registration. In step 5 of the registration, Amazon allows “None, I an individual” under the section Your business type. This basically allows you to go through the entire registration without a business license.

Why you do need a Business License to Sell on Amazon

Others believe that business licenses for online sellers, as well as the procedure of obtaining one, are a needless hassle. As a result, it is frequently overlooked. But one fact that you don’t want to overlook is if your product is federally regulated. If your product falls under the following category and agencies then you will need a business license.

The following product category will require a federal business license:

• Agriculture – visit the US Department of Agriculture
• Alcoholic beverages – go to the Alcohol and Tobacco Tax and Trade Bureau and the Local Alcohol Beverage Control Board
• Aviation – visit the Federal Aviation Administration
• Firearms, ammunition, and explosives – consult the Bureau of Alcohol, Tobacco, Firearms and Explosives
• Fish and wildlife – go to the US Fish and Wildlife Service
• Commercial fisheries – visit the National Oceanic and Atmospheric Administration Fisheries Service
• Maritime transportation – check with the Federal Maritime Commission
• Mining and drilling – seek advice from the Bureau of Safety and Environmental Enforcement
• Nuclear energy – talk to the US Nuclear Regulatory Commission
• Radio and television broadcasting – consult the Federal Communications Commission
• Transportation and logistics – go to the US Department of Transportation

The following product category will require a state and local business license:

• Legal
• Medicine
• Plumbing
• Accounting
• Construction
• Food production
• Restaurants and bars

You can see a complete list from the Consumer Product Safety site here.

Local Zoning and the Home Occupation Permit

When researching business licenses, most new Amazon sellers fixate entirely on federal regulations and state taxes, completely overlooking the laws of their own neighborhood. If you are launching your Amazon business from your living room or garage (particularly if you are utilizing the Fulfilled by Merchant (FBM) model or processing wholesale pallets at home) you must consider local municipal zoning laws.

Many cities and counties require what is known as a “Home Occupation Permit” to legally operate a commercial enterprise from a residential address. Local zoning boards are highly protective of residential neighborhoods. If your Amazon business involves daily freight deliveries, a surge in commercial shipping trucks pulling up to your driveway, or storing large quantities of inventory in a residential structure, you could quickly run afoul of local ordinances. Even if the state does not require a general business license to sell online, your local city hall might impose fines if you are operating without a Home Occupation Permit. Always check your city or county government website to review the specific zoning definitions for home-based e-commerce businesses.

Register for Business License for the Legality

Another reason for registering for a business license is the legality aspect of it. By forming an LLC, you are giving your company a legal foundation. Obtaining a business license will allow you to function and safeguard your company from any litigation. If your company’s popularity and sales are increasing, the chances of being sued are increasing as well.

Of course, you should want to prevent any litigation as much as possible. However, by creating an LLC, you can safeguard your identity from any legal proceedings taken against your firm. If someone decides to sue your company, they will sue the LLC rather than you. Not trying to scare you, but that is exactly how it will happen if you are doing business as an LLC with a business license vs as an individual.

The INFORM Consumers Act and Account Verification

In recent years, the federal government introduced the INFORM Consumers Act, a mandate designed to add transparency to online marketplaces and protect buyers from counterfeit or stolen goods. For Amazon sellers, this legislation changed everything regarding how accounts are verified.

Under this law, once you reach a certain threshold of sales, Amazon is legally obligated to collect and rigorously verify your bank account information, government-issued ID, tax identification numbers, and your physical business address. While you can technically pass this verification as an individual using your Social Security Number, the process is notoriously stringent. Any mismatch between your personal banking details, your home address, and your Amazon seller profile can trigger an automatic account suspension while Amazon investigates.

This is where forming an LLC and obtaining a formal business license becomes a massive operational advantage. By registering a formal legal entity, acquiring a federal EIN, and opening a dedicated business bank account, all of your documentation will match perfectly. Presenting Amazon with a unified, legally registered business profile drastically reduces the friction of the INFORM Act verification process, ensuring your storefront remains active and your payouts are never frozen.

Register for Business License to sell on Amazon Globally

So all the information in this article assumes that US-based sellers selling on the Amazon US marketplace. But if you want to branch out globally, other marketplaces have strict tax registration requirements. For example, to open a professional seller account on Amazon UK, you cannot simply operate under the radar. You must either form a UK Limited Company (LTD) or officially register with the UK government (HMRC) as a Sole Trader to obtain a Unique Taxpayer Reference (UTR) number.

Register for Business License for Growth

If you want to get essential services for your business such as any government grants or loans you are required to have a business license and LLC. Amazon selling is a cash-intensive business, and getting a loan allows you to scale out your business. Obviously, the first thing a bank or financing company will need is your LLC registration, they cannot offer you a business loan without it. For registering your LLC, consider taking legal advices or services from registered agents such as LegalZoom or Northwest Registered Agent for business’s countinues growth.

Unlocking Commercial Liability Insurance

As your Amazon business scales, your liability scales with it. To protect consumers, Amazon’s Terms of Service explicitly require all sellers to obtain a commercial general liability insurance policy the moment their gross proceeds exceed $10,000 in a single month. This policy must cover up to $1 million per occurrence and explicitly name Amazon as an additional insured party.

While hitting the $10,000 a month milestone is an exciting indicator of growth, it presents a sudden hurdle for sellers operating without formal business documentation. Top-tier commercial insurance carriers are highly hesitant to underwrite million-dollar liability policies for sole proprietors operating out of their personal checking accounts. Establishing an LLC, securing an EIN, and holding the appropriate state-level business licenses legitimizes your operation in the eyes of insurance underwriters. Without these foundational business structures in place, you will likely face exorbitant insurance premiums or outright rejections, which in turn puts your Amazon seller account at risk of suspension for violating the insurance mandate.

Do You Need a Reseller’s License (Resale Certificate)?

While a general business license grants you the right to operate within a specific jurisdiction, a reseller’s license (often referred to as a resale certificate or wholesale license) serves a very different, highly lucrative purpose. If your Amazon business model revolves around Wholesale or Online Arbitrage, obtaining this document is absolutely critical.

A resale certificate allows you to purchase inventory from domestic wholesalers, distributors, and manufacturers without paying local sales tax on those items. Because the end consumer will eventually pay the sales tax when they purchase the item on Amazon, state tax authorities do not require you to pay tax on the initial inventory acquisition. This exemption instantly improves your profit margins and frees up vital cash flow that can be reinvested into sourcing more products. In addition, if you plan to scale a wholesale business, you will quickly discover that authorized, high-tier distributors will firmly refuse to open an account for you unless you can provide a valid resale certificate. It is the gold standard of B2B credibility.

Demystifying Sales Tax Nexus and Marketplace Facilitator Laws

The landscape of e-commerce sales tax has shifted dramatically, and understanding your obligations in 2026 is vital to avoiding steep penalties. Historically, sellers were paralyzed by the complexities of collecting and remitting sales tax across dozens of different states. Fortunately, the introduction of Marketplace Facilitator laws has simplified the process.

As a designated Marketplace Facilitator, Amazon automatically calculates, collects, and remits sales tax on your behalf for orders shipped to customers in almost every US state. This relieves you of the massive administrative burden of filing monthly tax returns in states where your customers reside. However, this does not mean you are entirely off the hook.

You must still be aware of “Sales Tax Nexus.” A nexus is established when your business has a significant physical or economic presence in a specific state. For Amazon FBA sellers, simply storing your inventory in an Amazon fulfillment center creates a physical nexus in that state. Even though Amazon remits the actual tax revenue, certain states still legally require you to hold an active sales tax permit and file periodic “zero-dollar” returns to maintain compliance. Always consult with a certified CPA to ensure your nexus obligations are fully met.

What do I need to do to get a Business License?

1. Choose a Business Structure

As mentioned, you can start your entire online business without establishing a legal entity. The basic goal is to safeguard yourself in case something bad happens. Although the likelihood of things going wrong and being sued is low, it is possible.

You can operate as a sole proprietorship if you’re just starting out. When you file your taxes, all of your sales will be included with your income tax. It makes the tax filling much easier than the next option.

The next structure you should think about is forming your company as an LLC (Limited Liability Company). If your company is growing and you need to hire more employees, an LLC is a good option.

It also gives your company a legal identity apart from you, ensuring that you are not personally liable for your firm’s responsibilities.

Another advantage is that it will readily differentiate between business and non-business spending. This will ensure operational discipline.

B2B Credibility and Tax Flexibility of an LLC

Choosing to operate as a Sole Proprietorship might seem like the path of least resistance when you are just launching your Amazon storefront, but upgrading to a Limited Liability Company (LLC) unlocks tier-one advantages that go far beyond basic liability protection.

From a financial perspective, an LLC offers tremendous tax flexibility. By default, the IRS treats a single-member LLC as a “pass-through” entity, meaning the business itself pays no corporate taxes; the profits simply pass through to your personal tax return. As your Amazon revenue scales, you even have the option to elect S-Corporation tax status for your LLC, which can dramatically reduce your self-employment tax burden while still avoiding the double taxation associated with traditional C-Corps.

Beyond the tax code, an LLC establishes undeniable professional credibility. When you reach out to major brands to negotiate exclusive wholesale contracts or request approval to sell gated products, suppliers will look up your corporate structure. Presenting an LLC backed by a federal EIN signals that you are a legitimate, long-term retail partner rather than a fleeting hobbyist.

2. Appointing a Registered Agent

If you choose to safeguard your Amazon business by forming an LLC, there is one non-negotiable legal requirement you must fulfill: appointing a Registered Agent. A registered agent is an individual or a third-party service officially designated to receive legal correspondence, tax documents, and compliance notices on behalf of your company.

Every state mandates that your registered agent must have a physical street address (P.O. boxes are strictly prohibited) within the state where your LLC is formed, and they must be available during standard business hours. While you are legally permitted to act as your own registered agent, doing so means your personal home address will become part of the permanent public record. For Amazon sellers who value their privacy and want to ensure they never miss critical legal notices while traveling or sourcing products, hiring a professional registered agent service is a small, worthwhile investment.

