Amazon ecommerce and dropshipping are two of today’s most prominent online selling trends.
You can combine these two powerful strategies with an Amazon dropshipping business.
If you’re planning to start a dropshipping business, you should look into building one with Amazon.
Fortunately, I can help you.
My guide will answer all your Amazon dropshipping questions. You’ll also learn all the steps and best practices when dropshipping on Amazon.
Table of Contents
What is Amazon dropshipping, and how does it work?
Dropshipping isn’t new, but not everyone fully understands the concept. This business model works like most ecommerce systems except for one major factor—order fulfillment.
A dropshipping business doesn’t hold any inventory. Instead, it partners with a third-party supplier that handles its fulfillment.
The dropshipping store takes the orders and lets the dropship supplier ship them directly. You can start selling faster and lean out your operations.
Many online retail stores and business use drop-shipping as a fulfillment method. Due to its many advantages, 27% of online retailers sell through dropshipping. Accordingly, Amazon has started getting into the dropshipping game.
If you’re interested in dropshipping with Amazon, you’ll want to check the Fulfilled by Amazon program.
Under Amazon FBA, you ship your products to Amazon and let them handle inventory and shipping to your customers. You can then sell the products through your own ecommerce store.
Amazon has some of the most efficient fulfillment systems in the world, so your customers will get your products faster. FBA dispatches via the closest fulfillment centers to get orders to customers as soon as possible.
98.1% of consumers say shipping affects brand loyalty, so you can bet that a high-quality shipping service makes a strong selling point.
Can you dropship on Amazon?
Definitely! Amazon dropshipping is a legitimate business. You won’t get into trouble by dropshipping through Amazon.
However, it would help if you followed specific rules to be a trustworthy, reputable dropshipping business with Amazon.
You should always:
- Be the seller on record.
- Identify yourself as the product seller on all packing slips, external packaging, and selling information. You can’t use another identity.
- Take responsibility for accepting and processing customer returns.
- Comply with Amazon’s terms, policies, and seller agreement.
Amazon also prohibits certain forms of dropshipping. Here are a few activities to avoid.
- Purchasing products from other sellers and having that retailer ship directly to customers.
- Shipping orders with another name on packing slips, invoices, external packaging, and other documents or packaging.
If the external packaging, packing slips, or documents have the info of the other online retailer (if you’re buying from another online retailer), Amazon could suspend your account.
You could lose your account if you continue purchasing products from other sellers.
Visit the Amazon Seller Central page for more information on seller rules and regulations.
It would also help if you worked with a wholesale supplier when dropshipping products on Amazon. You can use your unique branding on products you sell online through a dropshipping supplier.
Your customer purchases products from you, not your supplier. As such, you must remove all the branding of your third-party drop shipper on the items you sell.
Amazon sellers pay commissions and fees when drop shipping through Fulfilled by Amazon (FBA). The costs are reasonable, but it’s good for Amazon sellers and dropshippers to remember them when running an ecommerce business.
You’ll need an Amazon Seller Account to use Amazon’s dropshipping services.
You have two Amazon account options when signing up. The Amazon selling fees for these two accounts follow different models.
The first option is the Individual Plan, where you’ll pay $0.99 for every unit sold.
The second option is the Professional Account, which costs $39.99 monthly regardless of the items you sell.
Amazon also charges dropshipping fees depending on your product category. The typical range of fees is 10% to 15% of every unit sold. You’ll have to ensure your Amazon dropshipping margins cover drop-shipping and other selling fees.
Visit the Amazon Seller’s Pricing page to learn the breakdowns and samples of Amazon’s commissions and fees.
A business only makes sense if you’re earning a profit. Otherwise, you’re wasting time, energy, and resources.
The question on your mind is probably: “Is Amazon dropshipping profitable?”
Like any online business, Amazon dropshipping isn’t a guaranteed business model. Several factors determine whether you’ll make money or not.
You must establish retail arbitrage, meaning you must sell higher than all your costs. Your retail price should be significantly more than your dropship supplier charges per item.
Dropshipping margins are typically 15% to 30% of your selling price. Considering Amazon will take 15% or even more, you must ensure a positive net income after every drop-shipping sale.
If your product profit margins are 30%, you’ll still have 15% of net revenue after Amazon charges you its fees.
On the other hand, you won’t have retail arbitrage if you sell products at a 15% margin.
Your product’s demand will also affect your business’s profitability. In-demand products naturally mean more sales and higher profits.
If you sell a product no one wants, there’s little chance you’ll profit from dropshipping on Amazon.
You’ll also have to develop a great marketing strategy (which I’ll discuss later in the article).
The good news is many people have profited from ecommerce businesses. Data indicates 76% of sellers have a profitable business.
You should also be able to make money through dropshipping on Amazon if you effectively work on setting up your store.
Here are some benefits to convince you to learn how to dropship on Amazon.
