How to Start Dropshipping on Amazon?

With the rapid growth of e-commerce business, online marketplaces such as Amazon, eBay, Shopee present more opportunities for merchants that want to make a big splash. One of the quickest ways to enter the market is Amazon dropshipping.

Why Amazon? Because Amazon is one of the biggest global online marketplaces, accounting for almost half of all online sales and around two-thirds of American families subscribe to Amazon Prime plan. Unlike standalone marketplaces like Shopify, Woocommerce, you can get an enormous customer base with less effort. If you are going to sell on Amazon, you will have access to large potential customers, and generate more profit margins.

What is dropshipping?

Dropshipping is a business model in which sellers selling products without having any inventory, after customers purchasing products at their store, then the shop owner sends the order to the supplier, and the supplier ship the products directly to the customer. This is how dropshipping works.

Simply put, this is a business involving three separate parties: the buyer, the dropshipper, and the supplier. The dropshipper acts as an intermediary, selling products directly to buyers, and then send orders to suppliers, who then directly ship to buyers.

The biggest difference between dropshipping and other means of retailing is that dropshippers do not stock any products but depends wholly on the third party to fulfill its retailing needs.

There is no doubt why dropshipping is considered one of the perfect business models for new e-commerce entrepreneurs, it doesn’t require large startup capital and easy to set up and manage.

How does Amazon work?

Amazon is one of the biggest e-commerce marketplaces in the world. It has large popularity because retailers are able to sell their products on it, and manufacturers, big brands are also allowed to sell on Amazon as their additional channels for their brands. After you’re approved for an Amazon seller account, you are able to start selling on Amazon.

How does dropshipping work on Amazon?

Amazon is a well-favored haven for dropshippers.

Dropshipping on Amazon (or allowing a third-party to fulfill orders) is generally acceptable as long as the seller meets the requirements set out in its dropshipping policy. Violation of this policy may result in the cancellation of your sales privileges.

These policies (as is shown below):

  • Be the seller of record of your products;
  • Identify yourself as the seller of your products on all packing slips, invoices, external packaging, and other information included or provided in connection with them;
  • Remove any packing slips, invoices, external packaging, or other information identifying a third-party drop shipper prior to shipping the order;
  • 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.

Examples of drop shipping that is not permitted:

  • Purchasing products from another online retailer and having that retailer ship directly to customers, if the shipment does not identify you as the seller of record or if anyone other than you (including the other online retailer) appears on packing slips, invoices, or external packaging; or
  • Shipping orders with packing slips, invoices, external packaging, or other information indicating a seller name or contact information other than your own.
Amazon dropshipping policy -- AmzChart
Amazon dropshipping policy — AmzChart

If you’re using a dropshipping model, you’ll be listing your products on your website without holding any physical inventory. In the general dropshipping model, all you have to do is to transfer your orders to your suppliers, and they then carry out fulfillment on your behalf.

On Amazon, dropshipping is not that easy. They clearly state in its dropshipping policy that it is not allowed to purchase products from online retailers and ship them directly to customers. However, what you can do is to buy goods from retailer A and have fulfillment center B deliver the goods on your behalf. This doesn’t fit into the traditional definition of dropshipping, but you can still make it dropshipping.

Even though Amazon’s policy does not allow traditional dropshipping delivery, many sellers still do so.

There are many people says you can dropship on Amazon with FBA, I don’t really agree with this opinion, because the biggest difference between dropshipping and other business models is that there is no need to invest inventory, while FBA requires you to deliver goods to Amazon’s warehouse first, which is your inventory.

How to dropship on Amazon?

#1 Product research

Before you get started, you should do some research and figure out which dropshipping supplier you want to work with. At the same time, you have to do some product research to get a well understanding of which niche market you are going to dive into. The easiest way you can do this is by looking at what’s trending on Amazon, which means you have to check Amazon BSR (Best Seller Rank) to know the top-selling items on Amazon and see if there has a chance for you to dive into. Also, you can find whether these products shipped by FBA or FBM.

I just set one filter criteria to filter out the Amazon FBM products and I finally get the results, more than 20,000+ active products that are trending now on Amazon.

Amazon BSR FBM products -- AmzChart
Amazon BSR FBM products — AmzChart

If you are not satisfied with what you get on Amazon BSR results, then I suggest you check more dropshipping niches on FindNiche, which is a niche analytics tool regarding AliExpress, and you can also find more high-quality suppliers there.

#2 Create an Amazon seller account

Once you’ve got this sorted out, it’s time to set up your Amazon store. You can get one by going to sellercentral.amazon.com. Then you will get two options: signing up as a professional seller or an individual seller. You can start with any of them.

Amazon Seller Central -- AmzChart
Amazon Seller Central — AmzChart

#3 Determine the products and check product sourcing sites

Once you have some product ideas, you will need to find a supplier. We offer you some suggestions on step one, you can find suppliers on AliExpress if you are going to do Amazon dropshipping, because AliExpress is the heaven for dropshippers, you can always find high demand and low competition products if you can spend more time exploring, also, some niche analytics tools such as FindNiche that could make things easier.

Like AmzChart, you can set many filter criteria based on your preferences on FindNiche, to filter out your winning dropshipping niches.

Find more dropshipping niches on FindNiche -- AmzChart
Find more dropshipping niches on FindNiche — AmzChart

#4 Set up an Amazon listing

After determining your products and fulfillment of your orders, next, As soon as you’re ready, you can publish your listing and start making sales.

When you create a new product listing, you will need to choose your product category first and then you’ll have to fulfill the information for the listing. And when you set up the price, you have to take Amazon fees into consideration. If you are a professional seller, you will pay a referral fee of 8-15% depending on the category. Individual sellers pay an additional $1.00 per sale, too.

How to succeed on Amazon dropshipping?

Starting a dropshipping business on Amazon is quite simple, but make it successful, you have to take a lot of effort.

Here are 3 tips to help you succeed on Amazon dropshipping.

#1 Pay attention to your products

You know how important a product for your Amazon business, so product research is essential. If you are a beginner and don’t want things to go bad, then I suggest you do product research with Amazon BSR because BSR represents the sales and popularity of products on Amazon, it fluctuates on an hourly basis. Use Amazon BSR analytics tools like AmzChart could help you find more product ideas. And then you can paste the product name to suppliers platforms, such as AliExpress to find this product.

#2 Get samples first

Unlike other types of e-commerce business, dropshipping is that kind of business that suppliers send products to customers directly, so you are not allowed to check the product’s quality by orders. That’s why get samples become so important.

#3 Care your customers

Customer is the key to your success because the customer always means sales. With the dropshipping model, you don’t have to manufacture your product, nor do you have to ship it. All you have to make sure is that customers receive the products and they are satisfied with them. You will have more time to spend on customer service in Amazon dropshipping. Also, great customer services would get you good product reviews, thus then affecting your sales.

Final thoughts

Are you going to start dropshipping on Amazon? Dropshipping on Amazon is a little bit different from dropshipping on other standalone platforms, you have to follow the Amazon dropshipping policy and take care of every step of your business.