3. Register a DBA (Doing Business As)

Depending on your overarching brand strategy, you may need to register a “Doing Business As” (DBA) name, also known in some states as a fictitious business name or trade name. A DBA is legally required if you plan to operate your Amazon storefront under a name that is different from your official legal entity name.

For example, if you register your formal legal company as Smith Holdings LLC, but you want your Amazon store, customer service emails, and product packaging to be branded as Cozy Home Essentials, you must register Cozy Home Essentials as a DBA with your state or county government.

Registering a DBA goes far beyond the aesthetics of your Amazon seller profile; it is a strict financial and legal requirement. If you attempt to open a business checking account, cash a vendor refund check, or apply for a business credit card under your consumer-facing brand name without a registered DBA, banks will reject the application. Furthermore, maintaining a clear paper trail that officially links your corporate LLC to your storefront brand is highly beneficial when you eventually file for a trademark and enroll in Amazon Brand Registry.

4. Get a Sales Tax ID

A Sales Tax ID (frequently referred to by individual states as a Seller’s Permit, Sales Tax License, or Department of Revenue ID) is a state-issued number that grants your business the legal authority to collect sales tax on items sold within that jurisdiction.

At this stage, many new sellers get confused. They ask: “If Amazon acts as a Marketplace Facilitator and automatically collects and remits sales tax for me, why do I need my own Sales Tax ID?”

The answer comes down to your physical home state and your long-term business strategy. Even though Amazon is handling the transaction tax at checkout, your business still has a physical nexus in the state where you live and operate. Most states legally require any retail business operating within their borders to hold an active Seller’s Permit, regardless of whether a third-party platform is remitting the actual funds. In these cases, you will simply use your Sales Tax ID to file periodic “zero-dollar” tax returns, proving to your state that Amazon handled the tax liabilities on your behalf.

Furthermore, if you ever plan to sell on a platform that does not automatically remit taxes (like your own Shopify store), or if you want to apply for a Wholesale Resale Certificate to buy inventory tax-free, holding an active Sales Tax ID is a strict prerequisite.

How to get your Sales Tax ID:

1. Locate Your State’s Tax Portal: Search for your home state’s Department of Revenue, Department of Taxation, or Board of Equalization website.
2. Apply Online: Navigate to the “Sales and Use Tax” section and look for the portal to register a new business.
3. Submit Your Details: You will need to provide your business structure details, your DBA name (if applicable), and your federal EIN.
4. Receive Your Permit: In most states, applying for a Sales Tax ID is completely free or requires a nominal processing fee (usually under $50), and you will often receive your ID number instantly upon completing the online application.

5. Get a Federal Tax ID

This is probably the most important part. A federal tax identification number used to identify an LLC is known as an Employer Identification Number (EIN). So you’ll need an EIN if you want to register a business banking account for your LLC or for import/export.

If your using a company registration service they will probably register an EIN for you. But you can also register via one of 3 ways.

1. Online – just visit this link from IRS.
2. Via Mail, send your accomplished Form SS-4 to Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999. Mailed-in applications are processed within 4 weeks.
3. Via Fax – download your Form SS-4 from the IRS website and send the accomplished form to fax number 855-641-6935. Please include your fax number so you can receive your EIN via fax within four (4) business days.

But let’s be honest no one using the internet will be using the last two options anymore.

It’s also worth noting that obtaining an EIN as a sole owner is completely optional, although you are still allowed to do so. As a sole proprietor, you can use your social security number for tax fillings.

Conclusion

Navigating the legal and tax requirements of an e-commerce business can feel daunting, but it should never stop you from launching your brand. The landscape is indeed maturing; 2026 brings stricter supplier expectations and tighter compliance rules, making an LLC and a Resale Certificate more vital than ever if you want to land lucrative wholesale accounts and protect your personal assets.

However, the fundamental beauty of the Amazon platform remains unchanged: the barrier to entry is still remarkably low enough for anyone to get started. You can absolutely launch your storefront today as a sole proprietor, test the waters, and upgrade your legal entity as your revenue scales. The secret to long-term success is simply to start smart, stay informed on the latest compliance guidelines, and build a foundation that is ready to grow.

Still have questions?If you are unsure about which business structure is right for your Amazon model, or if you need help navigating the 2026 legal landscape, we are here to help. Contact our team of e-commerce experts at hello@sellermetrics.app, and let us guide you through the process of setting up your storefront for success!

FAQ: All About Business License for Amazon

The post Do You Need a Business License to Sell on Amazon? (2026 Comprehensive Guide) appeared first on SellerMetrics.

14 min read By Rick Wong  Updated Mar 09, 2026

Overview

On Amazon, there are a few common business models that sellers adopt. Anyone in the Amazon FBA space has heard these words floating around – private label, wholesale, retail arbitrage, online arbitrage, and dropshipping. All of them are unique selling methods with their own benefits & limitations. Wholesale vs private label vs arbitrage vs dropshipping – what works for one seller might not work for another!

Still, out of these business models, private label and wholesale are by far the most popular. JungleScout‘s statistics indicated at least 67% of Amazon sellers sell private label products, and 26% sell wholesale products, this includes sellers who may use both. With both methods being so popular, they are constantly pitted against each other in a neverending Amazon Wholesale vs Private Label debate.

We will guide you on how wholesale and private label work, their pros & cons, and provide a brief comparison. By the end of this article, you will be able to make a clear decision on which business model will work for you!

What is Wholesale?

Wholesaling is a business model where sellers purchase goods in bulk, usually at a discount, and then sell the individual units in a retail marketplace or online marketplace like Amazon. Wholesale products are usually existing products, they tend to already have listings on Amazon. Wholesale Amazon FBA sellers add their own products to existing listings and act as resellers for them.

How much does it cost to start wholesaling? Is wholesaling profitable on Amazon?

According to one survey, nearly half of Amazon wholesale sellers spent less than $2500 in business start-up costs. Around 61% of them ended up earning over $5000 per month. This makes it quite a profitable business, for a relatively low start-up cost.

Pros & Cons

Despite the numbers and percentages, like every type of business model, wholesaling on Amazon has its pros and cons.

Wholesale definitely has some attractive advantages. Reselling products cuts some major costs including advertising, and cost of time. You don’t have to expend energy into building a brand, or even ASINs and optimized listings. You can simply start once you have your permit.

Still, sellers get lured in by the advantages and forget how difficult it is to find a wholesale supplier in the first place.

Established brands on Amazon already have sellers, and are unlikely to take on new sellers. Meanwhile, established brands that are NOT on Amazon are few and far between, now that Amazon holds 9.2% share in the US retail market. Sellers with past wholesaling experience and relevant connections will find it much easier to wholesale than new, inexperienced Amazon sellers. It’s important to keep this in mind!

That’s not to say it’s not worth doing! Wholesaling is extremely profitable once you get a foothold in the market. When you provide success to one brand, others quickly take note. Amazon wholesale is a fast way to scale if you do it right.

How do I Start?

So how do you start wholesaling on Amazon? How long does it take? What kind of products should you sell?

First, you need to get your wholesaling license to be a reseller. If you’re doing this in the US, you need to register your business and apply for an EIN (Employee Identification Number) with the IRS. This is totally free, but it will take 4-5 weeks. In those 4-5 weeks, you can start reaching out to brands, so once you have that permit, you’re ready to go.

So the answer to “How long does it take to start a wholesale business?” is… you guessed it, 4 to 5 weeks.

As for “What kind of products should I sell?”, this depends. Currently, the top 5 categories on Amazon for wholesalers are Home & Kitchen, Toys & Games, Sports & Outdoors, Beauty & Personal Care and Health, Household & Baby Care.

Do some market research, find a good, high-demand product, crunch some numbers and then reach out to brand owners. That’s the biggest hurdle you’ll face, but once a brand signs you on after all your cold emails and cold calls, it’s easy. You can start selling immediately and some brands even ship to Amazon for you, further cutting your costs.

Some tips to make yourself sound attractive to brands:

• Do your homework – show them examples of how you can improve their listings, their photos, or any other issues raised by customers in reviews
• Provide actionable insights – state your skillets and then identify areas where you can help them, a lot of established brands have difficulty selling on Amazon despite their size
• Don’t give up – keep following up every week or so, if you show your dedication a brand owner that said “no” at first may change their mind

What is Private Label?

Private labelling is a business model where sellers purchase products manufactured by a third-party manufacturer and then sell it under their own brand name(s) on Amazon. In this case, the manufacturer may produce your product but don’t have any rights over the “label.” This is why it’s called “private label.” Private label sellers have to create their product listings on Amazon, each of their products must have a GTIN, UPC, SKU, FNSKU and ASIN.

How much does it cost to start a private label brand? How profitable is it?

According to a survey, 61% of private label sellers spent $2,500 or more to get started. Similar to wholesaling, about 56% of sellers made $5000 or more per month. Looking at purely the numbers, there’s not much difference between private label & wholesaling.

Pros & Cons

Whether private labelling is a good business model for you again comes down to evaluating its pros & cons.

Private label in its essence is very high risk, high reward. It is different from wholesale in the sense that while there are a lot of costs, the seller has full autonomy over their business. An experienced Amazon FBA seller can easily launch & manage over 50 private label products under one brand. Private label sellers can also easily expand to other Amazon marketplaces.

Do not let the disadvantages of private label dissuade you. Building your own brand is time-intensive, but the payoff for a successful brand is huge!

In the past, building your own brand required a brick & mortar store with rent & overhead, and even an online one required you to manage packing, shipping, and customer service. Amazon FBA provides private label sellers the unique advantage of an established supply chain!

It is much easier to launch your own brand on Amazon than anywhere else!

The Financial Reality: Startup Costs, ROI, and Profit Margins

Choosing between wholesale and private label isn’t just a preference; it is a fundamental financial decision that dictates your cash conversion cycle. Data from across the Amazon landscape highlights a stark contrast in capital requirements. For a wholesale operation, sellers can often launch with an initial inventory investment of $1,000 to $3,000. Because you are purchasing established products with existing market demand, the runway to profitability is incredibly short. Many wholesale sellers see their first profits within 30 to 60 days, operating on predictable, albeit tighter, profit margins of 10% to 20%.

