Is Amazon FBA oversaturated in 2025?

In recent years, Amazon’s FBA (Fulfillment by Amazon) program has gained immense popularity among online sellers. However, there is a growing concern that the platform has become oversaturated, making it difficult for new sellers to enter the market. While it’s true that competition has increased, there are still plenty of opportunities for aspiring Amazon sellers.

So the short answer is No. Even though competition has significantly increased, there is still a lot of untapped potential in the Amazon FBA model in 2025.

According to a recent Marketplace Pulse survey, there are over 6 million active Amazon sellers worldwide, with more than 1 million of them using FBA. The number of active FBA sellers has grown significantly over the years, and it’s reasonable to assume that the platform is becoming increasingly crowded. However, despite this increase, Amazon’s overall share of the retail market is still relatively small, representing only 10.4% of total US retail sales in 2023.

Reasons why Amazon FBA has become increasingly competitive & somewhat saturated (at least in some niches):

1. Increasing number of large-scale sellers: The number of sellers on Amazon has grown significantly in recent years, leading to increased competition in many product categories. I personally believe that one reason for this is because of the recent explosion of new sellers from China, India, and Pakistan. Governments & the private sector in these countries has opened training centers at scale that teach thousands of students the art of selling product on Amazon US & UK. Back in the day, sellers from developing countries often struggled with understanding the cultural & branding preferences of western consumers, but now that gap has dwindled. There are multiple billion-dollar sellers on the Amazon US platform that completely operate from China, with no offices in the US.
2. Easy access to selling tools: The availability of easy-to-use selling tools and resources has made it easier for new sellers to start selling on Amazon, resulting in increased competition. With a click of a few buttons, you’ll know the sale of your competitor’s product in the last month, which makes it extremely easy for sellers in countries such as China & Bangladesh to reverse engineer successful Amazon brands, leveraging their supply chain and production capabilities.
3. Low barriers to entry: Amazon has a relatively low barrier to entry compared to traditional brick-and-mortar retail, making it easier for sellers to start selling on the platform.
4. Amazon’s algorithm: Amazon’s algorithm favors products that have high sales velocity and positive reviews, making it difficult for new sellers to gain traction on the platform. Additionally, the current industry leaders outprice newer players with less capital, making it a saturated market in some product categories.
5. Amazon’s fees: Amazon charges fees for its FBA service, which can eat into sellers’ profits and make it difficult to compete on price. Back in the day, it was easy to afford the high platform costs, because the gross margins were higher. Due to increased competition, average gross margins on amazon are now in the 30-35% range, which makes it difficult for sellers without economies of scale.
6. Increased advertising competition: As more sellers have entered the platform, advertising competition has increased, driving up the cost of advertising and making it more difficult for sellers to get their products seen by customers. The PPC bids in 2025 are 2x of what they were in 2018.

 

So, is it too late to start amazon fba 2025? (does amazon fba still work)

In short – No! Amazon FBA is still a very lucrative and viable business model in the US, with many untapped segments and niches that present significant growth opportunities for sellers. And yes, you can still make an extremely profitable Amazon FBA business in 2025. 

While some categories like electronics, clothing, and home goods are highly competitive, there are still many underserved markets that have not been fully explored by sellers. For example, categories like pet supplies, sports and outdoor gear, and health and wellness products are still relatively untapped, with plenty of room for new sellers to enter and establish a strong presence.

Update (1st September, 2025):

If you’ve followed Amazon FBA over the past decade, you’ve probably heard two very different takes. One side insists the game is over: too crowded, too expensive, too algorithm-driven. The other side still treats it like a get-rich-quick scheme, promising “six figures in six months” with the right guru course. The truth, as usual, is somewhere in the messy middle.

In late 2025, Amazon FBA is still a viable way to build a business — but it’s no longer about stumbling onto easy money. It’s about identifying pockets of demand where consumers are underserved, then creating a product that’s genuinely better, smarter, or more appealing than the sea of generic listings around it.

Think of Amazon as a giant city. The main boulevards — supplements, phone cases, water bottles — are jammed shoulder-to-shoulder. But the quiet side streets still have room to open a shop if you know where to look. Let’s explore fifteen such streets: categories that are growing fast, with specific examples of products that are already resonating with customers in 2025, and are likely to explode in 2026 & 2027.

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1. Eco-Friendly Household and Kitchen Products

Sustainability isn’t just a buzzword anymore — it’s practically a lifestyle badge. Eco-friendly goods like silicone storage bags, beeswax wraps, bamboo toothbrushes, and compostable wipes appeal to two overlapping groups: people who want to save money by reusing, and people who want to feel better about their impact.

The key here is differentiation. Everyone is selling reusable bags, but few are bundling them with smart labeling systems or storage racks. Customers also care about certifications (like BPA-free or compostable standards). In my opinion, this is one of the most resilient niches because once shoppers switch, they rarely go back.

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2. Work-From-Home and Digital-Nomad Gear

Even though some workers have gone back to offices, hybrid setups are permanent. That means ongoing demand for compact standing desks, laptop risers, webcam lighting kits, and cable organizers. Digital nomads also crave lightweight tech backpacks and portable green screens for Zoom calls.

I had a friend who sold a sleek aluminum laptop stand in 2024. He didn’t win because it was the cheapest — he won because he branded it as part of a “work smarter, not harder” toolkit and built a community on TikTok around remote-work hacks. That kind of positioning makes all the difference.

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3. Children’s Educational and Sensory Toys

Parents are always looking for toys that feel both fun and responsible. Montessori wooden sets, STEM building kits, bilingual flashcards, and sensory play mats hit that sweet spot. These products ride two cultural waves: parents worrying about screen time, and growing interest in early cognitive development.

Unlike electronics, returns are relatively low in this category, and parents talk. A toy that’s durable and genuinely helpful will often spread by word-of-mouth in parenting groups or schools. The catch? Compliance. Toy safety standards are strict, and cutting corners here is not an option.

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4. Health and Wellness Accessories

If you’ve noticed how many people in your circle complain about posture, sleep, or stress, you know why this category never goes out of style. Massage guns, acupressure mats, posture correctors, and infrared lamps are still flying off shelves.

That said, this space is tricky. Make any medical claims and you risk takedowns. Successful sellers frame their products as “comfort aids” rather than cures. Think “relieve everyday tension” instead of “treat arthritis.” It’s a compliance game as much as a product one.

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5. Pet Enrichment Products

Pet owners are famously irrational — in the best way. They’ll spend more on their dog’s snacks than on their own dinner. Popular items include puzzle feeders, natural treats, travel water bottles, and calming toys.

This category benefits from repeat purchases. If a dog loves a certain chew, the owner will reorder it again and again. It also taps into the guilt factor: when people leave pets at home, they buy enrichment toys to make themselves feel better. Competition is real, but so is loyalty.

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6. Niche Tech and Gaming Accessories

Gamers and gadget-lovers are passionate, picky, and always upgrading. Products like RGB-lit mouse pads, ergonomic wrist rests, mechanical keyboard keycaps, and MagSafe phone add-ons fit into this niche.

The challenge is staying ahead of trends. Today’s hot gaming accessory can look dated in a year. But if you can tap into a subculture — say, minimal desk setups or custom mechanical keyboards — you’ll find fans willing to pay premiums.

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7. Compact Travel and Outdoor Organizers

Travel has bounced back strongly, and people want convenience. Packing cubes, RFID-blocking passport holders, foldable cookware, and portable hammocks are trending.

This niche thrives on aspiration. Buying a packing cube isn’t just practical — it’s part of the joy of planning a trip. Seasonal spikes are real, but the products themselves are lightweight, low-return, and easy to brand.

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8. Sleep Optimization Tools

Sleep has become the new luxury. People are investing in weighted sleep masks, cooling pillow inserts, and portable white noise machines. These items speak to professionals, parents, and even students.

Unlike supplements, these aren’t consumables, but they do invite bundling: a “better sleep kit” can combine two or three related products. That’s how you increase average order value in a crowded space.

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9. Specialized Kitchen Gadgets

Foodies love tools that make them feel like pros at home. Items like fermentation jars for kombucha, sushi-making kits, tortilla presses, or specialty coffee filters cater to hobbyists.

What I like about this niche is that customers often post photos of their creations online. If your product becomes part of a “look what I made!” moment, you’re not just selling an item — you’re joining a community.

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10. Elderly Mobility and Comfort Aids

Populations are aging, and many seniors prefer to remain independent at home. Products like ergonomic jar openers, reach-and-grab tools, lightweight canes with built-in lights, or sock assist devices quietly fill that need.

This category doesn’t get much hype, but it’s steady, serious, and emotionally resonant. The main caveat: quality must be high, because a bad review in this niche carries more weight than in, say, kitchen gadgets.

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11. Car and Van-Life Accessories

With road trips and van conversions booming, demand for car trash bins, foldable trunk organizers, portable fans, and magnetic phone mounts is rising.

This category is all about practicality. These aren’t impulse purchases — they’re small quality-of-life upgrades for people living or traveling in their vehicles. The community aspect (van-life Instagram, YouTube channels) makes it easy to market if you position correctly.

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12. DIY Beauty and Grooming Kits

Self-care has shifted from salons to living rooms. Beard shaping kits, nail art sets, and at-home hair removal devices are thriving. Customers like the savings compared to salon visits, plus the sense of control.

One caveat: avoid overcomplication. People want simple kits they can master quickly, not professional-grade tools that intimidate them. Clear instructions and thoughtful packaging are your edge.

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13. Home Fitness Micro-Equipment

Forget giant treadmills — people want discreet, affordable gear like resistance band sets, under-desk pedal bikes, door-frame pull-up bars, and ab rollers.

I like this space because it appeals to both fitness beginners and enthusiasts. It’s also highly giftable, which gives you seasonal peaks around holidays and New Year’s resolutions.

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14. Gardening and Urban Farming Gear

As food prices climb and sustainability goes mainstream, people are experimenting with home growing. Hydroponic starter kits, stackable planters, grow lights, and seed kits are popular.

