Want to know how to start dropshipping on Amazon? Check out this business guide and take your first steps toward entrepreneurship.
If you want to start an online business without investing a chunk of money, Dropshipping might be your best shot. It’s a popular business model where you can outsource your business to a distributor, supplier, or manufacturer. Your orders will be packed and shipped to your customers under your business name.
When it comes to dropshipping platforms, the first name that comes to mind is Amazon. With over 200 million subscribers and millions of monthly buyers, it’s one of the best places to sell your products.
But what does it take to become an Amazon dropshipper? What are the requirements? Today I am going to uncover all the details for you. I will also talk about the advantages and drawbacks of Amazon dropshipping. Let’s get into it.
What Is Dropshipping?
Dropshipping is one of the best and most popular concepts for product reselling mainly in eCommerce. It is a process or an order fulfillment procedure where an eCommerce business source procures, delivers, and stores products that customers orders. As the order is placed it becomes the third party’s duty to manage the product, and finally, deliver it.
Although, dropshipping attracts business that aims to sell a specific product, but is a limited opportunity to create a worldwide brand or offers many other products.
Dropshipping on Amazon: Things to Keep in Mind
Bear in mind, Amazon is all about quality and reputation. People trust the brand blindly for all of their shopping needs. No wonder the platform has some strict rules for sellers as far as dropshipping is concerned.
Here are a few things to keep in mind while setting up an Amazon dropshipping account:
- You present yourself as the sole seller of the products. Even though your orders will be fulfilled by a third-party supplier, for Amazon, you are the seller and as a Seller of Record, you will set the price, and shipping costs, and bear the applicable sales tax for each sale. Go through Amazon’s dropshipping policy on the company’s website to find out more.
- No packaging, labels, or invoices must contain the supplier’s name, contact, or other details. For the customers, you are the seller and they can’t know that it’s actually a third-party supplier that is shipping the products.
- You can’t purchase your inventory from another Amazon seller. Amazon might suspend your account if you violate this rule.
- You always comply with Amazon’s terms & conditions.
How Does Amazon Dropshipping Work?
This is how a typical dropshipping cycle works on Amazon:
- You, as a seller, will sign a business agreement with a third-party supplier or manufacturer who will be shipping the products on your behalf.
- Customers can order from Amazon’s shopping website.
- You will receive the order and the customer will get confirmation of that.
- You will notify the order details to the dropshipper along with the shipping address.
- Dropshipper will pack the order under your business name, contact details, and address.
- The customer will receive the order.
How to Dropship On Amazon? Beginners Guide
1. Find the Products to Sell
Every business starts with planning. Often there is a misconception that you can sell anything through dropshipping. Yes, it’s relatively easy to start your store but you still need a competitive product with a decent margin.
Keep in mind that it’s an easy business model so you will face very high competition. To make sure your product sets apart, do a little product research and study the current marketplace trends. You can use various Product research tools that will give you insights into top-selling products, along with their sales history, profit margin, and the top-sellers of the product.
Also, due to heavy competition, it usually comes down to the lowest pricing. So keep in mind while choosing the product that it should offer a decent profit margin that will help you see off the initial days on Amazon.
2. Register on Amazon Seller Central
Next, you need to create an Amazon seller account and buy a subscription. To register, go to the Seller Central page and provide the basic information such as your name, email, address, tax information, and payment details. Before you finish the setup, you will have to choose between a Personal and a Professional account.
With a Personal account, you will pay a $0.99 commission to Amazon for each order. There is no limit to the number of products you can sell in a month, however, the commission might eat up a big part of your profit.
For the Professional account, you will pay a one-time monthly fee of $39.99 and get access to some essential sales and inventory tools. The mathematics is simple, if you are selling more than 40 products a month, go with the Business account.
3. Get Product Approval
To sell some products, you may need to get approval from Amazon before launching your store. Amazon is strict about product quality and minimizing the risk of fake products being sold with a brand name, the company requires you to apply for approval.
High-risk products such as jewelry, groceries, and fashion products are the categories for which you need Amazon’s approval. On the other hand, you can sell books, ebooks, games, and software without approval.
Also, go through Amazon’s guidelines to find out the products which are not allowed on the marketplace. This category usually contains alcohol. Firearms, smoking products, and more.
While searching for the product, you should keep in mind whether the product you are choosing will require approval or not. Based on your personal preference, and the target audience, you can choose the products and suppliers.
3. Link Your Amazon Account to Shopify
If you have your online store on Shopify, you can easily connect it to Amazon so you will be able to manage the orders on both stores without much hassle. You can also sync your inventory details with your Amazon so all your product listings will be automatically updated as per your Amazon stocks. This will prevent you from receiving orders for out-of-stock items.
If customers order a product that you can’t fulfill due to unavailability, you might get negative reviews and an agitated customer – both are not good for your reputation as a seller. Also, when customers see your business name linked with Amazon, it automatically identifies you as a genuine and respectable online merchant, increasing the chances of repeat orders and generating higher traffic.
Here is how you can link your Shopify and Amazon:
- Go to your Shopify dashboard page.
- On the left panel, click on Sales Channel and click on + to add a new one.
- From the menu, click on Amazon.
- Click on Add channel and then click on Connect to Amazon.
4. Product Listing
If you have already decided on the product you want to sell, simply open the Amazon sales channel and go to Create Listing ➡ Select Product. Now is the time for you to perform another product research if you need. Look for the products you want to sell. Compare the suppliers’ prices, reviews, product quality, and so on before choosing the product.
Once you have found the desired product, click on Select and then on Publish to bring the listing detail to your Amazon. You will be able to manually edit the listings later on. Make sure your product pages contain all the necessary information about the product. This will help customers decide quickly. If you don’t have sufficient information, customers might go somewhere else, as there is no shortage of sellers on Amazon.
5. Market Your Business
Finally, it’s time to market your Amazon store. There are multiple ways you can accomplish that. If your budget allows you, invest in paid promotions, Amazon PPC, and more. You can also use the Amazon affiliate program to find online marketers to spread the word about your products.
Social media is also an effective marketing environment. Create social media accounts for your store on multiple channels and advertise your products there. Shopify allows you to integrate your social media account into your store. You can also hire social media influencers to advertise our product to their followers.
Amazon Dropshipping: Is It Worth It?
The impact of Amazon is so great, that any business venture associated with Amazon is worth giving a shot at. Yes, the competition is stiff, but you get a massive audience to showcase your products.
Ultimately, how far you can go, depends entirely on your product and marketing skills. Selling anything online is tough but if you find a decent product to get started with and do some competitors’ analysis, you can cross the hurdle and establish yourself as a successful Amazon dropshipper.
Frequently Asked Questions:
Of course, dropshipping is allowed in the Amazon store if you follow proper guidelines including dropshipping policy.
Some seller makes a choice of fast-selling products available for the customers through FBA, on the other hand, dropshipping is a slow-moving item at the doorstep of the customers.