Amazon Dropshipping in 2024: How to dropship on Amazon?

Using drop shipping effectively in online selling can be an excellent way to earn money, as long as you follow suitable methods and avoid common mistakes. This blog will further explain drop shipping, how it works, strategies, and the steps to start dropshipping with an Amazon account.

What Is Dropshipping?

Amazon dropshipping is a business approach in which sellers list products on Amazon without keeping stock. When a sale occurs, the seller purchases the product from a third-party supplier, who then sends it directly to the customer. 

While Amazon doesn't explicitly ban dropshipping, sellers who list products over which they don't have direct control are restricted. Before starting a dropshipping business on Amazon's platform, it's essential to research Amazon's seller policies to ensure compliance carefully.

How Does Dropshipping Work?

To understand how dropshipping works, follow the below steps; 

• Customer Places Order: A customer finds a product you listed on Amazon and orders.

• Seller Forwards Order: You, the seller, then forward the order details and customer information to your dropshipping supplier.

• Supplier Fulfills Order: The supplier then retrieves the product from their inventory, packages it, and ships it directly to the customer.

• Customer Receives Order: The customer receives the product without knowing you didn't physically handle the product supply.

Easy Steps: How Do You Start Dropshipping with an Amazon Account?

To start dropshipping with an Amazon account, it’s essential to know the below steps;

Step 1: Sign Up for an Amazon Seller Account

There are two account options: Individual and Professional. Individual plans cost $.99 per item sold, while Professional plans have a monthly fee of $39.99 regardless of sales volume. Choose the plan that best suits your business sales.

Step 2: Find Profitable Products

Research high-demand, low-competition products using tools like Trend Hunter, Google Trends, YouTube, or paid services like AMZscout and Jungle Scout. Niche selection is crucial, so invest time in proper research and planning.

Step 3: Get Product Approval (if needed)

Some product categories, like jewelry or fine art, require Amazon's approval before listing. So, ensure to check Amazon's seller policies for details.

Step 4: Find Reliable Dropshippers

Your drop shipper significantly impacts your reputation. Avoid searching for 'drop shippers' as these may cater to businesses rather than consumers. Instead, search terms like 'wholesaler + drop shipper + [your product category].' Explore resources like Shopify's list of dropshipping suppliers, but remember, manufacturers can also recommend wholesalers.

Step 5: Create Product Listings on Amazon

Follow Amazon's guidelines for creating listings. You can match your product to an existing listing or create a new one.  Choose between creating individual listings or bulk uploads—factor in Amazon's fees when setting your product price.

Step 6: Process Customer Orders

Once a customer purchases a product from you, forward their shipping information to your drop shipper for order fulfillment. 

Pros & Cons of Amazon Dropshipping

Like any business strategy, dropshipping has its pros and cons. Whether it works for you depends on your goals and resources. Here's a breakdown to help you decide:

Pros of Dropshipping:

• Dropshipping cuts costs on storage and shipping, freeing up your budget for other areas.

• With minimal investment, dropshipping is a good option for new entrepreneurs.

• Since you don't buy inventory upfront, you avoid the risk of losing money on unsold items.

• Dropshipping lets you sell on your website, online marketplaces, or social media.

• You can run your business from anywhere with an internet connection.

• Dropshipping allows you to handle more orders without managing a large inventory.

• You can offer a wide range of products without pre-purchasing them.

• Dropshipping lets you experiment with different products to see what sells best.

Cons of Dropshipping:

• The ease of entry makes dropshipping a competitive field.

• Limited control over fulfillment can make it harder to ensure product quality.

• Standing out from the crowd can be challenging when selling generic products.

• Low-profit margins often lead to competition focused on price, not quality.

• You might have less control over delivery times.

• Dropshippers might not always have real-time inventory updates, leading to out-of-stock situations.

• Offering bundled products or free shipping can be challenging.

• Unreliable drop shippers can lead to errors in order fulfillment.

• You're responsible for customer satisfaction even if fulfillment issues arise.

Strategies for successful dropshipping on Amazon

While dropshipping on Amazon can be an easy way to enter the eCommerce world, it requires careful planning and execution to be successful. Here are some key strategies to consider:

Prioritize your reputation

Linking your Shopify store to Amazon for dropshipping is crucial. You can source products from various suppliers for dropshipping. However, avoid dropshipping from other online retailers on Amazon, as this is usually not encouraged. If customers purchase an item from Amazon but receive it in packaging from another retailer like Walmart or eBay, they may compare prices and choose to keep it. This practice, known as online arbitrage, can harm your credibility. 

Avoid third-party branding

When using Aliexpress or similar suppliers for your dropshipping orders, it's crucial to communicate with your suppliers in advance to ensure they do not include their company information in shipments.

Order samples from your supplier

Understanding the quality of products you plan to dropship is beneficial. Consider placing sample orders with your suppliers without revealing that you intend to dropship on Amazon. Evaluate the products as if you were a customer, focusing on quality, the unboxing experience, and delivery time—all factors contributing to customer loyalty.

Develop your brand

Competitive pricing offers a slight advantage in dropshipping since many sellers may use the same suppliers. Instead, building a solid brand and delivering exceptional service can attract more customers, even if your prices are higher.

Streamline your operations

Managing a dropshipping business on Amazon can become complex as it grows. Simplify your operations using automation software to optimize and manage your tasks efficiently. One of the best ways to automate your financial operations is to use Saasant’s PayTraQer. The application lets you integrate payment platforms like Square, Stripe, PayPal, AmazonPay, WooCommerce, etc, with your accounting software. Additionally, it ensures transactions are synchronized accurately, saving you considerable time on manual tasks.

Conclusion

To develop a profitable and reputable Amazon business, prioritize your customers, understand your products, manage returns effectively, use the right marketing strategies, and use helpful software. Following these guidelines can build a lasting, trust-based relationship with your target audience.

If you want to know more about Amazon selling without inventory, read how to sell on Amazon without inventory.

FAQs

Is dropshipping legal?

Yes, dropshipping is legal. It involves selling products that are shipped directly from a third party to the customer while ensuring compliance with local laws and regulations.

How to dropship for beginners?

Start by choosing a niche, finding trusted suppliers, setting up an online store on platforms like Shopify, and focusing on marketing to attract customers.

Is Amazon dropshipping profitable?

Dropshipping on Amazon can be profitable with the proper product selection, cost management, and sales optimization, despite Amazon's fees and competitive environment.

Is dropshipping allowed in the Amazon store?

Yes, but you must follow Amazon's policies, including being the seller of record and handling returns. Dropshipping from other retailers directly to customers is not allowed.

How much does it cost to dropship on Amazon?

Costs include Amazon's monthly subscription and referral fees, plus any additional expenses for marketing and testing products. Budget management is crucial for profitability.