Starting a traditional business with a brick-and-mortar store will require tens to hundreds of thousands of dollars. With Amazon dropshipping, you can start with a few hundred dollars.
Everything happens online, so you’ll need a few subscriptions and online tools. These are the basic costs to start dropshipping on Amazon.
- Domain name – $15
- Subscription to an ecommerce platform like Shopify – $29
- Product samples for photo shoots – $100 to $150
- Initial marketing and advertising spend (FB ads, email marketing tools, etc.) – $100 to $200
Based on this list, you’ll likely need no more than $400 to start.
Note that this is just a sample computation; you may spend a little more (or slightly less).
You also don’t need to spend a to keep your shop lights on. Many businesses fail because they cost too much to operate. Dropshipping on Amazon won’t cost too much since you have no fixed inventory and order fulfillment costs.
Amazon can take care of order fulfillment for you, eliminating the following expenses:
- Warehouse costs
- Salaries for order fulfillment staff
- Initial inventory
You’ll have to set up the following before you start dropshipping on Amazon:
- An Amazon seller account
- An online store
- Social media pages
These tasks are easy for anyone to do independently.
Becoming an Amazon dropshipping shop owner doesn’t require special training or certification. You only need to set up your store and promote it.
An automated business model runs even when you’re not spending time on it—like dropshipping businesses. If you’re looking to build an online store that continues to generate revenue, then automating it is the way to go.
Amazon dropshippers enjoy automation.
Your business continues to run like a well-oiled machine while you sell. Your online store takes customer orders; your FBA account puts the order. You then have your supplier ship out the order.
When you sell online through FBA, you can access vetted amazon dropshipping and wholesale suppliers. Amazon knows these dropship suppliers don’t disappoint.
When you build an Amazon business, you get the platform’s list of dropship suppliers. Finding a third-party supplier that will provide proven service to you and your customers is more manageable.
Amazon also has multiple suppliers for up to 30 categories. You’ll likely find wholesale suppliers for whatever product category or niche. You only have to find the ones you want to offer and start selling them in your store.
Now that I’ve told you why you should dropship on Amazon, it’s time to learn how to start a dropshipping business on Amazon.
Follow these steps to build your dropshipping ecommerce business and start selling.
You’ll need to create a seller account on Amazon before selling products.
Head to Amazon Seller Central and fill in the necessary details, including name, email, and your nominated password.
Amazon will ask for more details about your business, including your address and tax information. Select which account type you want.
You can start with an Individual plan. As your business grows and you start selling more products, upgrading to the Professional seller account is best for saving on Amazon fees.
You’ll need to get approval from Amazon in some niches and categories before you launch your Amazon store. The most common categories requiring prior Amazon authorization include fashion, beauty, and jewelry.
Check Amazon’s approval requirements to sell products in restricted categories.
Create an Online Store if you don’t already have one.
I highly recommend using Shopify since it has an app that seamlessly integrates with Fulfilled by Amazon (FBA).
Go to the Shopify website to create your own online store. Here are a few things you must complete.
- Select a theme for your shop. You can use a free one or buy it if you want something more premium-looking.
- Add your branding to your site, including logos, colors, and copy.
- Add some basic pages, including an about page, a contact page, and a seller’s-policies-and-terms page.
- Set up your tax and shipping settings.
- Set up your payment gateways. Head over to Settings, then Payments, to configure payment options.
Here’s how to connect your seller account to your Shopify store.
1 – Go to your Shopify backend’s sidebar and click the plus (+) sign next to Sales Channels.
2 – Click Add Channel on the pop-up, then click Connect to Amazon.
Following these steps will integrate your Amazon and Shopify accounts.
When your Amazon and online shop accounts are ready, you can add your Amazon product listings to your ecommerce store.
1 – Head to the Amazon sales channel link on your account’s left panel (for Shopify stores).
2 – Click Create Listing, then Select Product. You’ll see two options. You must purchase unique product codes (UPCs) if you make unique products.
3 – Since you’re planning to dropship on Amazon, select the option saying Another brand makes this product.
4 – Search for the product you want to drop ship, then click Select and publish the listing.
Follow these steps on your Amazon sales channel, and you’re ready to start dropshipping on your ecommerce store!
You can now promote your store! This step is a crucial part of the process, as your marketing efforts will determine the traffic and sales your store gets.
Setting up your Amazon dropshipping store is essential, but it’s not the end of the story. You’ll need to draw visitors to your store and convert them to buyers to earn profits.
Here are some proven tactics to promote your store and increase sales.
The most effective marketing messages make the customer the hero. When creating content, promotions, or marketing campaigns, highlight your customer’s pain points, dreams, aspirations, and desires.
Avoid marketing that emphasizes your business and what you sell. Instead, discuss your customer’s wants, requirements, and challenges.
A business brand makes your product memorable and likable. It gives you a competitive advantage, especially when selling products in a saturated market. Your brand can be a mix of the following.
- Visuals – logo, headline images, social media content, etc.
