For any eager entrepreneur wanting to start an eCommerce business, dropshipping is our magic bullet. Dropshipping is an online retail fulfillment method where the seller does not keep the inventory they sell in stock. Rather, we purchase the product from a third-party supplier when we make a sale. The supplier then directly ships the product to our customer.
To start a dropshipping business, we first need to choose a selling channel. Selling channels are marketplaces and eCommerce websites where we can market and sell products. In fact, if we use a marketplace like Amazon, we can leverage the trust and recognition that the marketplace already has. On top of that, we can utilize the large audience readily available on Amazon.
Amazon allows dropshipping as long as you comply with its policies and guidelines, such as providing accurate product information.
Choose reputable suppliers and ensure the products are high quality.
Avoid dropshipping trademarked and restricted products on Amazon.
Keep track of your inventory levels and monitor your supplier’s stock to avoid backorders or delayed shipments.
To succeed in dropshipping, you need to maintain excellent customer service, including prompt communication and addressing any concerns or issues that customers may have.
To avoid account suspension or other penalties, monitor your seller performance metrics, such as order defect rate, late shipment rate, and cancellation rate, and take corrective actions if necessary.
Use a dropshipping tool like AutoDS to automate tasks like inventory management, order fulfillment, and price monitoring, which can save you time and improve your efficiency as a dropshipper on Amazon.
With that said, in the article, we’ll look at a step-by-step guide for dropshipping on Amazon. Plus, we’ll learn the advantages and disadvantages that come with it. Let’s go!
Is It Legal To Dropship On Amazon?
The answer is yes; dropshipping on Amazon is legal. Amazon does not have any specific policies prohibiting dropshipping, as long as the seller follows the terms and conditions. In fact, Amazon specifically has dropshipping policies that we need to abide by.
Moreover, the seller must ensure that the product is legitimate and meets Amazon’s product standards. We also need to ensure we have clear shipping times and solid customer service.
There are a few key factors to consider when dropshipping on Amazon:
- The dropshipper must be listed as the seller of record.
- Remove any packing slips, invoices, external packaging, or other information identifying a third-party supplier.
- Be responsible for accepting and processing customer returns of your products.
Ultimately, it’s completely legal to dropship on Amazon as long as we follow their regulations.
What Is The Profit Potential Of Dropshipping On Amazon?
Dropshipping on Amazon has a high-profit potential because we can tap into a large existing customer base. That way, we can reach a huge amount of people and increase our conversion. As such, we can take advantage of the high-profit potential by dropshipping on Amazon.
Plus, the dropshipping business model is low-risk and high-reward, opening the door for us to make a hefty profit with minimal investment. As a matter of fact, the value of the dropshipping market size was forecast to grow to 476.1 billion U.S. dollars by 2026.
And, with eCommerce continuously on the rise, the profit potential from dropshipping on Amazon does not show any signs of slowing down. With Amazon’s sales consistently growing each year, we can anticipate an increase in our sales, given that we sell our products on the platform.
The Advantages & Disadvantages Of Dropshipping On Amazon
As with anything, there are advantages and disadvantages of dropshipping on Amazon. So, let’s take a look at them.
Advantages Of Dropshipping On Amazon
- Free organic traffic
- No warehouse cost
- Large active user base
- Multiple product categories
- Easy scalability
- Efficient order fulfillment
First and foremost, we can get free organic traffic from dropshipping on Amazon. Because Amazon has a large audience, we can take advantage of the free organic traffic to drive sales for our store.
Since we don’t hold our own inventory, we can save on warehouse costs. Another great aspect of Amazon is that we can leverage the vast and loyal customer base worldwide. We’ll have access to a large number of customers, which will help us increase sales.
Plus, with Amazon, we can tap into various product categories, which allows us to spread our reach. We can appeal to a wider customer base by having a wide selection of products.
Moreover, we can target as large a market as we want. The sky’s the limit! Since we don’t hold our inventory, we can always test products to find our winning items. With a wide audience reach, we can achieve higher profit margins.
