How to Dropship on Amazon: A Comprehensive Guide
Dropshipping is a great way to start selling on Amazon without having to invest in inventory up front. I know this from personal experience – when I first started selling on Amazon, I used the dropshipping model and it was a great way to get started with very little risk. In this guide, I’ll show you everything you need to know about how to dropship on Amazon, from finding profitable products to list on Amazon, creating your listing, and shipping your orders. By the end of this guide, you’ll be ready to start Dropshipping on Amazon!
What is Amazon Dropshipping?
The dropshipping business model involves selling products online without keeping an inventory of them. Instead of receiving orders directly, sellers pass the order information to manufacturers, distributors, or suppliers who then fulfill the order for them on a seller’s behalf.
How to dropship on Amazon? First, you need to get approved for an Amazon seller account. Comply with Amazon’s requirements and enable a third-party provider to fulfill your orders.
Is Amazon dropshipping profitable?
Yes, Amazon dropshipping can be profitable. The average profit margin is between 10% to 30% so you can make a good profit by dropshipping on Amazon.
Amazon’s cut is typically around 15% of your top-line revenue.
The margins can be higher if you win the Amazon Buy Box, but it’s highly competitive and shouldn’t be something you rely on in the long term.
The Pros and Cons of Dropshipping
The main advantages of selling on Amazon are that it’s easy to get started, you have immediate access to a large audience, and you don’t need to worry about inventory.
Another big advantage is that Amazon buys products in bulk from mostly European suppliers, so you can be sure that the products you’re selling are of high quality. Since the company buys products in bulk, it can offer lower prices to customers.
Amazon’s warehouses are the perfect place to store your dropshipping products until they’re ready to ship. Whether you’re a new seller or a seasoned pro, you can sell quality products at scale to an international audience.
One of the great things about dropshipping on Amazon is that you don’t have to worry about warehousing costs. Amazon has its own fulfillment centers, known as the Fulfillment by Amazon (FBA) program, which can handle all of your packaging, shipping, and warehousing needs. This allows you to focus on selling and growing your business, without having to worry about the logistics of fulfillment.
You can find more products to sell on Amazon by selecting from one of the 30 categories available. These categories are meant to help you find products that are popular and profitable.
One of the great things about dropshipping is that you can sell in multiple niches. This allows you to reach a variety of different markets with your products. By partnering with the right suppliers, you can ensure that you have the products that your target market is looking for.
What are the drawbacks of dropshipping on Amazon?
If you sell items through Amazon, you run the risk that Amazon can see all of your sales data, including what items sell best and how much you’re selling overall.
Amazon has allegedly been using customer data to strengthen its foothold in the e-commerce market, at the expense of other sellers.
It’s also unlikely that you’ll build long-term relationships with your customers.
Amazon is more focused on helping sellers move products than on building customer relationships. You can expect to be heavily restricted in how you brand your business, display your products, and communicate with customers.
You will also be limited in the customization you can do.
All aspects of your business, including your marketing efforts, are under the control of your seller account on Amazon.
If you want to be able to sell products on Amazon, you will need to have products from the supplier in your inventory. This is because Amazon has very specific fulfillment requirements.
This means that you’ll have to spend money upfront to start selling products through Amazon’s FBA program.
How Much Does it Cost to Dropship on Amazon?
You’ll have to choose a selling plan. Amazon’s dropshipping fees are quite reasonable, usually falling between 10% and 15%. However, if you’re working with tight margins on the products you’re dropshipping, this can eat into your profits significantly.
The Standard plan costs $9.99 per unit sold, and the Professional plan costs $39.99 per month, no matter how many products you sell.
How to Dropship on Amazon
So, how do you start a dropshipped business?
When signing up for an Amazon Seller account, be sure to have your personal information, billing info, and tax info ready. This will ensure a smooth and easy sign-up process.
As a professional seller, it is important to note that you will be charged $0.99 for every item sold through an Individual Account. If you plan on selling more than 40 products per month, it is advised that you upgrade to a Professional Account for $39.99 per month. This will give you access to additional features and benefits to help grow your business.
Find Profitable Products to Sell
Identify which category you want to sell in or which product you want to dropship. There are plenty of tools that can help you research profitable products using Amazon data. For now, let’s just focus on finding a product to sell.