Private label, conversely, is a high-yield, long-term play. Launching a brand from scratch typically requires a capital injection of $2,500 to $6,000 just for inventory, supplemented by an additional $500 to $1,000 for branding, packaging, and trademark registration. The margins are highly lucrative (often resting between 25% and 40%), but the timeline requires patience. It is common for private label sellers to wait 3 to 6 months before breaking even, as initial capital is aggressively reinvested into PPC campaigns and aggressive launch strategies to build organic ranking.

Amazon Product Listing Optimization: The Make-or-Break Factor

The operational reality of these two models differs entirely when it comes to search visibility. If you are launching a private label brand, mastering Amazon product listing optimization is not optional; it is the entire foundation of your business. Your product does not exist in the minds of buyers until you optimize it to appear in the search results. Private label sellers must conduct exhaustive keyword clustering to build highly optimized titles, bullet points, and backend search terms. Furthermore, they carry the burden of conversion rate optimization through high-definition lifestyle photography, video assets, and compelling A+ Content.

In the wholesale model, Amazon product listing optimization plays a vastly different, more defensive role. Because you are selling a brand that already exists in the Amazon catalog, the listing is typically pre-established. You do not need to build awareness from zero. Instead, the battleground shifts away from keyword density and toward Buy Box dominance. Wholesale optimization is about pricing automation, securing Prime shipping badges through FBA, and occasionally submitting support tickets to fix hijacked or poorly optimized brand listings to lift the rising tide for all sellers on that ASIN.

Day-to-Day Operations: Navigating the Workload

The daily operational workload of an Amazon FBA seller looks entirely different depending on the chosen path. A private label seller acts as a brand manager and digital marketer. This involves monitoring PPC ad spend, refining keyword strategies, split-testing main images, managing overseas supply chain logistics, and analyzing competitor rankings. It is a creative, data-heavy workload focused on continuous product improvement and market expansion.

A wholesale seller operates more like a high-speed logistics coordinator. The daily grind revolves around scanning massive distributor spreadsheets, negotiating bulk pricing, analyzing sales velocity data, and managing rapid inventory turnover. Success in wholesale requires ruthless efficiency in supply chain management and relationship building, rather than creative marketing and brand storytelling.

How do I Start?

So how do you start private labelling on Amazon? How long does it take? What kind of products should you sell?

Initially to start a private label business on Amazon, you need to legally establish your business. After this, you can simply register as an Amazon seller and begin. Since private label is essentially building your business from scratch, it’s much more time intensive. To answer the question of “how long does it take to start a private label brand on Amazon?” – most sellers reported 3 months or less.

The question of “what kinds of products should I sell?” is not so cut and dry. Private label hinges on EXTENSIVE product research to find the perfect untapped niche to sell in. Most private label sellers use Amazon tools like JungleScout or Helium10 to find product opportunities. Currently, the most popular Amazon categories for private label sellers are Home & Kitchen, Kitchen & Dining, Sports & Outdoors, Beauty & Personal Care and Health, Household & Baby.

Selling private label products on Amazon FBA involves the key steps of starting any Amazon FBA business:

• Register as an Amazon Seller, before this you need to legally register your business
• Create a brand name, logo, and other marketing materials
• Conduct extensive product research, find a niche, calculate costs, prospective demand, revenue, profits, etc.
• Create ASINs/product listings and product detail pages for your product(s)
• Source your product, locally or externally by getting in touch with suppliers
• Make your first order, prepare your products & assign inventory to FBA
• Ship your products to an Amazon fulfillment center, and now you’ve officially started selling on Amazon!

Important note for Private Label sellers- Amazon PPC is an absolute must. Once you’ve setup your business, you’re not done yet. You have to manage your advertising very well to create a profitable private label business. With so much time already invested into creative processes, many private label sellers use Amazon PPC Management Software like ours to automate the bid management process for them!

Wholesale vs Private Label

Now, we come down to the final question – Wholesale vs Private Label, which is better?

It depends on a few factors, and also on your own strengths & skillsets as a seller.

Comparison of Wholesale vs Private Label

A basic comparison of Amazon wholesale vs private label is as follows:

As you can see, it’s pretty fairly balanced. There are pros and cons for both methods, and it boils down to one thing- which model works for you, as a seller. If you’re an Amazon FBA seller who works better alone and wants to scale your business in the future, private label is for you. If you’re an Amazon FBA seller just looking for a predictable, stable income, then wholesaling is the way to go.

Which is Better? Wholesale or Private Label?

To answer the question of wholesale vs private label, which is better? There’s no absolute winner.

It can be argued that wholesaling on Amazon is getting harder due to most brands already having a digital presence. However, many brand owners are on the lookout for people who understand selling on Amazon better than them. Similarly, many say that Amazon private label is saturated, no matter what product you sell, competitors pop up the next day.

Overall, both methods hold promise, it just depends on your goals and priorities as an Amazon seller.

Risk Management, Legal Liability, and Brand Exit Value

A crucial, often overlooked differentiator between these models is the long-term equity of the asset you are building. Wholesale generates excellent cash flow, but it builds minimal brand equity. If you decide to sell a wholesale business, buyers are essentially purchasing your supplier relationships and operational SOPs, resulting in a lower exit multiple. Additionally, the risk profile is tied strictly to market forces: price wars, supplier policy changes, or brands deciding to gate their products. However, your legal liability is generally lower, as the original manufacturer bears the brunt of product compliance and defect liabilities.

Private label flips this equation entirely. You are building an exclusive, proprietary asset. When optimized correctly, a successful private label brand can command an exit valuation of 3x to 5x annual revenue from e-commerce aggregators. You own the trademark, the customer loyalty, and the exclusive right to the Buy Box. However, this autonomy carries full legal and operational responsibility. As the brand owner, you are entirely liable for product safety, intellectual property compliance, and quality control.

Final Thoughts

Private label and wholesale are two the most popular business models adopted by Amazon sellers. Both methods have their benefits and limitations, and it can’t be said that one is definitely better than the other. We hope our comprehensive breakdown of the pros & cons of each method and the clear comparison between them helps you decide which is best for you – wholesale or private label?

FAQ: Wholesale, Private Label, and Listing Optimization

The post Wholesale vs Private Label: A Guide for Amazon FBA Sellers appeared first on SellerMetrics.

8 min read By Rick Wong  Updated Feb 16, 2026

Amazon FBA is a robust and convenient business model, but sellers should know all the fees before they get into it. Amazon charges a number of fees, including but not limited to monthly subscription fees, referral fees and FBA fulfillment fees. It’s important to stay on top of these fees, because Amazon is very punctual in collecting them every month. This is where Amazon Seller Repay charges come in, which we will explain further in this article.

What fees does Amazon charge?

First, before we get into what Amazon Seller Repay charges are, we need to refresh our memory on all the fees Amazon charges. If you’re a budding entrepreneur looking to enter the Amazon Seller space, this will be useful for you!

Monthly Subscription Fee

Amazon charges a $39.99/month fee for Professional Seller Plan. Most sellers choose this, for the Individual Plan it will cost you $0.99 per unit sold. We recommend the Professional Plan, because the Individual Plan is far too rudimentary.

How to Stop Recurring Charges if You Take a Break from Selling: Downgrading Your Amazon Seller Account

To stop the $39.99 monthly fee for a Professional Seller account for appearing on your credit card you need to downgrade your seller account. If you are out of stock, or simply take a break from selling you will have to continue paying this fee, unless you take action. Also, once your seller account balance hits zero, Amazon will aggressively bill your personal or business credit card on file to collect this debt.

To stop these continuous Repay charges, you do not need to permanently delete your seller account. In fact, closing your account completely is highly discouraged, as it acts almost like a lifetime ban that makes returning to the platform incredibly difficult. Instead, you should simply downgrade your account to the Individual Selling Plan. Under the Individual plan, you are not charged a flat monthly fee, you are only charged $0.99 when an item actually sells.

Step-by-Step Guide to Downgrading:

1. Log into your Amazon Seller Central dashboard.
2. In the top-right corner, hover over the gear icon (Settings) and click on Account Info.
3. Scroll down to the Your Services section on the left-hand side and click Manage.
4. Under the “Sell on Amazon” section, locate your Professional plan and click Downgrade.
5. Follow the on-screen prompts to confirm the transition to an Individual account.

Once downgraded, your $39.99 monthly charges will cease immediately at the end of your current billing cycle, effectively putting a stop to the associated Seller Repay credit card charges.

Referral Fees

For every sale, Amazon charges a percentage referral fee from the total sales price (excluding taxes). Referral fees can vary from 3% to 45% depending on product category. The screenshot below only shows a part of the table. You can find a comprehensive outline of referral fees for each category here.

FBA Fulfillment Fees

For every unit sold, Amazon charges FBA fees that depend on product type, size tier of your product and shipping weight. Like referral fees, these fees are highly specific to those three dimensions. Once again, the screenshot below only provides a snapshot of the full table. You can find a detailed outline of Amazon fulfillment fees here.

Monthly Inventory Storage Fees

Between the 7th and 15th of the month, Amazon charges storage fees based on the type of product, the month, and the size tier of your product. These fees are more expensive in the latter part of the year from October to December, and for dangerous goods products.

Long-Term Storage Fees

Long term storage fees are charged for inventory that’s been sitting in an Amazon Fulfillment Center for over 365 days. These are charged monthly between the 18th and 22nd of each month. Long term storage fees can be staggeringly expensive because they are charged per unit stored! Further details on these fees can be found here.

High-Volume Listing Fees and the Hidden Cost of “Dead” Inventory

While most sellers are hyper-aware of FBA storage fees, a silent profit-killer that often triggers an Amazon Seller Repay charge is the High-Volume Listing Fee. If your catalog is bloated with thousands of “dead” listings that aren’t actively selling, Amazon will penalize you.