And lastly, order fulfillment is efficient and easy. In dropshipping, we don’t fulfill the orders ourselves, but rather our supplier. As a result, it makes it super efficient and easy to dropship on Amazon.
Disadvantages Of Dropshipping On Amazon
There are a few disadvantages when it comes to dropshipping on Amazon. However, with a little creativity, even these disadvantages can be turned into advantages.
- Limited branding
Amazon has fierce competition since there is an already existing customer base and a lot of free traffic. On top of that, the lack of customization on Amazon makes it harder to stand out.
However, we can stand out from our competitors by focusing on providing excellent customer service. Offering product variations for the same product from different suppliers is a great way to differentiate yourself. This will enable you to have unique pages and offer discounts.
And to combat the lack of customization and branding, we can implore suitable marketing strategies. We can use pay-per-click (PPC) marketing, influencer marketing, email marketing, and more.
How To Dropship On Amazon: Step-By-Step Guide
To begin dropshipping on Amazon, there are a few steps we first need to cover. With that said, let’s take a look at how to dropship on Amazon:
- Create An Amazon Seller Account
- Choose Your Amazon Selling Plan
- Find Winning Products: Product Research
- Connect Amazon To AutoDS
- Select A Dropshipping Supplier
- Create Amazon Listings & Import Products
- Market Your Amazon Dropshipping Products
- Fulfill Your Customer Orders
- Provide Excellent Customer Service
1. Create An Amazon Seller Account
First, we need to create our Amazon seller account to be able to dropship on Amazon. The process is straightforward and starts by simply signing up and providing the required information.
In the sign-up process, we need to provide some basic information:
- Phone Number
Additionally, we need to also verify our seller account. There are a few steps in the Amazon verification process we have to go through before we’re ready to start dropshipping.
We’ll need to scan our government-issued ID and upload it. Then, Amazon asks us to provide a credit card or a bank statement. The goal is to ensure that we are who we say we are. So, we must ensure that the details provided in the seller account setup are the same in our ID and bank info.
In addition, Amazon might ask us to do a verification video meeting. But, this is nothing to worry about since, in the video chat, we’ll just need to physically show our ID and bank info. After that, we’ll have a verified Amazon seller account.
Lastly, we need to request approval for the product categories we want to dropship in. This depends on what types of products we want to dropship and which niche we want to go into. For example, fashion, jewelry, and other categories require product category approval from Amazon.
2. Choose Your Amazon Selling Plan
Now, we need to choose our Amazon selling plan. Our choice will depend on our dropshipping needs and which plan covers them best. Amazon has two seller plans, the Individual Plan and Professional Plan.
To begin, in the sign-up process, Amazon, by default, subscribes us to a Professional Plan. But, once we set everything up, we can easily downgrade to an Individual Plan. We can do this by going into ‘Settings’ and opening ‘Account Info.’ We can manage and change our plans in the ‘Your Services’ section.
To elaborate, the Individual Plan doesn’t have any monthly fees. However, it does charge $0.99/item sold. This plan is ideal if we’re selling under 40 products in a month.
But, if we’re selling more than 40 products monthly, we should consider upgrading to a Professional Plan. This is worthwhile considering that if we sell more than 40 units, we won’t be charged more than $40/month because the plan costs $39.99/month.
Besides the fixed fee, there are also category selling fees. These fees vary from category to category, but the average is around 15 %/category with a minimum of $0.30.
3. Find Winning Products: Product Research
Product research is integral to the success of our business – especially when dropshipping on a competitive platform like Amazon. The key to effective product research is to use data-driven methods to identify winning products.
With that said, there are a few factors that can help us determine winning products:
- High demand
- Low competition
- Positive reviews
In order for us to conduct quality product research, there are a few methods we can take advantage of:
- AutoDS Winning Products Hub
- AutoDS Product-Finding Blog & YouTube Channel
- Amazon Best Sellers / Movers & Shakers
- AliExpress Dropship Center
- Google Trends & Google Lens
AutoDS Winning Products Hub
Product research is very time consuming, but we can automate our product research process with AutoDS’ Winning Products Hub. The AutoDS Winning Products Hub gives us the hottest, best-selling items in no time.
