If you’re new to selling on Amazon, the platform can feel confusing at first. People throw around words like FBA, FBM, Buy Box, A9 algorithm, storage fees, PPC… and suddenly you’re wondering: how does Amazon actually work?

Here’s the simplest way to understand it:

Amazon is not “one business.” It’s a system made of 3 engines working together:

1. A marketplace (customers + traffic)

2. A logistics machine (delivery + returns)

3. A ranking and conversion system (visibility + sales)

Once you understand those three, everything else becomes easier.

1) Amazon is a marketplace that rewards what customers love

Amazon’s #1 goal is simple:
Show the shopper the product they’re most likely to buy—and be happy with.

So Amazon doesn’t “rank” products based on how much you want sales.
It ranks them based on signals that indicate a great customer experience, like:

• Sales velocity (how many sales you’re getting consistently)

• Conversion rate (how many visitors turn into buyers)

• Reviews and ratings (quality + trust)

• Price competitiveness (within your category)

• Stock availability (running out hurts visibility)

• Delivery promise (fast delivery improves conversion)

• Return rate (high returns reduce confidence)

Think of Amazon like this:
Amazon promotes products that make Amazon look good.

2) The customer journey on Amazon (what happens in 10 seconds)

Most shoppers make a decision quickly. The Amazon buying journey is usually:

1. Search (customer types a keyword)

2. Results page (they choose what to click)

3. Product page (they decide whether to buy)

4. Checkout (purchase happens)

5. Delivery + review (customer experience feeds back into ranking)

That means, as a seller, you have two jobs:

• Get discovered (show up in searches)

• Convert (make people choose you)

Everything you do on Amazon supports one of those two goals.

3) How Amazon “finds” your product (keywords + relevance)

Amazon is not Google. It’s a shopping search engine.

When someone searches “protein peanut butter” or “baby bed bumper 2m,” Amazon looks for:

• Products that are relevant (keywords match)

• Products that are likely to sell (historical performance)

That’s why your listing content matters so much:

• Title

• Bullet points

• Description

• Backend search terms

• Category and attributes

If your keywords are weak or mismatched, Amazon won’t show you.
If your listing doesn’t convert, Amazon won’t keep showing you.

4) Two ways to fulfill orders: FBA vs FBM

This is one of the biggest “how Amazon works” decisions.

Option A: FBA (Fulfilled by Amazon)

You send stock to Amazon’s warehouse, and Amazon handles:

• storage

• packing

• delivery

• returns

• customer service

Pros: faster delivery, higher trust, often stronger conversions
Cons: storage fees, strict rules, you must manage inventory carefully

Option B: FBM (Fulfilled by Merchant)

You store stock yourself (or with a 3PL) and you handle delivery.

Pros: more control, lower warehouse fees
Cons: delivery speed and customer experience depends on your setup

In UAE/KSA, many sellers choose FBA for faster Prime delivery—especially if they’re building a competitive product.

5) What the Buy Box is—and why it matters

On most listings, the “Add to Cart” button is controlled by the Buy Box.

If multiple sellers offer the same product, Amazon chooses who wins the Buy Box based on:

• price competitiveness

• fulfillment method (Prime/FBA helps)

• seller metrics (late shipment rate, cancellation rate, etc.)

• stock availability

• customer experience history

For beginners, the simple takeaway is:
Even if your listing is live, you can still lose sales if you’re not winning the Buy Box.

6) Amazon fees: how Amazon makes money

Amazon makes money when you make sales, through:

• Referral fees (a % of the sale)

• Fulfillment fees (if you use FBA)

• Storage fees (especially for slow-moving inventory)

• Optional advertising costs (PPC)

That’s why pricing on Amazon isn’t “copy competitor price.”
It must be based on:
cost + fees + margin + a buffer for promos/returns.

7) Ads are not magic—they amplify what already works

Amazon ads can drive traffic fast, but they don’t fix a weak product page.

If your listing is not converting, ads will just:

• spend money

• bring clicks

• produce no sales

Ads work best when:

• your listing is optimized

• your price makes sense

• your images are strong

• your offer is competitive

For beginners:
Optimize first, then scale with ads.

8) The “Amazon flywheel” (how sellers actually grow)

Here’s the cycle Amazon rewards:

Better listing → higher conversion → more sales → more reviews → better ranking → more traffic → more sales

That flywheel is the real secret.

Most sellers try to skip steps. The winners build momentum properly.

Conclusion: Amazon is simple once you understand the system

If you remember only one thing, remember this:

Amazon promotes products that:

• match the search (relevance)

• convert well (sales + customer satisfaction)

• deliver reliably (availability + fulfillment)

Your job is to build an offer that checks those boxes—and then improve it weekly.

Watch the full video explanation