To cover the systemic costs of cataloging massive amounts of data, Amazon charges a monthly fee of $0.005 per eligible ASIN. This fee is applied to non-media ASINs that were created more than 12 months ago, have an active offer, but have not recorded a single sale in the past year. While half a cent sounds trivial, dropshippers or wholesale sellers with massive, unoptimized catalogs can suddenly find themselves hit with hundreds of dollars in fees. If your sales balance cannot cover this catalog maintenance fee, it will instantly convert into a Seller Repay charge on your credit card.

The Solution: Conduct a quarterly catalog audit. Comb through your Seller Central inventory and permanently close or delete old, inactive listings that have not generated revenue in the last 365 days. Keeping your catalog lean not only prevents High-Volume Listing Fees but also improves your overall Seller Central performance metrics.

FBA Disposal Order Fees

Do you have inventory that is simply not selling, and you’d like to discard it? Well, that also costs a fee, which is called the FBA disposal order fee. These fees are charged per unit disposed, and the charge depends on the shipping weight per unit. Disposing units from your Amazon FBA store can come out to be very costly.

You can find a more detailed outline of FBA disposal fees here.

Returns Processing Fee

Returns processing fees are charged whenever a customer returns your product. First, Amazon will assess the returned item, and then after that fees are charged per unit returned based on the size tier of your product. This is why it’s important to ensure the quality of your products before selling them on Amazon.

A more detailed explanation of these fees including an example is provided here.

Refund Administration Fee

Amazon charges a fee every time you issue a refund to a dissatisfied customer. Not only do you lose money equivalent to the original sales price, you also get charged a little extra for issuing a refund. This, and the Returns Processing Fee mentioned earlier are some of the “mitigating” measures Amazon takes to ensure high quality products from Amazon Sellers.

Refund administration fees are charged per unit returned, and depends if you’re refunding multiple quantities of the same item, or multiple different items from the same order. A detailed overview can be found here.

Other Miscellaneous Fees

Amazon has a lot of other hidden fees that are highly product-specific. For example, the “Special handling fee” which only applies to flat-screen TVs that are 42 inches or larger, and the charge is $40 per unit fulfilled! Similarly, a “Closing fee” gets applied to products sold in the categories of – Books, DVD, Music, Software & Computer/Video Games, Video Game Consoles, and Video Game Accessories.

There is also the “Rental book service fee” and the “Lithium batteries fee” and even a “High-volume listing fee!” Specific details for all of these can be found on the Amazon Help page – Selling on Amazon fees guide.

What are Amazon Seller Repay Charges?

As you can see Amazon has an absolute myriad of fees when you really take a closer look at their guidelines. Amazon is very prompt in collecting these charges, and will almost always do it exactly on time. Due to all these little hidden fees, sometimes Amazon Sellers don’t realise how easily they start stacking up. Amazon keeps withdrawing from your Account Funds, and at some point, you’re going to hit zero.

The unfortunate reality is that even once you hit zero funds in your Amazon Account, you will continue to be charged in a timely basis. These is what an “Amazon Seller Repay Charge” or a “Seller Repayment” charge is. Basically, if you weren’t able to settle your charges due to insufficient funds in your account, this warning will appear in your Payments section.

The warning means that Amazon will initiate the same charge again at the end of every billing cycle, until it is settled. Without any funds in your account, the repay charges are then charged to your credit card, and are labelled “Amazon Repay.” Have you seen it before and been scratching your head at what it could possibly be? Well now you know!

How to avoid Amazon Seller Repay Charges?

So how do you avoid these scary Amazon Seller Repay charges? Well, it’s simple. Keep your eyes peeled, and learn how to manage your cash flow. There are no magic tips that can help you avoid these fees, and no secret code to crack. To avoid Amazon Seller Repay charges you need to do some good old-fashioned business management.

Start off by checking your Payment Reports on a frequent basis, we recommend as frequent as once a week. It’s not hard! Take an hour out of your day to keep abreast of any surprise charges.

You can find your Payment reports in Seller Central under Reports->Fulfillment->Payments. There’s four reports to look through- Fee Preview, Inventory Storage Overage Fees, Monthly Storage Fees, and Long-Term Storage Fee Charges. There is also a Reimbursements report, but that is not a fee but actually Amazon reimbursing you for any of your inventory that was lost or damaged in their warehouses.

After you’ve checked out and ideally consolidated the information from this report, we recommend you to make an Amazon FBA Cash Flow Forecast. Making a cash flow forecast is simpler than you think, and if you click the link you can find our step-by-step guide to doing so!

Most often, the costs Amazon Sellers struggle most to cover are Amazon PPC costs. Running ads on a competitive marketplace like Amazon, where CPCs are increasing day by day, is incredibly expensive. High ACoS can bleed you dry, which is why we highly recommend using Amazon PPC Automation Software to bring that ACoS down and save you those precious dollars.

Disputing Inaccurate Repay Charges and Bookkeeping Implications

Amazon’s automated billing system is highly sophisticated, but it is not flawless. There are instances where sellers are hit with an Amazon Seller Repay charge due to a system glitch, an incorrect FBA fulfillment fee calculation, or an unjust customer refund.

If you notice a Repay charge on your bank statement that does not align with your Payment Reports, you have the right to dispute it. Open a case with Amazon Seller Support under the “Payments” category. Provide the exact date, the transaction amount from your credit card statement, and a screenshot of your Seller Central statement view. Ask them to trace the origin of the debt. If Amazon discovers that you were incorrectly charged for an FBA dimensional weight error or a mishandled return, they will issue a reimbursement to your account balance.

Bookkeeping Implications: When reconciling your books in software like QuickBooks or Xero, an “Amazon Seller Repay” charge should be categorized as an operating expense or “Merchant Fee.” Because this charge is essentially Amazon pulling money from your bank to cover existing platform fees, it is critical that your bookkeeper does not double-count the expense. Ensure that the Repay charge is matched against the negative balance in your Amazon clearing account to maintain accurate profit and loss (P&L) statements.

Final Thoughts

Like every business, even for Amazon FBA, it all comes down to being well-informed and managing your cash flow. Amazon paints a very lucrative picture for Amazon FBA on the surface, and they’re not lying! Amazon FBA is an incredibly convenient method of eCommerce in 2021, but not every single piece of information can be displayed outright.

Being aware of the various fees require deep research into Amazon fees that every Seller needs to do. Thankfully, we’ve done it for you! We hope you found this article helpful, and wish you the best in your Amazon business!

FAQ: Amazon Seller Repay Charges Explained

The post Amazon Seller Repay Charges & Refunds Explained appeared first on SellerMetrics.

8 min read By Rick Wong  Updated Feb 16, 2026

Guidance on Creating Amazon Ads that Convert

In our always on, constantly stimulated, and noisy digital landscape, first-impressions matter and rich media content can act as a powerful hook to reel in your audience. As reported in a study by media agency GroupM Amazon advertisers that met the media agency’s criteria for Amazon Ad Creative Best-Practices enjoyed a 3x higher Click-Through-Rate (CTR) and a 6.5x greater Return on Ad Spend (ROAS) than brands that did not meet the criteria (Source). In this blog post, we share some creative best-practices. 

Amazon Ad Types that allow for Custom Creatives

Whereas Amazon Sponsored Products ads only feature product listings and do not require creative input, Amazon Sponsored Brand and Amazon Sponsored Display ads require custom visuals, headline copy and optionally also video. Optimizing creative assets is thus vital to achieve optimal results.

Sponsored Brands Ads

Sponsored Brands include custom headline, visual and optionally video assets. They prominently display your brand and products on top of Amazon search results and in other placements such as product listing pages. 

Sponsored Display Ads

Sponsored Display allows for broader reach and retargeting of audiences both on and off Amazon—they may appear on Amazon’s product detail pages (i.e. on a competitor’s listing), Amazon’s search results, or on third-party websites and apps (depending on your country locale). With Amazon display ads, you can use custom ad copy, visuals or videos.

Engineering Creatives that Increase Brand Awareness and Engage Amazon Shoppers

Building a recognizable brand helps your audience easily remember and identify you from the competition while brand consistency strengthens trust and loyalty amongst your customers. Use the guidelines below to drive better brand awareness through high-quality assets that can extend your reach across different devices, placements and regions. 

Tips for Creating Visually Appealing and Cohesive Ad Creatives

In principle, keyword research for PPC campaigns works exactly the same as keyword research for Amazon SEO. Once you have identified relevant terms, you target them with ads. Include keywords in product titles to increase the chances that users click on your ads.

• Color Palette: Use a consistent color palette that aligns with your brand’s identity. This helps in creating a unified look across all your ad creatives.
  
• Imagery: Use high-quality images that reflect your brand’s style and values. Consistent imagery across ads can significantly enhance brand recall. Steer away from stock images.
  
• Templates: Develop templates for your ad creatives to maintain consistency while streamlining your design process to ensure more time is spent on creativity than execution.

Understand Your Target Audience to Craft Communication Angles that work

Understanding your target audience is fundamental to creating ads that resonate and convert. It’s important to know their preferences, behaviors, and needs so you can tailor your creatives for maximum impact.

Tips for Leveraging Shopper and Data Insights to Craft Compelling Messages

• Customer Reviews: Analyze reviews to gain insights into customer preferences and pain points. Important: do not only go through your own reviews – also go through reviews of competing product listings. For the latter you focus on negative reviews. Understanding what shoppers love about your products and dislike about competitors’ effectively provides you with the most compelling reasons why anyone would buy your products. 
  
• Competitor Analysis: Study your competitors products to identify how their features differ from the features of your products. Is your product weather resistant while competing offers are not? Find important points of differentiation. 
  
• Amazon Analytics: Utilize Amazon’s analytics to gather data on customer demographics and behavior. You can often reverse-engineer this by going through search term reports and then identifying queries that were driving sales.
  

Effective use of Logos in Amazon Ads

Studies show that shoppers engage 20% more on desktop and 13% more on mobile with ad campaigns when their brand logo met the logo requirements. A logo is a visual representation of your brand and plays a critical role in brand recognition. Including your logo in Amazon ads reinforces brand identity and ensures that customers can easily associate the ad with your brand. Logos may appear in different sizes, on different devices, and atop different backgrounds so it’s important to anticipate this when you upload your logo assets.

Logo Placement and Size Best Practices

Understanding the distinct approaches and goals of keyword research for SEO and PPC on Amazon can help you develop a comprehensive strategy that enhances both organic visibility and targeted ad performance that ultimately drives more traffic and sales.

• Visibility: Ensure your logo is clearly visible without overshadowing other critical elements of the ad and avoid interacting with complex or cluttered graphical elements.
  
• Placement: Typically, placing the logo in the top left or bottom right corner works well as these areas are where the eye naturally gravitates.
  
• Size: Your logo should be large enough to be easily recognizable but not so large that it dominates the ad.

Logo Ad Creatives Do’s and Don’ts

Below are some examples for the correct (and incorrect) usage of logos in Amazon ads.

Image credit: Amazon

Practical Examples of Good Logo Usage in Amazon Ads

Logo that is clear, visible and large enough without distracting the ad is more effective than a logo crowded with additional imagery, taglines or extra content.

Brand Messaging: Get to the Point Fast and Provide Compelling Reasons to Buy

To combat today’s crowded digital landscape and limited audience attention span, your brand message should have personality to create emotional resonance with your audience, be easily understood at a glance, and compelling enough to prompt further interest. Your messaging should be aligned with your brand tone and voice to create consistency and trust while succinctly conveying the value proposition of your product offering.

Tips for Effective Brand Messages

• Customer-Centric Messaging: Focus on the benefits that your product offers rather than just its features—what are you solving for your customers and what will they gain in return?
  
• Emotionally Driven Content: Craft messages that evoke emotions, whether it’s humor, excitement, joy, or a sense of urgency—it’s that spark that makes your advertising memorable and impactful. 
  
• Consistency Across Platforms: Ensure consistency in your brand messages across different platforms to build a cohesive brand narrative—consistency bolsters trust.

Examples of Effective Brand Messaging in Amazon Ads

Lifestyle Images: Showing your Product in Use Helps Shoppers Visualize their Needs

Lifestyle images show your product being used in real-life scenarios, helping customers visualize how it fits into their daily lives. These images enhance relatability and evoke positive emotional connections with your audience, such as happiness or comfort, making the product more appealing.

Best Practices for Selecting and Incorporating Lifestyle Images

• Authenticity: Use authentic images that reflect real-life usage of your product.
  
• Diversity: Include diverse representations to appeal to a broader audience.
  
• Quality: Ensure high resolution and professional quality to enhance credibility.

Examples of Effective Lifestyle Images in Amazon Ads

Video Ads: Capture Attention more Effectively

Video content is king in digital advertising. It offers a dynamic way to showcase your product and engage customers.

Key Elements of Effective Video Ads

• Storytelling: Craft a compelling story around your product to captivate viewers.
  
• Length: Keep videos concise. Your videos should be no longer than 30 seconds and key messages and your brand logo should be communicated within the first 5 seconds (after that viewer numbers will drop off significantly).
  
• Visuals: Use high-quality assets to create an enriching experience.
  
• Call-to-Action: Include a clear and compelling call-to-action to prompt immediate response from the video.

The Amazon Video Ad Ecosystem: Choosing the Right Format

Before diving into creative best practices, you must understand that “Amazon Video Ads” is not a monolith. Amazon offers four distinct video ad placements, each serving a uniquely different stage of the buyer’s journey. Deploying the wrong video format for your specific goal will result in rapidly wasted ad spend.

• Sponsored Products Video (SPV): This is your bottom-of-funnel powerhouse. SPV ads appear directly in the search results grid alongside organic listings. Because they target shoppers with high purchase intent (people actively searching for specific keywords), these videos should skip the lifestyle fluff and focus entirely on high-fidelity product demonstrations. SPV is unparalleled for driving direct, immediate conversions.
• Sponsored Brands Video (SBV): Appearing as a massive, mid-search-result banner, SBV is a mid-to-bottom funnel hybrid. When a shopper clicks an SBV ad, they are driven directly to your product detail page or your Amazon Brand Store. These videos are ideal for brand storytelling combined with product education, allowing you to cross-sell multiple items within your catalog.
• Sponsored Display Video (SDV): SDV allows you to reach audiences both on and off Amazon (like Twitch and third-party websites). It uses audience targeting (retargeting shoppers who viewed your product but didn’t buy) and contextual targeting. SDV is the ultimate tool for recovering abandoned carts and staying top-of-mind.
• Amazon DSP & Prime Video Ads (Streaming TV): This is the top of the funnel. Through Amazon DSP, brands can run non-skippable OTT (Over-The-Top) streaming ads on platforms like Freevee, Twitch, and Amazon Prime Video. While the minimum investment is higher, the ability to use Amazon’s first-party data to target incredibly specific household demographics on the biggest screen in the house is a game-changer for massive brand awareness.

Best Practices for Successful Video Ads

• Key Takeaway First: Put the most important takeaway in the first few seconds (plus your logo)
  
• Legible Text: Use text that’s clear and legible over the background
  
• Use Captions: Most shoppers will see your video with sound off. That’s why it’s important to add stylized captions. 
  
• Allow Sufficient Reading time: Keep text on screen long enough for it to be read
  
• Mobile Optimization: Optimize for mobile screen sizes as most customers shop on mobile

To get detailed overview as to which best-practices work best for Amazon video ads, check out our dedicted article on Amazon Video Ads Best Practices.

Seasonal and Event-Based Advertising

Leveraging Seasonal Trends and Events to Boost Ad Engagement

Leverage seasonal trends, shopping periods and of course Prime Day in your ads. These provide unique opportunities to capture more awareness and interest. Tailoring ad creatives around significant moments can boost engagement and sales, especially if customers are anticipated to shop around this event (i.e. Christmas). 

Tips for Resonating with Shoppers During Holidays and Special Events

• Timely Themes: Align your ad themes with current holidays and events.
• Special Offers: Highlight limited-time offers and discounts.
• Festive Imagery: Use seasonal imagery to create a festive atmosphere.
• Urgent Messaging: Create a sense of urgency

Amazon Ads Guidelines and Acceptance Policies

Understanding Amazon’s ad guidelines and policies is crucial to ensure ads are approved and perform well in the marketplace. These guidelines cover various aspects, including common pitfalls to avoid to ensure your ad gets approved, image quality, and ad formatting. 

It’s important to stay up-to-date on Amazon’s guidelines and policies by regularly reviewing the official Amazon pages and subscribing to their official communication channels to help you stay informed on frequent changes.

Things to Avoid to Ensure Ad Approval

• Misleading Information: Ensure all claims are accurate and verifiable.
• Poor Quality Images: Use high-resolution images that meet Amazon’s standards.
• Irrelevant Content: Keep your ad content relevant to the product being advertised.
• Avoid Prohibited Content: Abstain from prohibited content listed on Amazon’s guidelines.

Resources for Further Information on Amazon Ad Policies

• Amazon Ads Guidelines and Policies: Amazon’s official guidelines and acceptance policies.
• Amazon Advertising Blog: Regularly updated with tips and policy changes.
• Seller Central: Amazon’s official resource for sellers and advertisers.
• Amazon Advertising Support: Direct support for any queries related to ad policies.

Takeaways – Be Strategic when Crafting Creatives and Test, Test, Test

While staying informed and adhering to Amazon’s guidelines ensures success in your Amazon ad campaigns, creating effective Amazon ads goes beyond technical precision—it’s about infusing creativity and energy into your campaigns that resonate at a deeper level with your audience. Emotion is a powerful force to shift behavior changes and influence decision-making that will ultimately help you win over customers. If you are not sure how to edit your campaigns check out our step-by-step guide on how to edit Amazon advertising campaigns.

Oftentimes it will take you a while to figure out the best communication angle, or to tweak creatives until they deliver maximum impact. Testing and learning is thus an important part of the process. As an Amazon advertising agency we have significant experience deploying creatives that are proven to work. Contact us today to get a free consultation and to learn how we could help you turbocharge your creative iterations to reach maximum ad efficiency faster. 

Related readings: How to conduct Amazon PPC keyword research and our guide on Amazon retargeting ads.

FAQ: Amazon Ad Creative Best-Practice

The post Amazon Ad Creative Best-Practices: Practical Recommendations & Examples appeared first on SellerMetrics.

What are Amazon Posts?

Amazon Posts are essentially a social media feed for your brand. Via Amazon posts you can share brand content and lifestyle images without having to spend a dime. Amazon shoppers can scroll through and explore brand feeds to learn more about your brand and find products they’re interested in buying. Amazon Posts only appear on Amazon’s mobile shopping apps, and look like the example below.

The Building Blocks of Amazon Posts

The basic format of an Amazon Post can be seen in the screenshot above. There’s a header with your brand name & logo, your product image, a caption, a category tag and a clickable link. You can customize all of these except for the category tag, which is assigned by Amazon based on product relevancy.

Let’s go into this elements in a bit more detail:

• Profile Picture / Brand Logo: This is usually your brand logo. Using it helps boost brand recognition and establishes a consistent visual identity. Create a profile picture that aligns with your brand’s look.
• Product Image or Video: This is where you showcase your product in a relatable lifestyle setting to help customers visualize how it fits into their lives. It is key to emphasize the lifestyle element and not just to show plain product images. Think of Amazon Posts as the “Instagram feed” of Amazon. When a shopper clicks an image in an Amazon Post, they are taken to a brand feed that displays all other Posts from that brand. This creates a browsing experience that can encourage deeper engagement with your product lineup.
• Caption: Describe the benefits your products bring to users and include a call-to-action or an engaging phrase. Be sure to adhere to Amazon’s content guidelines to avoid any prohibited elements (more on this below).
• Clickable Link: Include a link that directs customers to a product listing page. This makes it easy for them to explore and purchase your item.
• Category Tags: These act like hashtags, enabling customers to discover similar products by clicking on them.

Where can Amazon Shoppers Discover Amazon Posts?