In fact, by going on the AutoDS Winning Products Hub dashboard, we can easily find popular items that are selling well, along with detailed analytics.
AutoDS Product-Finding Blog & YouTube Channel
Furthermore, an easy and convenient way to find winning products is with AutoDS’ blog and YouTube best-sellers playlist. From this content, we can get access to exclusive product suggestions, enabling us to scale our eCommerce dropshipping venture.
Amazon Best Sellers / Movers & Shakers
Amazon Best Sellers is a list of the top-selling products across various categories. The list includes products that are popular among customers based on their sales volume.
On the other hand, Movers & Shakers identifies products that have experienced a significant increase in sales over the past 24 hours. This feature can help identify products that are currently gaining popularity.
AliExpress Dropship Center
The AliExpress Dropshipping Center is a powerful tool with the ability to find top-selling products. To find best-sellers, this tool looks at various factors like price range, category, and popularity.
Google Trends & Google Lens
Google Trends allows dropshippers to analyze search data for a specific keyword over a particular period. As such, this information can help us determine a product’s or niche’s popularity and identify any seasonal or long-term trends.
Google Lens, on the other hand, is a visual search tool that can help dropshippers identify products and their suppliers. To explain, with Google Lens, we scan an image of a product, and the tool will provide information on the product’s name, manufacturer, and supplier.
We can also utilize some paid product research methods and tools:
Undeniably, with these tools, we can analyze Amazon sellers properly. In fact, we can see what’s selling well, how much the sellers are selling for, and additional analytics. Plus, we can easily spy on our competition and make informed decisions about our product catalog.
No matter which method we opt for, we should utilize the AutoDS product research spreadsheet to narrow down our winning products.
4. Connect Amazon To AutoDS
One of the best aspects of dropshipping on Amazon is that we can automate our dropshipping process! As a result, we save time and effort while reducing errors in any of the steps. Plus, by automating our dropshipping processes, we can optimize our business and boost profits.
With this in mind, the best all-in-one automation tool to use is AutoDS. With AutoDS, we can achieve:
- Quick product importing
- Price/Stock automation
- Automatic orders
To clarify, with price and stock automation, we can update the stock levels and price changes that our suppliers adjust. However, this tool is not fully supported by Amazon. If the supplier changes the price, it will not change automatically on our store, but rather we have to do so manually on Amazon.
To connect our store, first, we need to navigate to the AutoDS platform and register. Then, for us to connect our Amazon store to AutoDS, we need to select ‘Add Store.’ We can find this in the store selection section in the left menu bar.
Then, we need to select what type of store we are adding. And, in our case, we will choose an Amazon store.
After this step, we just need to sign into the Amazon Seller Center and continue. Once we are signed in, we’ll confirm the connection to AutoDS.
As long as we’re signed in to our seller account, AutoDS will synchronize with our Amazon store. Now we’ll be able to automate our dropshipping processes.
5. Select A Dropshipping Supplier
Once we have identified our best-selling products and connected to AutoDS, our next step is to find reliable dropshipping suppliers. We must ensure that our suppliers are a good fit for our business.
It’s essential to choose a supplier whose business policies and product range align with our needs. After all, they are the ones responsible for sourcing and shipping products to our customers.
To ensure we choose a suitable and reliable supplier, we need to consider some key characteristics, such as:
- International Warehouses
- Fast Shipping & Delivery Times
- Partner With Reliable Shipping Couriers
- Various Payment Options
- Affordable Product Pricing
- Wide Product Range
- Positive Reviews
- Excellent Customer Service
- Practical return, payment, and shipping policies
We should note that it’s best to work with multiple suppliers. As such, we can compare prices and shipping times. Plus, if one supplier is out of stock, we can quickly fall back on another. It also gives a chance to offer more products and multiple different varieties. That way, we can appeal to a larger customer base.
