- What is Dropshipping?
- What is Amazon Dropshipping?
- Is It Legal to Dropship on Amazon?
- How Much Does It Cost to Start Dropshipping on Amazon?
- Can You Make A Good Profit with Amazon Dropshipping?
- What are the Benefits of Amazon Dropshipping?
When it comes to starting an online business, Amazon and dropshipping are both great options that a lot of entrepreneurs, new and experienced, can take advantage of. But have you ever considered combining the two and starting an Amazon dropshipping business? Since Amazon is one of the world’s largest ecommerce platforms, it only makes sense to take advantage of it as a marketplace to get you sales since there are already loyal customers built in.
People are already on Amazon shopping every day and many consumers are extremely loyal to the ecommerce website, turning to Amazon first when they’re looking to purchase virtually anything. So by selling on Amazon, you can tap into this audience and get your products in front of an enormous potential customer base. Amazon is one of the most trusted ecommerce platforms in the world, and customers are already used to shopping on there, so you’re starting your business on a platform that already has a lot of credibility which can transfer to your own business as well.
Another great thing about Amazon dropshipping is that they handle a lot of the customer service and fulfillment for you, so you don’t have to worry about those aspects of your business as much. This ensures a business that is easier to run, highly automated, and can be done with less of an upfront investment than other ecommerce models.
Now that we’ve gone over some of the basics of how to dropship on Amazon, let’s go over how you can actually get started with your own Amazon dropshipping business. This guide will walk you through common questions about how to do Amazon dropshipping and all of the steps to get started, from how to find the right products to launching your own products on Amazon.
Whether you’re new to ecommerce or an experienced entrepreneur looking for a new platform, Amazon dropshipping is an excellent opportunity to help grow your business and expand your reach. So if you’ve been thinking about learning how to start Amazon dropshipping, this article will help you get started!
What Is Amazon Dropshipping – Common Questions
While dropshipping on Amazon sounds great, you might still have some questions about how it all works. In this section, we’ll cover some of the most common questions when it comes to Amazon dropshipping so that you can familiarize yourself with the concept.
What is Dropshipping?
Dropshipping is a business model in which ecommerce entrepreneurs sell products without having to carry any inventory. When a store owner receives an order from a customer, they simply contact the supplier, who will then ship the products directly to the customer’s doorsteps. Dropshipping businesses can be run entirely online, which makes them easy and affordable to start. Amazon dropshipping works very similarly and the next question will outline what major differences.
What is Amazon Dropshipping?
Amazon dropshipping is very similar to a traditional dropshipping business model with a few key differences. The first one is that instead of taking orders on your own website, your customers will be placing orders directly on Amazon.
The other key difference is that instead of your suppliers shipping products to your customers, you (or your suppliers) will ship all of your inventory to Amazon, and then Amazon will fulfill the orders for you as they come in. This program is called Fulfilled By Amazon (FBA) and it’s a great way to get started on Amazon without having to worry about physically carrying any inventory yourself.
Is It Legal to Dropship on Amazon?
Amazon dropshipping is definitely legal, in fact, their whole FBA (Fulfilled By Amazon) program is built to do just that.
However, there are some things you have to consider, such as:
- You must be the seller on record of all of your products
- You must identify yourself as the seller of your products on packing slips and other information provided
- You must be responsible for customer returns (accepting and processing)
- You must comply with all the terms in your seller agreement and all Amazon policies
Dropshipping methods that aren’t permitted on Amazon:
- Buying products from another retailer and having that retailer ship directly to customers
- Shipping orders with packing slips and invoices that include another seller’s name or contact information other than your own business
In the end, you can dropship on Amazon using their FBA program as long as you are the only named seller and there are no other retailers named or involved in the process between the buyer purchasing a product on Amazon and getting the product in the mail. As long as you abide by these policies, Amazon dropshipping is totally legal and allowed on their platform.
How Much Does It Cost to Start Dropshipping on Amazon?
The Fulfilled By Amazon program, which is their dropshipping program, has its own fees that you’ll need to keep in mind when getting started. When you sign up as a seller, you can pick between two plans:
- Individual plan: $0.99 per unit sold
- Professional plan: $39.99 for unlimited items sold
In addition to the plan fees, there are variable dropshipping fees that are generally in the 10%-15% range. These fees are essential to keep in mind when considering what products to sell on Amazon to ensure you have enough profit margin after the cost of the product and all applicable fees.
Can You Make A Good Profit with Amazon Dropshipping?
Amazon dropshipping can be extremely profitable as long as you’re able to find the right products for the right price. The upfront work of finding the right, profitable products is the key to ensuring you make money with Amazon dropshipping. For example, if you’re selling an item with a 25% profit margin and Amazon takes 15% of that particular product, you’re left with 10% profit. Depending on the actual price of the item, the volume you can sell, etc. this may or may not be a good enough profit margin for you.
Running the numbers on each and every product that you plan to sell on Amazon is crucial to making sure that you’re profitable. Many Amazon dropshippers have just a handful of successful products that make them a considerable income. Once you find profitable products, you can scale those products and then move on to finding the next profitable product to dropship on Amazon.
To sum it up, Amazon dropshipping can be profitable, but you need to make sure you’re very strategic about the products you choose to sell and always run the numbers before making a purchase from your supplier.
What are the Benefits of Amazon Dropshipping?
There are several benefits to choosing Amazon dropshipping for your business, including:
- Access to a massive customer base with millions of buyers
- Ability to quickly and easily scale your business by leveraging FBA’s fulfillment capabilities
- No need to worry about carrying and shipping products yourself, as this is handled by Amazon on your behalf
- No added expense of renting a warehouse or hiring employees to ship products
Overall, if you’re looking for a way to get started in ecommerce and reach a massive audience of buyers, Amazon dropshipping may be the perfect solution for you. Just be sure to do your research up front, run the numbers on potential products, and make sure you’re able to manage your business costs to be profitable. With the right approach, Amazon dropshipping can provide an excellent opportunity for aspiring entrepreneurs looking to break into ecommerce.
Pros and Cons Of Amazon Dropshipping
Now that you understand some of the most common questions when it comes to Amazon dropshipping, it might be beneficial to look at a quick pros and cons list to see if Amazon dropshipping may be the perfect solution for you. As with anything, there are also some great benefits along with potential downsides to this business model that should be considered before getting started.
Amazon Dropshipping Pros
- Large built-in customer base: With millions of buyers from all over the world, Amazon dropshipping can provide you with a large audience for your products.
- Low upfront costs: You don’t need to rent a warehouse or hire employees to ship items, which helps keep your upfront costs low.
- Easy to get started: Setting up an Amazon dropshipping business is relatively quick and easy compared to other ecommerce businesses.
- No need to ship products yourself: Amazon will take care of shipping products on your behalf, which saves you time and money.
- Ability to scale quickly: With Amazon FBA, you can easily scale your business by leveraging their fulfillment capabilities.
- Minimal risk: When you dropship through Amazon, you can try out how different products do without putting a lot of money into a large amount of inventory.
- Location independence: With an Amazon dropshipping business, you don’t need to be tied down to a specific location or storefront. You can run your business from anywhere in the world with an internet connection.
Amazon Dropshipping Cons
- Low margins: Because you’re outsourcing a lot of the work, margins can be quite low with Amazon dropshipping. This just means you need to be strategic about the products you choose to sell.
- Fees: There are several fees associated with Amazon dropshipping that can eat into your margins, including Amazon seller fees, FBA fees, and supplier costs. These are important to keep in mind when deciding what products to sell to ensure you’re making enough profit.
- Competition: Because Amazon is such a popular platform, there is a lot of competition from other businesses selling similar products.
- No control over supply: When you dropship items through Amazon, you must rely on your suppliers to keep their inventory up-to-date. If they run out of one of your products and you’re unable to replenish your Amazon inventory, this will cause you to lose profit.
- Lack of quality control: Since you’re not holding product and shipping directly to your customers, you’re at the mercy of your dropshipping suppliers who could send low quality items and hurt your brand. Working with a dropshipping supplier you trust and testing out products yourself regularly can help avoid this situation.
- Dropshipping suppliers as competition: Some dropshipping suppliers are starting to sell on Amazon themselves, and when this happens they’re able to provide the product at a lower price, which undercuts other sellers. If a dropshipping supplier jumps on a listing, this usually means you’ll have to find a new product to sell.
Step by Step To Amazon Dropshipping
Now that you know some of the pros and cons of Amazon dropshipping, if it sounds like the right business model for you, here are the steps you’ll follow to get started.
Step 1: Sign up for an Amazon seller account
The first step is to sign up for an Amazon seller account via Amazon Seller Central. When you sign up, you’ll choose between an individual seller account and a professional seller account. The main difference is how the fees are structured. With an individual account, you’ll pay .99 per item sold, and with a professional account, you’ll pay $39.99/month for unlimited items.
If you’re just starting out and might only sell a few items a month as you get your business going, the individual seller plan will likely be the best option. If you’re confident you’ll sell 40 or more items per month from the beginning, you can go with the professional plan. Keep in mind that you can always upgrade once you start to make more sales.
When you sign up, you’ll need to provide your personal information, billing and tax info, etc. so make sure to have all of that information ready.
Step 2: Research products to sell
The next step is to find products to sell on Amazon. This can be time-consuming, so you’ll want to start with a few product ideas in mind and use the proper research using tools to help you out. We’ll list some of our favorite tools and software for Amazon dropshipping later in this article, so you know where to start.
When doing your research for what products you want to sell on Amazon, you’ll want to consider the following:
- Niche products can do well because there tends to be less competition than more generic products
- Finding products that are in demand all year round will ensure more consistent sales than seasonal products
- Some products that can be easily shown in a quick video can do well going viral on social media
- If an item is already being sold via Amazon Prime, it’s best to avoid it because someone else is already selling it, making it hard to compete
- Try to think of products that are either obscure or helpful (or both!)
It’s best to have a decent-sized list of ideas because once you start looking for suppliers, checking unit prices, and researching the demand of items, you may find that many items aren’t worth selling. It really does take time to find the right items to sell on Amazon. So taking time to research and get a long list of product ideas to move forward with researching further is a smart move.
Step 3: Find a supplier
Once you’ve done your research and found some types of products that could be good sellers on Amazon, it’s time to find a supplier. There are many different ways to source dropshipping suppliers, some of which we’ll cover below.
- Search Google: It seems so simple, but it is still one of the most effective ways to start your research. For example, searching Google for things like “stainless steel straws supplier” can help you find potential dropshipping suppliers. Remember to comb through many pages of results and try different keywords because it often takes a little digging to find the right supplier. It’s not always the first results that are going to bring you the right options.
- Look for trade shows to attend: Attending trade shows can be another great way to find potential dropshipping suppliers. There are many different types of trade shows, some more targeted towards a specific industry and others that are open to all types of businesses. For example, you could look for local trade shows in your area or even travel to larger nationwide trade shows that cover many different types of products. This can be costly and take some time since you’ll have to wait until the event, but it ensures that you can speak directly to the dropshipping supplier and that you’re working with a reputable company.
- Dropshipping directories: There are many different dropshipping directories available online, which can be an excellent resource for finding potential suppliers. These directories list suppliers you can use or contact directly to get started.
Remember to always do thorough research on any supplier you plan to work with. This includes reading reviews, asking for references, and even ordering samples of products yourself to test out the quality. It’s also a good idea to contact the supplier several times as you come up with questions to see how helpful and responsive they are, as this can give you a good indication of what it will be like to work with them.
Step 4: List your products on Amazon
Now that you’ve found a supplier and have products ready to sell, it’s time to list them on Amazon. You’ll want to be strategic in creating your listings, as this is what will help you convert visitors into buyers. You will use Amazon Seller Central to help you create, edit, and maintain your listings.
Make sure that you take your time when creating your listings so that they’re well written, have good photos, and look professional. When deciding on product photos for your listing, it’s a good idea to include clear, high-quality images of the product from different angles. This will give buyers a better sense of what they’re getting when they purchase.
Software For Amazon Dropshipping
One of the biggest advantages of Amazon dropshipping is that there are many ways to be as hands-off as possible. Using software and tools can help automate many of the processes involved in running an Amazon dropshipping business, making it easier to manage your orders, track inventory, and more.
Jungle Scout is a popular tool that helps you find products to sell on Amazon. It provides you with historical product data, keyword information, and allows you to track products. In addition, you can streamline inventory planning, automate requests for reviews, and track sales analytics.
Pricing: Starts at $49/month or $29/month when you pay annually
Oberlo is a dropshipping tool that allows you to find products to sell on Amazon. You can use Oberlo to search for products, contact suppliers, and it also integrates with Shopify if you plan on using that ecommerce platform to import your products to Amazon.
Pricing: Explorer account is free. Paid accounts start at $7.90/month.
Shopify is a popular ecommerce platform that can be used to create your own Amazon dropshipping store. Shopify has a built-in integration with Amazon so you can easily and automatically import your products into Amazon, manage inventory, fulfill orders, and more. This can take a lot off of your plate when it comes to running an Amazon dropshipping business. In addition, since you will already have your own storefront with Shopify, you can market your dropshipping store and sell directly to customers and save on Amazon fees for those orders if that’s something you’re interested in.
Pricing: Free 14 day trial and then $29/month for the basic plan.
Spocket is a dropshipping tool that allows you to find suppliers and products to sell on Amazon. One of the unique features of Spocket is that it allows you to work with suppliers who ship directly from their warehouses in the US or Europe, so you can get your products to the Amazon warehouse quickly compared to many dropshipping suppliers who ship out of China and take a long time to arrive.
Pricing: Free plan available with paid plans starting at $24/month for up to 25 unique products
Dropshipping on Amazon can be a great way to get started in ecommerce with little upfront investment, and it also can be a good complement to an existing online store. Whether you’re looking for a way to make some extra money on the side, or you want to start your own business, hopefully, this article has provided you with everything you need to know about how to dropship on Amazon. With the tools and resources available today, it’s never been easier to start your own Amazon dropshipping business!