Amazon Posts can show up on product detail pages in various feeds on the Amazon website. So what is a “feed”? If you’ve used Instagram, Facebook or X, your feed is essentially the scrollable list of posts on your dashboard. On Amazon, your brand’s feed is a custom list of all your “shoppable” Posts. Posts may also appear on product category feeds, which display content related to a specific type of item, such as “Kitchen & Dining.” In some cases, Posts can also appear on competitor detail pages within the “Related Posts” or “Explore Posts” sections, providing visibility to a wider audience that is already in “buying mode”. The exact placements can vary, as Amazon frequently tests new layouts and user experiences.

Possible placements of Amazon Posts Include:

• Product detail page – on this page your posts will show up in the carousel at the bottom, which shoppers can scroll through horizontically, these contain posts from different brands including your own
• Related products/posts – shoppers are lead to this feed if they tap on a post within the product detail page carousel, they can see posts from your brand and others in this vertical feed
• Brand feed – this is your own personal feed for your brand which contains all of your posts, shoppers can scroll through
• Category feed – all posts have “category tags” which place them on the Posts feed for a particular category, these will also contain posts from various brands, including yours

Like you can see below, posts from 3 brands are appearing in the “related products” section on Amazon. This is one of the more useful placements. Many customers will scroll down to “related products” on mobile to find better deals. This is where related posts can come in handy.

Unfortunately, you can’t choose when and where your Posts appear, that is up to Amazon. Amazon automatically places your posts based on relevance and how much customer engagement they receive.

Who can use Amazon Posts?

Amazon Posts are broadly available to Sellers who are also brand owners and operators. They do not require any ad spend and are one of the most accessible marketing tools available on Amazon. However, there are two eligibility criteria that Amazon brands need to meet in order to use Amazon Posts.

Eligibility and Requirements for Amazon Posts

There are two eligibility criteria for using Amazon Posts:

1. Your brands must be registered in Amazon’s Brand Registry (so only brand owners with a registered trademark can create Amazon Posts)
2. You must have an Amazon Storefront

Please note that you don’t have to advertise or use Amazon PPC (more about our Amazon PPC Services) to be able to use Posts, since it is free of cost, but you obviously need to be selling a product on Amazon.

Eligibility requirements for Amazon Brand Registry in the US are:

• A registered trademark certified by USPTO (United States Patent & Trademark Office)
• Status of registration must be issued & active i.e. a live application in the principal reigster
• Text-based marks that can be either:
  • 1 – Typeset Words/letters/numbers
  • 4 – Standard Character Mark
• Image-based marks that can be either:
  • 3 – An illustration or drawing which includes words/letters/numbers
  • 5 – Words/letters/numbers in a stylized form

Note- Amazon DSP users can also use Amazon Posts, but they can’t use it without an advertising console account.

Why Should Amazon Sellers use Amazon Posts?

If you’re already using Amazon PPC to run Amazon Sponsored Brand Ads, then you may wonder, what’s the point of using Amazon Posts?

Main Benefits of Amazon Posts

Amazon posts can help Sellers optimize their customer journey on Amazon. According to statistics released by Amazon, shoppers who have engagement with Amazon posts have a 33% higher probability of adding an item to card and a 2.5% increased conversion rate as opposed to Amazon shoppers who have previously not engaged with Amazon posts. Also, their average order value is almost 15% higher than that of other shoppers.

But there are more benefits:

Amazon Posts are Free of Charge

Amazon Posts are free of charge, so all you really need is a little time and manpower to use this feature. When it comes to marketing, more is better. Why not supplement your paid ads with some social media marketing on the side? There is also no limit on how frequently you can post. From 5 posts a week to 5 a day, the freedom is yours.

Broader Brand Presence

Amazon Posts is a fantastic way to maintain brand presence & increase brand awareness amongst Amazon shoppers. Imagine having a social media feed directly on Amazon marketplace itself…. That’s what Amazon Posts is! You can post lifestyle posts with attractive imagery that will make shoppers tap on your posts. These posts then take them directly to your product page.

It gives them more insight into what your brand is, and a good feed may even inspire brand loyalty.

Easier Product Discoverability

Over 150 million users use Amazon Mobile, it’s one of the most popular shopping apps in the US. That’s 150 million users who will be able to see your brand’s Posts feed. Using Amazon Posts can make your brand more discoverable on Amazon. Not only this, but in the digital age consumers respond well to social media.

Over 50% of US shoppers buy products they learned about on social media, so if even 50% of those 150 million users take the time to look through your feed, that’s already boosted your brand discoverability by a lot.

Get Your Products on Competitors’ Product Listings

While it’s true that you can’t choose where your Posts go, it doesn’t mean they can’t show up in some valuable places. Yes, Amazon Posts don’t provide the same certainty you get with Amazon PPC product targeting, or running Amazon Sponsored Display Ads … But there is always the distinct possibility that your Post might end up on a competitor’s listing!

The more relevant your Post is to the product category, the more likely your Post will show up under “Related Posts.”

Detailed Step-by-Step on Setting Up and Publishing Amazon Posts

Convinced? You can start Amazon Posts right away if you’re already a Brand registered seller. The process of setting up your first Amazon Post begins with locating the feature in Seller Central and continues through creating compelling content designed to capture shopper attention.

Here is a step-by-step outline of how to get started with Amazon Posts:

Access the Amazon Posts Dashboard

After logging into Seller Central, go to the main menu and click on the “Brands” or “Advertising” tab. Under one of these sections, you should find “Posts.” Select it to open the Posts dashboard. If you do not see “Posts,” confirm you meet the eligibility requirements.

Set Up Your Brand Profile

Begin by confirming your brand details. Upload a high-resolution logo and verify the name shown matches your Brand Registry information. This ensures brand consistency across your Store page and any future posts you publish.

Create Your First Post

In the Posts dashboard, click on the “Create Post” button. You will be prompted to upload an image, write a caption, and add one or more product ASINs. The caption field usually has a character limit, so keep your text concise, clear, and benefit-driven. Tagging ASINs ensures that your post links to a relevant product detail page.

Review and Submit your Post

Preview your post to confirm that the image displays correctly and the text is error-free. Once you are satisfied, submit the post for Amazon’s review. This approval process can take anywhere from a few hours to a few days, and you will be notified if changes are required.

When it comes to creating the post. You can add a lifestyle photo and a caption. Make sure your image matches the dimensions Amazon requests, and make your caption short & engaging! Under products, be sure to list some ASINs of related products so that Amazon knows what category tags to add to your post.

After you’ve entered all this, Amazon will approve your posts. Sometimes they may not get approved, this will usually be due to image size, so make sure to follow the image dimensions requirements). If you’re still having trouble you can check out Amazon Posts creative policies.

If you aren’t certain how to make your post engaging, Amazon offers some tips in a sneaky little link that you might have missed.

This is one of 5 tips offered by Amazon, you can flip through them for a brief idea on how to make your Posts stand out more. Don’t be afraid to think out of the box, Amazon Posts aren’t like product listings! Try to convey your brand in the most creative way possible.

Best-Practice for Designing Effective Images for Amazon Posts (Image Guidelines & Tips)

Images play a pivotal role in Amazon Posts, as they determine whether shoppers stop to engage with your content or simply scroll past it. The quality, relevance, and composition of your visuals can significantly influence click-through rates and conversions.

Amazon generally recommends a square (1:1) aspect ratio for Posts, and images should be at least 640 x 640 pixels to display well on various devices. Higher resolution, such as 1080 x 1080 pixels or more, is encouraged for clarity. You should avoid overlaying large text, promotional banners, or watermarks on your images, as these can violate Amazon’s creative policies and lead to rejection.

Lifestyle images tend to perform well because they demonstrate a product’s use in a real-world context. For example, a brand selling kitchen utensils could show someone using a spatula while cooking a meal. Clear product shots on a white background can also be effective, especially if the product design itself is eye-catching. However, consider blending these standard shots with at least some lifestyle or contextual imagery to provide variety and capture interest. The goal is to highlight product benefits, set the right context for its use, and maintain a cohesive brand identity across all posts.

Measuring and Analyzing Amazon Posts Performance

With Amazon Posts you can measure performance metrics such as impressions and engagement rates. Based on these numbers you can deduct what’s working and what isn’t. You can also split-test different types of lifestyle images, or brand imagery to find the perfect formula to build your brand. Amazon Posts can also serve as a way to test out images you create for Amazon A+ Premium Content. This is a strategy that we highly recommend, because it will give you more confidence that your A+ content, which is ideally also lifestyle and product usage centric is providing sales lift (which you cannot easily measure otherwise).

Also, Amazon Posts allows you more freedom when it comes to your post designs, than listing photos do. There are less restrictive rules, so you can experiment more with your designs.

In the Posts dashboard, you can review basic performance metrics that show how effectively your content is resonating with shoppers. Common metrics include impressions (how many times your Post was displayed), clicks (the number of times a shopper clicked the Post), and engagement rate (clicks relative to impressions). By monitoring these figures over time, you can gauge whether certain images or captions generate higher levels of interest.

Some brands choose to apply custom tracking methods, such as adding UTM parameters to external links used in brand outreach campaigns, or using Amazon attribution tools to compare traffic sources. However, we generally suggest driving traffic to your product listings, as this will make it most likely that shoppers buy your products. While Amazon does not offer a robust A/B testing platform specifically for Posts, you can rotate images, test seasonal messages, and observe which variations perform better.

How to Improve the Performance of Amazon Posts

There are multiple tactics that Amazon Sellers can utilize to improve the organic reach (so the number of impressions your posts get) and the click-through-rate of your Amazon Posts. Popular tactics include:

Leveraging User Generated Content (UGC) in Amazon Posts

Using UGC is a great way to improve Amazon Post performance. If customers share testimonials, reviews, or real-world photos of your products on social media, consider asking them for permission to use this content in your Amazon Posts. This adds authenticity and helps manifest your brand’s value proposition. Oftentimes this less scripted and less polished content outperforms highly polished brand content that is perceived to be less trustable.

Integrate Amazon Posts with Lightning Deals and other Marketing Activities

Some brands also coordinate their Amazon Posts with sponsored ad campaigns or Lightning Deals, creating a layered marketing approach that maximizes exposure. When your brand is running a time-limited discount, scheduling a relevant Post can often reach broader audiences and given the more promotional nature of the content achieve better CTRs and drive conversion.

Final Thoughts

All in all, we believe Amazon Posts are a useful supplement to your Amazon PPC ads. These are a different form of marketing that appeals to mobile app users, that all sellers should at least try out. If you’re afraid you don’t have enough time or manpower to manage both your Amazon PPC and Amazon Posts feed, you can leave the Amazon PPC heavy lifting up to an Amazon PPC software like ours. We hope you found this article helpful & convincing!

FAQ Amazon Posts: What They Are and How to Use Them

The post Amazon Posts: What They Are & How to Use Them for Brand Discovery appeared first on SellerMetrics.

In the competitive world of Amazon selling, optimizing your product listings and ad campaigns for search terms is crucial for success. 

Targeting the right search terms influences the visibility or your product listings in Amazon search results, click-through-rates (CTR) to your product landing pages, the effectiveness of your PPC campaigns, and also your conversion rate. 

In this guide, we’ll break down the differences between keywords and search terms, discuss the importance of search term optimization in 2025, and provide you with a practical guide on analyzing and optimizing your Amazon search terms.

What are Amazon Search Terms?

Amazon search terms are the words or phrases that Amazon users type into the Amazon search bar when looking for products. 

On Amazon, the beginning of the buyer journey will often start with the Amazon search bar. For the Amazon A9 algorithm to pick up on your product listing, you will need to have the right keywords so the A9 algorithm can match the search term with the listing. Your listing keywords give the A9 algorithm signals that your listing is related to the current customer search term on the search bar.

Optimizing for commercially relevant search terms is thus important, because optimizing your ads and product listings will determine whether your products appear in the search results or not.

What is the difference between Search Terms, Search Queries and Keywords?

Many Amazon Sellers use the terms “search term”, “search query” and “keyword” interchangeably. While “search term” and “search query” are essentially the same thing, “keywords” are very different from “search terms”.

• Definition of Search Term / Search Query: These are the actual words shoppers input into the Amazon search bar.
  
• Definition of Keyword: Keywords are the terms or phrases that sellers add to the backend of their Amazon product listing or use in their Amazon PPC campaigns to target potential customers. They represent the words that sellers believe will lead to conversions.
  
• Search Term vs Keyword: While a search term always refers to the exact word(s) a user has searched for, for PPC campaigns, a keyword can also include partial matches, synonyms, or even similar words. Think of a keyword more as a “target word cloud”. For Amazon Ads the keyword type can be further broken down into “exact match”, “phrase match” and “broad match” keywords. As these denominations indicate, the constraints of the target keyword “word cloud” are more narrowly defined when “exact match” keywords are used and most broadly defined when a keyword is added to a campaign as a “broad match” keyword. More about this topic in our blog post on Amazon keyword match types.
  
• Example: For example, if a seller selects “running shoes” as a phrase match keyword, the search terms might include queries such as “best running shoes for women,” “cheap running shoes,” or “Brand name running shoes.” As this example shows, understanding the distinction between search terms and keywords is crucial for optimizing your Amazon PPC campaigns effectively.

What is the Difference Between Search Terms and Backend Keywords?

Backend keywords are manually added by Amazon Sellers the backend of a listing. They are not customer-facing and not included in the Amazon product listing copy. You will fill in the backend search term field within 249 bytes limit restrictions, excluding spaces or punctuation such as a comma.

So while backend keywords are technically a different thing than the search terms users input in the Amazon search bar, ideally the backend keywords should reflect on the search terms that you target with your listings. That is because backend keywords are also one of the data points picked up by the A9 algorithm that it uses to match your listings with customer searches. You will fill in the backend search term field within 249 bytes limit restrictions, excluding spaces or punctuation such as a comma.

Since there is a 249-bytes limit (normally 1 byte is a character) it is important to not repeat words inside the search term field. Also, you have to make sure that the characters you are using are also not in the title and bullet.

Another thing to note is that the text inside the search term field does not have to be in a sentence structure and there’s also no need for punctuation. Therefore, you do not need to use filler words such as “for” or use any periods or commas to separate words.

You can use your 50-60 keywords list to develop words that you have not added in your bullets, title, and descriptions to fill out the search term field.

How to Review Search Terms of Amazon Advertising Campaigns?

At this point you are probably wondering how to review the search terms of your existing Amazon PPC campaigns. The answer is: by reviewing your search term report (Related post: How to download the Amazon search term report).

What is the Amazon Search Term Report?

The search term report of a campaign provides you with a list of all the different search terms that have triggered your Amazon ads. When analyzing campaign performance, the search term report provides the most granular and undiluted level of reporting. Whereas a single keyword can, depending on match types, include many different search terms, each search term really is a representation of the exact search query an Amazon shopper has used. 

Which Metrics and KPIs to Monitor in the Amazon Search Term Report?

The search report provides important metrics such as impressions, clicks, conversion rates, click-through rates (CTR), and cost-per-click (CPC) or sales. 

Naturally metrics such as sales, conversion rate, or cost-per-conversion are most critical. Search terms that drive bottom-line performance are obviously most critical. Secondary metrics that are a good indicator of performance are CTR and also CPC. A high CTR indicates that your product listings are relevant for a given search query and a low CPC makes it more likely that your ads can hit desired ACoS goals as advertising costs are not too high (What is ACoS?).

In practice however you may face these two common issues:

• Converting search terms are “brand” searches: This shows that shoppers who are already looking for your brand name also end up buying your products. This behavior is to be expected because these users have probably already done their research, knew your brand before, or are repeat buyers. So while this is great, there is not much you can do from a search term optimization point of view.
  
• There are not many impressions or clicks for many individual search terms: Keep in mind that statistical significance is very important when it comes to PPC. Concluding that a search term with 50 impressions and zero clicks is “not performing” does, statistically speaking, not make sense. The underlying data sample is too small to arrive at this conclusion.
  
  Same goes for search terms that had quite a few clicks already but have not yet brought in any conversions. This is one of the main advantages of working with an Amazon PPC agency: At SellerMetrics, we manage a significant total ad spend spanning many different ad accounts and can aggregate learnings across all these accounts for the benefit of our clients. Learn more about our Amazon PPC services and our Amazon Product Ads Management services to see how we could help you grow faster and run your ads highly profitable.

How to Optimize your Amazon PPC Campaigns using your Search Term Report?

You can use the search term report to identify:

• Keywords you should exclude from your ad campaign by adding them as negative keywords. This will typically be search terms with many clicks AND not sales, search terms that are just contextually irrelevant, or search terms with very high CPCs.
  
• Keywords that you should prioritize in your campaign by either specifically targeting as exact match keywords, or by increasing bids for these keywords. Basically this applies to search terms that are driving either sales or at least quality traffic (high CTR at low CPC). You want to make sure that you maximize your search exposure for these search terms.

How to Identify New, High Potential Search Terms?

No matter whether you are starting out new on Amazon, or are an experienced Seller, identifying and targeting new profitable search terms is an absolute key priority and an essential part of ongoing optimization (more about our Amazon listing optimization services and our Amazon SEO services). Here are three ways you can use to identify relevant search terms for your listings.

1. Product Driven Search Term Research

If you are selling a product that you have not personally used, this step of the procedure is crucial of identifying relevant search terms.

The goal is to find the following:

• What is it used for?
• Pain points this product will fix or alleviate?
• What would the customer type when searching for the product? (i.e., figure out what the seed keywords are for the product)

Product Research

To start, I would normally begin my research on the Amazon marketplace. Unless the product is not on Amazon (seldom happens), Amazon would be where I’d start my research.

In the above Amazon listing, you will learn more about the product by reading the bullet points and the product description. Also, keep a note of what you can potentially improve on the existing listing. I would recommend reading 2-3 product listings on Amazon about a similar product. In figure 1, you can see the words that are highlighted in red in the title of the 2 listings. These are “Yoga Wheel” and “Dharma Yoga Roller.”

Identify a Seed Keyword / Search Term

By just this title alone, I got two good seed keywords I can use to:

1. Further my research off Amazon, or
2. Use these seed keywords to get better seed keywords.

As a rule of thumb, if the keyword is in the beginning of the title, in this case “Yoga Wheel,” it is a good seed keyword to use.

Upon searching for “Yoga Wheel” on Amazon, it is confirmed that a lot of listing has this term at the beginning of the title. This tells me that the “Yoga Wheel” is a good seed keyword to use. I can also search on Google or Youtube to learn more about what the “Yoga Wheel” does. This knowledge would set my job up easier once I start copywriting for the product.

2. Reverse ASIN Research

Now armed with the seed keyword, in our example, “Yoga Wheel,” we will select one top competitor Amazon Listing that is organically ranked in the top 5 for the keyword “Yoga Wheel.”

Going back to the “Yoga Wheel” search results, we will pick the listing with the badge “Amazon Choice.” Click on the listing and save the link of the listing somewhere, save only up to the ASIN only. In this case, the link is (https://www.amazon.com/Ultimate-Dharma-Wheel-Petes-Choice/dp/B06W9K1W4F). You will use this for later to conduct Reverse ASIN research (Amazon reverse keyword search).

What is Reverse ASIN? It is actually a known keywords gathering process in the Amazon community. There are free tools out there that can take an ASIN and show historical keywords that customers have used to search for the product. It is a great way to gather keywords and intel on your competition.

The free tool that I have found with the best reverse ASIN result is Sonar.

Add the ASIN “B06W9K1W4F” and you’ll get the following result.

Feel free to download the result into a CSV format which will be used for further analysis in the next couple of sections.

3. Using Brand Analytics for Search Term Research

In 2019 Amazon, released a new reporting function called Brand Analytics that allows Amazon seller’s market intelligence data directly from Amazon. Much like reverse ASIN, you enter a seed ASIN and get a result of the popular Amazon search term.

Unfortunately, this reporting is only available for sellers that have registered for the brand registry. Which means you would have to trademark your brand. So this part might not be applicable for all sellers

Although the search results are not as numerous as other 3rd party tools such as Sonar, you can rely on the accuracy in terms of relevance and relative search volume.

There are two was to use the brand analytics report:

1. Enter a seed keyword and get a list of relevant keywords
2. Enter a seed ASIN and get a result of the popular Amazon search term.

Using both ways you can gather a larger list of keywords along with the 3rd party tool like Sonar.

Understanding Search Term Relevance

For anyone that has experience in search term research, they can skip this part. Before we move further into actually creating the listing, I feel I need to explain search query relevance.

After consolidating all the search terms in the previous steps, you will now refine the list down to around 50-60 target search terms, only if it is over that range. Some products will have less than the 50-60 search term range. You will probably not be using all 50-60 search terms in your product listing. You want to leverage this process so you can use the same list of keywords to launch your PPC campaign (How many keywords per Amazon ad campaign?).

The goal here is to eliminate search terms that are relatively less relevant to each other.  This step is more subjective than the others. It will come down to part common sense and the research you did in the product research section (step 1).

Determining % Relevancy

The mindset is that you want to get 50-60 search terms that are at least 60% relevant to the product. In other words, your product would be at least a 60% match to the customer searches. This is just a general relative guideline for Amazon listing optimization. The 60% relevancy might be flexible if your search term list before refining is less than 50 search term, than your 60% relevancy threshold might be a lot less.

So how do you know a search term is of a certain % relevant? The below example will serve as your start. For example, we have a “Yoga Wheel” that is 10 inches in diameter in size. The following are the keywords and the relevancy:

Now that you have the guidelines on refining the search term list, you will refine the list by removing search terms that are not closely related to the product.  You can use the MS Excel/Google Sheet filter function to remove any search terms that do not fit your relevance criteria.

Tips on Filtering Relevant Search Terms

Here are some points on filtering to help you remove none related search terms more efficiently:

• If you have a large list of search terms, remove the search terms that have more than 4 words.
• Look for terms in the search term list that are NOT related to the product. For example, if you are selling a 10 inch Yoga Wheel, any terms that are not 10 inches, such as 12 inches or 11 inches, can be used in the filter. Filter the search terms that contain these terms, and remove these search terms.
• Continue from the last point. It can be vice versa, where you are looking for search terms that must have a certain word. Our example can be “Yoga.” I am looking to remove search terms that do not contain the term “Yoga.” Since “Yoga” is the actual niche of the product, you have to make this word mandatory.

**Please note if there are doubts on any of these search terms, verify them by searching these search terms out Amazon or Google, see if the search result given is the same as the product in question.

Narrow to 6-8 Keywords

With a list of search terms from the previous step, you will define a list of to 6 to 8 keywords. These 6 to 8 keywords will be used in the listing copy. This ensures that a customer search in the Amazon A9 search algorithm can be matched/indexed to your product. Targeting the right keywords and having them in the front end (part the listing customer sees) are good fundamentals in Amazon SEO.

So how do you pick the keywords? You will pick the keywords that have the highest search volume which also have strong relevancy.

Previously, we hit on the relevancy concept and have a list of 50-60 highly relevant search terms to show for it, so how do we find the search volume? Unfortunately, Amazon does not make search volumes available. There are paid software tools out there that, in my opinion, give a good estimate of Amazon search volume such as Helium10. In this guide, I want to be budget-friendly and only suggest free methods. Hence my suggestion for getting search volume data for free is by using Google Ads (Learn how to run Google ads to Amazon).

You probably are asking why are you getting search results data from Google since we are selling on Amazon? Well other than the fact that Adwords keyword planner function is free, we don’t care about the exact search volume since it is not data that Amazon provides anyway. What is important is to know the volume of the relative keywords so you can prioritize and choose your 6-8 keywords.

Using Google Keyword Planner

You’ll need to sign up for a Google Ads account. Once inside the Ads accounts, go to the reporting tool called the Keyword Planner. This should be under Tools & Settings 🡪 Keyword Planner. However one thing to note: You will only be able to get accurate search volume data out of your Google Ads account if your account has been active and if you have already spent on Google Ads. Virgin Google ad accounts with no spend history will only provide very wide search volume ranges that are highly inaccurate and not at all useful in practice.

On the keywords planner page, click “Get Search Volume and Forecast,” enter your list of 50-KW and click “Get Started.”

Click on “Historical Metrics” and then sort “Avg. Monthly Searches” by descending order.

Although you can not see the exact monthly searches, you can still see the search ranges. The most important intelligence you can gather from this process is to see the keywords volume relative to each other.

From the list, you will pick those 6-8 keywords that are A) relevant, and B) have significant search volumes, based on the results on the keyword planner.

I will probably use the below 6-8 keywords in my listings for the combination of search volume and relevance:

• yoga wheel
• dharma yoga wheel
• yoga roller wheel
• cork yoga wheel
• yoga wheel for back pain
• massage yoga wheel

Conclusion: Search Term Research and Analysis is Complex but Worth it

Search term analysis and optimization seems like a lot of work. Well, it is! But when it is done right this one task can give you the best ROI out of all the front end work you can do when you start on Amazon. Keep grinding and best of luck!

The post Amazon Search Term Optimization Guide (2026) appeared first on SellerMetrics.

Amazon FBA (Fulfillment by Amazon) is Amazon’s popular delivery fulfillment service. It allows sellers to focus on what they do best: creating great products and listing them on Amazon, rather than getting stuck in day-to-day logistics operations. Amazon shoppers on the other hand reap the full benefits of Amazon’s near perfect logistics operations with same-day shipping and convenient return options.

Many brands consider dropshipping products using the Amazon platform merely as a marketplace to list products a viable alternative that offers more flexibility. Both dropshipping (on Amazon or via a direct-to-consumer ecommerce website) or leveraging Amazon FBA are possible routes to launching a new business successfully. Monthly searches on Google.com for “Dropshipping” and “Amazon FBA” reflect this, while showing a clear post-covid drop for both search terms. 

Dropshipping and Amazon FBA Explained

As e-commerce continues to soar, figuring out how you will deliver your products to ensure happy customers is crucial to the success of your online enterprise. With hundreds of marketplaces and e-commerce platforms to choose from, which one is the right choice for your business? In this article, we will consider the advantages and challenges of two popular e-commerce strategies:

• Amazon FBA (Fulfillment by Amazon) — you have Amazon handle your storage and order fulfillment.
• Dropshipping — you (or a third party) handle your storage and order fulfillment.

Making the right choice affects the profitability, scalability and customer success of your businesses.

What is Amazon FBA?

Amazon FBA stands for Fulfillment by Amazon. It is Amazon’s fulfillment service for sellers to outsource their warehousing and shipping logistics to Amazon. As a seller, you send your product to Amazon’s fulfillment centers, where the items are stored until a sale is made. Once an order is placed, Amazon handles the picking, packing, shipping, customer servicing, and product returns. This allows sellers to leverage Amazon’s global consumer marketplace and vast logistical capabilities to ensure faster delivery and streamline your business operations. All you need to do is ship your products to Amazon, and FBA takes care of the rest.

What is Dropshipping?

Dropshipping lets you start an online business with minimal capital. It is a business model where you can list a product for sale online without purchasing any inventory upfront. Instead, you only pay for the inventory once your customer has paid you. However, you’ll pay a higher wholesale price for each product, which means your profit margins will be smaller. When you receive an order, you transfer your customer details to a third-party company, typically your supplier or manufacturer, who is responsible for shipping the product straight to your customer.

How about dropshipping on Amazon?

Dropshipping on Amazon falls under the Fulfilled by Merchant (FBM) business model where you handle your own storage and order fulfillment. This allows you to save time and money instead of using Amazon FBA services. While some brands choose to mix and match their business approach to satisfy their unique fulfilment needs, with roughly 22–33% of online retailers dropshipping on Amazon for additional income, this approach has its own challenges and is generally more suitable for larger brands with strong fulfillment capabilities. Dropshipping on Amazon has higher overhead costs and increased operational complexity such as inventory management. In addition, to qualify for Amazon Prime, sellers need to show a positive fulfillment history with records such as on-time shipping rate of 99% and low product return rate. 

What are the benefits of Amazon FBA vs Dropshipping?

What are the drawbacks of Amazon FBA VS. Dropshipping?

What Products Are Better Fit for Amazon FBA vs. Dropshipping

Some products are better suited for dropshipping than others. As dropship products are sourced and shipped directly from the supplier, you don’t always have the ability to customize and tailor the design of your products. Thus, the nature of your product plays a crucial role when deciding between Amazon FBA and dropshipping.

Amazon FBA is ideal for:

• Small and lightweight items that are fast-selling and can benefit from Amazon Prime’s shipping speed.
• Higher-value products where the profit margin can absorb Amazon FBA fees.
• Products where high visibility on Amazon’s marketplace can lead to significant sales volume.

Dropshipping is suitable for:

• Niche products that are not consistently in high demand but can yield substantial profit margins per sale.
• Products with variable demand, allowing sellers to adjust their offerings without the burden of excess inventory.
• High-margin, low-volume products where holding inventory could be risky and expensive.

Conclusion: When to Opt for Amazon FBA and when for Dropshipping

Dropshipping can be an attractive option for newcomers due to lower upfront costs and minimal operational/logistical effort, but it comes with its own risks such as poor product quality, longer shipping times, and increased risk of customer dissatisfaction. With dropshipping, it is important that you carefully select your suppliers to ensure you build a reputable brand while maintaining customer satisfaction and trust. While there is potential for success with this business model, the dropshipping success rate is only around 10–20% compared to the slightly higher Amazon FBA success rate of 11–25% where 64% of Amazon sellers become profitable within 12 months. While dropshipping provides more flexibility with lower upfront costs, Amazon FBA offers sellers with access to their vast customer and operational network with rapid delivery and Prime benefits.

The post Dropshipping vs. Amazon FBA: Which One Is Better? appeared first on SellerMetrics.