Furthermore, there are a good number of reliable suppliers to work with, like AliExpress, Banggood, and more. But, it’s also a good idea to check out the 25+ AutoDS-supported suppliers. This allows us to automate everything from sourcing to order fulfillment and more. Therefore, enabling us to run our business efficiently.
6. Create Amazon Listings & Import Products
After we’ve found our winning products and reliable suppliers to source them from, we need to import our products and create Amazon listings. First, we need to check if we have permission to sell any product or brand on Amazon.
We can do this by clicking the ‘Sell On Amazon’ button on the right side. If not, we need to ask for permission to sell a certain product or from a specific brand. Amazon sometimes requires us to ask the brand for brand approval before we can import our products. In most cases, AutoDS will warn you that the brand requires approval with a link to Amazon on how to obtain it.
If we’re able to sell the product, we have the option to manually list it by adding all the listing details. However, that’s not very efficient or optimized.
With AutoDS’ Automated Product Importer, we can simply copy/paste the product URL from our supplier and add the product’s ASIN. Then we can easily import our product in seconds. To clarify, the ASIN is the product ID number on Amazon. One place we can find the ASIN is within the product URL. However, we can also find it by searching for “ASIN” on the page, and it’ll take us below to where the ASIN is.
Depending on where we saved it in the importing process, we can find our product in the AutoDS Drafts or Products section. After that, we can edit our new Amazon product listing. We can add product tags, choose shipping methods, and edit variants. This way, we can find the optimal shipping method and variants to increase our appeal to customers. However, we cannot update fields like titles, descriptions, images, and item specifications through AutoDS. To apply these updates, we need to do so directly through Amazon.
Furthermore, when we edit variants, we can add our optimal price to ensure we appear at the top of the Buy Box. To clarify, the Buy Box is the “Add to Cart ” and “Buy Now” sections where we compete for the sale with other sellers.
With AutoDS, we can do single-product imports, bulk imports, or even schedule imports for future dates.
Key Elements Of An Amazon Product Detail Page
We also need to ensure we have all the elements of an Amazon product detail page. Optimizing a product page requires careful consideration of various factors that can influence a customer’s purchase decision.
The key elements to an Amazon product detail page are:
- Description – product-identifying information
- Up to 7 images
- Product video
- Brand name
- Product reviews/rating
- Buy Box
- Up to 5 bullet points
- Best Seller and Amazon Choice badges
- Frequently bought together feature
- Special offers and product promotions
- Product description/A+ Content
- Product details
- Customer questions & answers
- Customer reviews
- Competitor ads/related products
When optimizing a product page, it is important to take into account each of these factors. They need to be presented in a clear and concise manner. This will help customers make informed purchasing decisions and improve the overall success of our product page.
All in all, once we find and properly list our products, we can enjoy the sales pouring in.
7. Market Your Amazon Dropshipping Products
Since Amazon is a marketplace, we compete side by side with other sellers who are likely selling similar products. To deal with the competition, we need to use various marketing strategies. We need to choose the right methods that would be most effective for our dropshipping business.
Now, let’s take a look at some marketing strategies:
- Sponsored Product Ads
- Win The Buy Box
- Facebook Ads
- TikTok Marketing
Sponsored Product Ads appear on Amazon search results and product detail pages labeled as “Sponsored.” Moreover, they are pay-per-click (PPC) ads and can increase our visibility on Amazon and drive more sales. We can target customers already searching for similar products, increasing our conversion rates.
The Amazon “Buy Box” is the “Add to Cart ” and “Buy Now” sections of the product listing. If a buyer doesn’t choose which seller they’d like to buy from, the seller who ranks in the Buy Box gets the sale. So it’s important to keep metrics like refunds, cancellations, and late shipments low.
With Facebook ads, we can actively target our audience. It allows us to define the parameters to target our ideal customers. To note, we pay each time someone clicks on our ad. With Facebook ads, we can put the right message in front of the right people at the ideal time. This increases our chance of conversions and maximizes our return on investment (ROI).
Lastly, TikTok ads are similar to Facebook ads, with the chance to reach new audiences, especially Gen Z. We can adjust our advertising objective to optimize our paid ads. Some examples of objectives include conversions, traffic, increased reach, and more. We can also choose the best ad format from their various offers.