First, try to find niche products that are in demand all year round. This will help ensure that you always have customers for your product.
Second, look for products that are obscure or useful or both. These types of products tend to be the most successful on Amazon.
Third, for high-maintenance products that would otherwise warrant storage costs, you’re better off dropshipping them. This way, you can avoid having to pay for storage space and still make a profit.
Finally, eye-catching products that you can aggressively market on social media tend to do well on Amazon.
Just be sure to avoid Prime products, as these are already being sold by an FBA-registered seller and will be very difficult to compete against.
Find Quality Dropshipping Suppliers
If you’re looking for a dropshipping supplier, there are a few different ways to find one that will fit your needs.
You can do a simple Google search, which will likely turn up a lot of results. However, not all of these will be actual dropship suppliers.
Another option is to attend trade shows related to your product niche. This can be a great way to meet potential suppliers in person and get a feel for their business.
Finally, you can also find dropship directories online. These are lists of suppliers that have been vetted and are ready to work with retailers or dropshippers.
When looking for a supplier, always vet them thoroughly. The best way to do this is to get some facetime with wholesale suppliers, but you can also investigate them online. This will help you find a reputable and reliable supplier.
You should ask the supplier about their inventory management, fulfillment process, and payment terms. This will help you determine if they are a good supplier for your business.
To ensure that you are authorized to drop ship products from a particular wholesaler, you should ink a dropshipping contract with that supplier. This will provide evidence to Amazon in case they ask for verification.
Create an Awesome Amazon Listing
If you’re marketing the product on a standalone e-commerce store or a Shopify site, integrate Amazon as a sales channel. You want your listing to be customer-centric and boast a killer design.
As you build your brand, keep sustainability in mind. This will make it easier to transition to more sustainable business models like private labeling once you have a good understanding of Amazon.
Can You Dropship on Amazon Legally?
While dropshipping on Amazon is possible, there are a couple of rules that you’ll need to follow.
You can dropship on Amazon as long as you are the seller of record for your products. Identify yourself as the seller on all packing slips and other information included or provided in connection with them.
Be responsible for accepting and processing customer returns of your products, and comply with all other terms of your seller agreement and applicable Amazon policies.
Dropshipping on Amazon is only allowed under certain conditions. You cannot purchase products from another online retailer and have that retailer ship directly to customers.
Shipping orders with packing slips, invoices, or other information indicating a different seller’s name or contact information other than your own is also not allowed.
Dropshipping on Amazon With FBA
You can use Amazon’s FBA service to drop ship orders to your customers without having to deal with picking, packing, or shipping them yourself. Amazon will take care of the fulfillment for you.
Not only will Amazon take care of shipping for you, but they will also take care of customer service and returns.
Dropshipping software with FBA management tools makes the process simpler.
If you want to take advantage of Amazon’s Fulfillment by Amazon (FBA) program, you’ll need to ship your products in bulk to one of Amazon’s fulfillment centers. This is different from other dropshipping models, where you usually only order products as needed from your supplier.
With FBA, you’ll need to pay for your merchandise upfront and send it to Amazon in bulk.
There are many benefits when dropshipping with Amazon’s Fulfillment by Amazon (FBA) program.
Amazon FBA is a great way to ensure your products are shipped quickly and correctly, as well as giving you the added benefit of being eligible for Amazon Prime’s 2-day shipping.
Additionally, because Amazon is such a large and well-known company, selling through their platform gives you instant credibility and can help you win the Buy Box more often.
And finally, you can take advantage of Amazon’s world-class marketing and advertising capabilities to help drive traffic to your listings.
You can start dropshipping on Amazon by creating a new FBA seller account or upgrading your existing Seller Central Account.
If you’re considering using FBA to dropship on Amazon, we have a helpful online calculator that can give you an estimate of how much you could earn.
Moving to FBA is a great way to increase your earnings potential and get your products in front of more customers.
Tips on How to Successfully Dropship on Amazon
Dropshipping on Amazon is easy, but to be successful you need to work a bit harder than with other platforms.
Here are five tips that will help you succeed in your dropshipping business.
1. Drive Traffic to Your Amazon Product Listing
To increase sales, you need to get people to visit your product listing page. This can be done in several ways.