- Brand voice – How your brand sounds through written and oral messaging.
- Social proof – Who’s talking about your brand, and what are they saying?
- Reputation – Sites or media platforms that have featured your business.
Building your brand will take time, so don’t rush the process. Continue building your brand by constantly realigning and boosting your branding efforts.
Get some added help from paid boosts when you start. Advertising costs are now affordable, thanks to the advent of the digital age. Even small businesses can now afford ads on social media platforms, search, and email.
Here are some paid advertising channels you should consider.
- Google search ads
- Facebook ads
- TikTok ads
- Amazon ads
- Instagram ads
- Pinterest ads
- YouTube ads
Building your own online store gives the added edge of a unique visual experience, so don’t waste it. Your online store’s design and visual hierarchy will be crucial to your conversion rates.
Use a Shopify theme design that resonates with your target audience.
You’ll also want a functional store design. Navigation should be simple when customers purchase products in your store. Eliminate as many steps as possible.
Another way you can spruce up your site is to use beautiful product photos when promoting your listings.
Use photos on your product page, social media channels, ads, and other places where your products may appear.
It would also help if you learned Amazon product photography guidelines.
Some business owners let their dropshipping providers’ performance dictate their customer service. However, it’s best not to sit on your laurels after you make a sale.
Excellent customer service can result in repeat purchases, so make an effort to delight customers.
Here are some ideas to improve customer service.
- Throw in freebies but ensure you still have a good profit margin.
- Include a handwritten thank you note in the package.
- Throw in a discount on your customer’s next purchase.
- Create seasonal raffle contests for your buyers.
- Create a VIP list of your most loyal customers. This list can be a simple newsletter where you send great deals, flash sales, and exclusive products.
Search traffic is still one of the most significant sources of leads and prospects in ecommerce. You’ll have to optimize your online store for search if you want to significantly increase traffic to your store.
To optimize your online store, perform keyword research on terms and words that you want your store to rank for on search. Try to find long-tail keywords, as those provide chances of ranking.
For example, if you have an online shop that dropships swimwear, you’ll want to target words like “Monday swimwear” or “plus size swimwear” since those phrases have less competition than “swimwear.”
While search engine optimization (SEO) is a great strategy to drive traffic to your store, it’s a lot of hard work.
You won’t see immediate results, but you’ll slowly climb up the rankings for the keywords you target.
If you do SEO right, your store will get significant organic traffic.
As an Amazon store owner and dropshipper, you should aim to win the Buy Box and get more sales.
To win the Buy Box, you’ll need a high seller rating.
Most Amazon selling experts say a 95% seller rating is the bare minimum. You’ll also want to ensure you ship products quickly—ideally within 14 days.
The trickiest part of the Buy Box is the cost. Your product should be lower than most offers on Amazon.
While you’ll want to sell products lower than your competitors, you also don’t want to lose money selling at a loss. Look for products with higher profit margins and sell them at lower prices.
Creating coupons for your online store is a proven selling strategy. Most online businesses add discounts for particular milestones and events, like holidays.
You can make special sales on Thanksgiving, Christmas, New Year, Fourth of July, and any other occasion when people tend to buy more.
You’ll need to create coupons on your Amazon store when selling through Amazon drop shipping. Ensure your discounts and deals don’t affect your profits; you want to still sell at a profit.
If you sell at a 20% profit margin, you’ll want to cap your discount at 10%.
Alternatively, you could also add low-cost freebies.
Add stickers, wristbands or bracelets, tote bags, or any functional item you can brand at a minimal cost.
Consider emailing sales announcements to previous customers and selling to a warm audience who already trusts you and your brand.
User feedback and testimonials are crucial when selling online. Most buyers will check a store’s reviews before buying, so ensure you manage store feedback well.
I recommend using a tool called FeedCheck, which allows online sellers and dropshippers to view product reviews in one clean dashboard.
This tool will immensely help, especially if you already have multiple Amazon products in your store.
Respond to positive and negative reviews.
When you get unhappy customers, don’t panic. It happens to all sellers.
Do your best to amend the relationship. Your most prominent critics could become your most loyal customers if you manage to turn things around.
Yes, it’s possible to dropship your unique products.
These services offer various products in various categories.
- Women’s and men’s fashion
- Home improvement and decor
- And more.
You can also use a service called Printify, a print-on-demand dropship company that can print custom products and ship them directly to your customers.
Here are some products you can dropship on Printify.
- Phone casings
- And more.
You can turn your entire business into an Amazon dropshipping company or mix your listings with unique products. Doing the latter allows you to get the best of two worlds.
I hope this guide has helped you learn how to start dropshipping on Amazon.
Amazon dropshipping can be a great business opportunity. You’ll need to put in a lot of work, including creating accounts, searching for products, and securing a business license.
However, you could generate significant profit if you commit to building and promoting your dropshipping store.
Visit my blog for more Amazon ecommerce tips and strategies.