The bottom line is that we need to find a solid marketing method to increase our outreach and appeal. That way we can reach more people and boost our sales.
8. Fulfill Your Customer Orders
To ensure customer satisfaction, we must fulfill orders immediately. So, to fulfill orders on Amazon manually, we start by getting the shipping address from the order details page. Then, we ship the order to the buyer using the delivery address and the requested shipping method. Lastly, click Confirm Shipment from ‘Manage Orders’ and complete the required information.
Undeniably, the sales will start pouring in. If we fulfill orders manually, we risk having errors and delays. As a solution, we can automate our order fulfillment process, save time and effort, and avoid making errors. With a tool like AutoDS Automatic Orders, the system can fulfill the orders for us.
With the AutoDS Automatic Orders tool, our orders will appear on the orders page from our AutoDS dashboard. Then, the system will automatically process it from our supplier directly to our buyer.
The difference between order fulfillment automation on Amazon and other selling channels is that we manually enter customer address details. We can do this on order settings on AutoDS. Then, we can send it out for automatic order fulfillment.
Plus, as soon as tracking information is available from our supplier, AutoDS will grab it and update it automatically on our customers’ orders. The order status and the supplier’s order number will also update automatically. So, we don’t need to worry about manually updating these aspects; AutoDS handles it all for us!
9. Provide Excellent Customer Service
Providing our customers excellent customer service is vital for our success. This is because it helps us differentiate ourselves from the competition and attain customer loyalty. Customers will be encouraged to return if they have a pleasant experience when purchasing from our Amazon store.
On Amazon, the seller covers customer service issues for which the seller is responsible. On the other hand, Amazon will handle all customer contacts about customer service issues for which Amazon is responsible.
Providing excellent customer service greatly benefits our Amazon dropshipping business. In fact, we can increase our seller ratings which will boost our credibility. As a result, we can increase our sales volume.
Can I Dropship From An Amazon Supplier To My Amazon Store?
We can dropship from any supplier to our Amazon store. This includes dropshipping from Amazon suppliers to our Amazon store.
However, if we want to dropship from and to Amazon, there’s also a catch. In this case, we must source our products from a different Amazon marketplace. For example, we can source from Amazon UK to Amazon US.
Ultimately, we have a large selection of suppliers to choose from, including Amazon. So, it just depends on which supplier best fits our needs.
Frequently Asked Questions
What Is Amazon Dropshipping?
Amazon dropshipping is a business model in which we can source products from a third-party supplier who fulfills our orders. We can list them for sale on Amazon without physically handling the inventory.
How Can I Start Dropshipping On Amazon?
To start dropshipping on Amazon, you will need to first identify a profitable niche and find a reliable supplier who offers dropshipping services. Next, you will need to create an Amazon seller account and list the products you plan to sell on the platform. Then, orders will start flowing in!
Is Amazon Dropshipping Allowed?
Amazon allows dropshipping, but it has specific guidelines that sellers must follow. These guidelines include ensuring that the supplier is reliable and can fulfill orders on time, accurate product representations, and providing customer support and handling any returns or issues.
What Products Should I Avoid Dropshipping On Amazon?
On Amazon, we should avoid selling VeRO products that are protected by copyright laws. We should also avoid hazardous materials, liquids, medicines, supplements, tobacco, and firearms.
How Much Does It Cost To Dropship On Amazon?
Amazon dropshipping fees vary by product type but are usually in the 10% to 15% range. So, this means that Amazon takes 10%-15% of our dropshipping profits.
All in all, dropshipping on Amazon is a lucrative opportunity for entrepreneurs looking to start an online business. It offers a low-risk way to enter the eCommerce market and take advantage of Amazon’s vast customer base.
Success in dropshipping on Amazon requires careful research and strategic planning. Plus, with dropshipping automation and ongoing effort to maintain a competitive edge, we’ll surely succeed.
In order to ensure success when dropshipping on Amazon, we should take a look into the following articles: