The Ugly Truth about Amazon FBA
If you’ve ever searched YouTube for “Amazon FBA,” chances are your feed is filled with gurus promising fast money and passive income. But the video “The UGLY Truth About Amazon FBA That No Guru Will Tell You” cuts through the hype and presents a brutally honest, up-to-date look at what it actually takes to run a Fulfillment by Amazon (FBA) business in 2025.
Let’s break down the key insights.
What is Amazon FBA?
Amazon FBA, or Fulfillment by Amazon, is a business model where Amazon takes care of the heavy lifting. Sellers ship inventory to Amazon’s warehouses, and Amazon handles the rest—picking, packing, shipping, customer service, and even returns.
This model makes it possible to run a business from virtually anywhere in the world. Whether you’re in London, New York, or Bali, Amazon will fulfill your orders without you needing to touch a single package.
Legitimacy and Inventory Rules
One of the first myths to bust: Amazon FBA is 100% legitimate. It’s used not only by side hustlers and small businesses but also by billion-dollar brands.
That said, FBA isn’t the same as dropshipping. Amazon strictly requires sellers to purchase inventory upfront and ship it to their fulfillment centers. Direct-to-customer dropshipping (sending items from a random supplier straight to Amazon buyers) violates policy and can result in an account suspension.
Inventory can go straight from your supplier to Amazon or pass through your home/office for a quality check before being forwarded.
Reselling, Brand Approval, and “Gated” Products
Yes, you can resell branded products on Amazon under the wholesale model. However, some brands are “gated,” meaning you’ll need approval before listing them.
The way in? Proper invoices from an authorized distributor or directly from the brand. While this adds paperwork, it also reduces competition—since fewer sellers are approved to sell gated products.
Licenses, Permits, and Product Sourcing
Setting up an Amazon seller account doesn’t require a business license. But depending on your country, operating legally will likely mean registering your business, collecting sales tax/VAT, and having permits for wholesale relationships.
There are three main ways sellers source products:
Arbitrage – Buying clearance/discounted items from local stores to flip on Amazon. Cheap but risky, since it goes against Amazon policy.
Wholesale – Buying branded products in bulk from distributors. Lower risk, and ideal for beginners.
Private Label – Creating your own brand/product, which requires higher investment but offers long-term scalability.
Profitability and Competition in 2025
Amazon remains the world’s largest marketplace, with over 9 million active sellers and 300+ million customers. Demand is bigger than ever, but so is competition.
The easy wins of 2015 or 2020—finding a random product, tossing it on Amazon, and watching it sell—are gone. In 2025, success means:
Better product research and selection
Stronger supplier relationships
Smarter marketing and brand positioning
A recommended path is to start with wholesale. Learn the ropes, become profitable, then graduate into private label once you’ve built the skills (and cash flow).
Startup Costs and Fees
Starting an Amazon FBA business isn’t free, and “gurus” often downplay the true costs.
Arbitrage: £250–£300 (low barrier, but not compliant)
Wholesale: £1,000–£3,000
Private Label: £3,000–£5,000 minimum (including ads and branding)
Add to that Amazon’s own fees for storage, picking, packing, and shipping.
Returns, Risks, and Drawbacks
Amazon’s customer-first policy is great for buyers but frustrating for sellers. Amazon accepts returns easily, often refunding before a product is inspected. Returned goods may be resold, sent back to you, or destroyed.
Other risks include:
High and sometimes unpredictable fees
Inventory headaches (cash tied up in stock)
Suspensions if you break rules—even unintentionally
Slow or inconsistent support when issues arise
Long-Term Success in FBA
The biggest mistake sellers make? Relying only on Amazon. While FBA is powerful, Amazon owns the customer relationship—you don’t get their emails or data.
The smartest sellers use Amazon as a launchpad, then expand:
Build a Shopify store for direct sales
Sell on other marketplaces like Walmart or eBay
Collect customer data through inserts, communities, or newsletters
This diversification builds resilience and brand equity beyond Amazon’s ecosystem.
At a Glance: FBA in 2025
Final Thoughts
So—is Amazon FBA still worth it in 2025?
Absolutely. But it’s no longer the wild west where anyone could slap a label on a product and strike gold.
FBA is a real business now, with real costs, real competition, and real risks. To succeed, you need strategy, compliance, and persistence. Start small with wholesale, master the fundamentals, then grow into private label and beyond.
That’s the ugly truth the gurus won’t tell you.