First, take advantage of Amazon’s internal sponsorship program, Amazon Pay-Per-Click (PPC). By creating advertisements for your products, your product will appear higher in Amazon’s search results for keywords that you set. PPC is an effective way to increase your product’s visibility and drive more traffic to your listing.
Another way is through external methods such as Facebook ads, social media, blogging, email marketing, etc. By using these methods, you can help to differentiate your product from your competitors.
If you don’t have a large following for your brand yet, driving traffic to your Amazon product listing may be a little more difficult. However, by investing time into external promotion, you can set your listing apart and attract potential customers.
2. Focus on the Customer
Dropshipping on Amazon takes away a lot of the hassle that comes with being an entrepreneur. You don’t have to worry about manufacturing or shipping your product.
What you need to do is ensure the customer is happy with the product they receive.
In dropshipping, you can spend your time on other tasks since you don’t need to worry about handling the inventory or shipping products. Instead, you can focus on customer service and marketing.
When you provide excellent customer service, you increase the chances of getting positive product reviews. Good reviews can make a significant impact on your success on Amazon.
3. Focus on Your Brand
The two main disadvantages of dropshipping are that you have no say in the product’s development or design and that other sellers can access the same supplier.
This leaves you with very little competitive advantage. Therefore, you must focus on the brand.
Even if your products are exactly the same as your competitors, it doesn’t mean they have to be the same.
4. Get Samples
Before you list your product, you must familiarize yourself with the item by ordering a unit in advance. This way, you can avoid any potential issues or problems down the road.
If you can manage it, try to get in touch with the supplier without them knowing that you’re interested in dropshipping. It might make things easier for you down the line.
When the sample arrives, be sure to inspect it. Take note of how it looked when it arrived, how long it took to arrive, and if the products were as described. This will give you a good idea of what to expect from the supplier.
All of these little details will help you predict how your customers will receive the product once you start dropshipping on Amazon. By taking the time to understand your customer’s needs, you’ll be able to create a product that they’re sure to love.
5. Cast a Wide Net
Because dropshipping has no start-up costs, it’s much easier to list multiple products at the same time. This way, you can reach a wider audience and see what sells best.
Some will, others won’t.
Keep doing what works and cut out what doesn’t.
As long as you’re following all of Amazon’s guidelines, this is totally acceptable. Just make sure to stay organized, and that you continue focusing on tips #2 and #3.
Amazon’s Dropshipping Policy
Amazon’s policy regarding dropshippers has been in place for a long time, but recently they updated it.
Amazon does not allow dropshipping in the traditional sense. You cannot purchase products from another retailer and have them ship directly to your customers. All shipments must come from you, and you must be listed as the seller on packing slips, invoices, and the external packaging.
The main takeaway here is that dropshipping products from online retailers such as AliExpress, eBay, and Walmart are frowned upon by Amazon.
In other words, you can dropship on Amazon as long as the customer cannot tell that your products are dropshipped.
There may be some people who bend or break Amazon’s rules, but that will only lead to account suspension.
Can I Dropship Through FBA on Amazon?
Dropshipping and Amazon FBA are two very different business models and are not usually done together. A lot of people try to dropship through Amazon FBA, but it usually doesn’t work well.
In dropshipping, you never really own any inventory, so there’s nothing to ship and store inside Amazon’s massive warehouses. This means that you cannot use Amazon FBA to drop ship products.
In contrast, with FBA you purchase and own the products, regardless of whether you see them in person or have them shipped to FBA warehouses.
A middle-ground is to have your third-party suppliers send their goods to Fulfilled by Amazon under your own name.
This is a great option if you don’t have the capital to invest in inventory up front. You can work with a third-party supplier, sell their products on your e-commerce store or Shopify, and integrate Amazon as a sales channel. This way you have more control over your brand and product listings. Either way, you’ll need to find reliable suppliers who can provide high-quality products at competitive prices.
However, dropshipping through Amazon FBA sounds like a minefield of potential problems.
For example, you may have difficulty ensuring the quality of your inventory or keeping track of delivery dates and quantities. Additionally, if your suppliers don’t always come through, you could run into account suspension or earn withdrawal issues.
If you’re looking to start selling on Amazon, dropshipping is a great way to get started with very little risk. In this guide, we’ve shown you how to dropship on Amazon — from finding profitable products to creating your listing and shipping your orders. By following the steps in this guide, you’ll be ready to start dropshipping on Amazon!