This isn’t just about gardening; it’s about identity. Shoppers feel proud saying, “I grew this myself.” Products that simplify the process — say, a compact balcony grow kit — can turn casual buyers into repeat customers.

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15. Niche Seasonal and Holiday Décor

Seasonal décor isn’t new, but niches within it are exploding. Customizable LED string lights, themed baking molds, reusable wreath storage bags, and minimalist ornaments are trending.

16. Plus size clothing:

As mentioned earlier, plus size clothing is an untapped niche with enormous potential. With more and more consumers demanding inclusive clothing options, there is a growing demand for plus-size clothing on Amazon.

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Moreover, emerging markets like Brazil, India, and China represent huge opportunities for Amazon FBA sellers, since sellers based in the US & UK can easily sell in emerging markets from the comfort of their homes, just like Indian & Chinese sellers are selling on Amazon US/UK from their countries.

In addition, Amazon’s continued investment in emerging technologies like artificial intelligence and machine learning has created new ways for sellers to optimize their operations and better serve their customers. Furthermore, Amazon’s vast customer base and sophisticated search algorithms provide sellers with the potential to reach new customers and grow their businesses.

These are just a few examples of untapped categories on Amazon. As with any market, the key to success is to find a niche that you are passionate about and that has significant demand from consumers. You can find a more comprehensive list of 100+ Amazon FBA Low Competition Product Niches here.

 

Making a Large Asset on Amazon in 2025:

Amazon FBA selling represents an opportunity to build a large asset and then sell it to Amazon aggregators like Thrasio and on platforms like Empire Flippers for a variety of reasons. Here are some of them:

1. Scalability: Amazon FBA allows sellers to scale their businesses quickly and efficiently, with the potential to generate significant revenue and profits.
2. Proven business model: Amazon FBA has a proven business model that has been successful for many sellers, making it an attractive investment opportunity for buyers.
3. Established customer base: Amazon FBA has an established customer base, with millions of shoppers visiting the site every day, making it easier for sellers to reach a large audience.
4. Low overhead costs: Amazon FBA has relatively low overhead costs, making it an attractive business opportunity for investors.
5. Valuable intellectual property: Amazon FBA businesses often have valuable intellectual property, including trademarks, patents, and proprietary product designs, which can be attractive to buyers.
6. E-commerce market growth: The e-commerce market is growing rapidly, and Amazon FBA is a significant player in this market, making it an attractive investment opportunity for buyers.
7. Increasing interest from buyers: As the Amazon FBA market has grown, there has been increasing interest from buyers, including Amazon aggregators like Thrasio, who are actively looking to acquire successful Amazon FBA businesses.

By building a successful Amazon FBA business, sellers can create a valuable asset that can be sold to Amazon aggregators or on platforms like Empire Flippers. However, it’s important to note that building a successful Amazon FBA business takes time, effort, and expertise, and not all businesses will be attractive to buyers. But if you execute correctly, you can exit with a 40x monthly income multiple within 1 year. Thousands of sellers have done it on platforms like Empire Flippers in the past.

Amazon Product Research Tools That Can Help You Uncover Unsaturated Product Categories in 2025:

There are several product research tools available to potential Amazon sellers that can help identify unsaturated selling niches and products on Amazon. Here are some of the top product research tools (PS: I don’t earn affiliate commissions from any of these products):

1. Jungle Scout: Jungle Scout is one of the most popular product research tools for Amazon sellers. It offers a wide range of features, including product research, keyword research, and sales analytics. Jungle Scout can help you find profitable niches and products, and provides detailed information on sales data, pricing, and competition.
2. Helium 10: Helium 10 is another powerful product research tool that offers a suite of features, including keyword research, product research, and competitor analysis. It also includes a range of tools for optimizing listings, managing inventory, and automating pricing. I have personally been using Helium for over 5 years, and I almost exclusively depend on it for all my product research needs. Although it is a little more complex, and the learning curve is steeper than Jungle Scout, it is still the best option available for serious Amazon sellers who want all the tools under one umbrella.
3. Viral Launch: Viral Launch offers a range of features to help you find profitable niches and products on Amazon. It includes tools for product research, keyword research, and competitor analysis. Viral Launch also offers a product launch service that can help you drive sales and increase your product’s visibility on Amazon.
4. AMZScout: AMZScout is a suite of tools designed to help Amazon sellers find profitable niches and products. It includes features for product research, keyword research, and sales analytics. AMZScout also includes a range of tools for managing inventory, tracking sales, and automating pricing.
5. Unicorn Smasher: Unicorn Smasher is a free product research tool that provides detailed data on sales, revenue, and competition. It includes a range of features for identifying profitable niches and products, including keyword research and product tracking.
6. Keepa: Keepa is a browser extension that provides detailed data on pricing, sales history, and trends for Amazon products. It can help you identify profitable niches and products, and provides real-time data on pricing and sales trends.
7. Sellics: Sellics is a suite of tools that offers features for product research, keyword research, and sales analytics. It also includes tools for managing reviews, optimizing listings, and automating pricing.