How to do Dropshipping on Amazon: Step by Step Guide [2022]

Thinking about dropshipping on Amazon?

It's tempting because Amazon is the world's biggest online retailer and everyone recognizes its name.

Is starting an eCommerce business with Amazon Dropshipping doable? Many new entrepreneurs are looking to do some form or online selling. Is this business model for you?

In this article, I'll tell you what it's all about, how to do it, list the pros and cons and give you some tips on how to get your dropship eCommerce store as successful as possible.

Let's dive in.

What Is Dropshipping on Amazon?

Dropshipping on Amazon is similar to the typical way of doing dropshipping, except you are doing it on the Amazon marketplace instead of a store hosted on Shopify or some other platform.

Some dropshippers prefer to do it on Amazon because it has such a large customer base. And, of course, because it's Amazon.

It's also much different than Amazon FBA because you aren't holding any inventory yourself.

Is Dropshipping on Amazon Profitable?

The answer to this question is a little complicated because it depends on a lot of factors. The biggest factor is the niche you choose to dropship in.

Some niches are more profitable than others and some have more competition than others. If you can find a niche that is profitable and not too competitive, then dropshipping on Amazon can be quite profitable.

Another factor that will affect your profitability is how well you set up your campaign and how well you optimize it. If you don't do these things well, then your profits will suffer.

But if you do them well, then your profits can be quite good.😊

Does Amazon Allow Dropshipping?

Yes, Amazon does allow dropshipping but the following must be adhered to:

  • You must show that you are the only seller of your products. Your store name must be on all your invoices, packing slips, external packaging, and everything else related.
  • You must be the seller of record for your products.
  • You must handle all the product returns.
  • Any invoices, packing slips, external packaging Etc., From a third-party drop-shipper must be removed prior to the package being shipped to the customer.
  • You need to comply with all the terms of the seller agreement and policies. Keeping these is check will keep your Amazon business going.

Amazon’s Dropshipping Policy

To sell products on Amazon as a dropshipper you will need to apply and be approved to sell in the category that your products fall under.

There are some categories where Amazon does not allow dropshippers, such as Grocery & Gourmet Food, Health & Personal Care and Beauty.

Amazon has different policies for different countries so it's important that you check the policy for your country before applying to sell.

Familiarize yourself with Amazon's drop shipping policy first.

How Much Does It Cost to Start Dropshipping on Amazon?

Dropshipping fees on Amazon will vary according to product type but typically are between 10 and 15%. If you’re dealing with small margins when doing Amazon dropshipping, this is going to take a pretty big piece out of your profits.

You’re also going to need a selling plan. The individual plan works out to 99¢ for each unit sold. The professional plan is a set monthly rate at $39.99 per month. You can sell unlimited products with this plan.

Learn more about Amazon fees.

7 Steps on How to Start Amazon Dropshipping

How do you get started selling on Amazon? Here are the steps involved.

1. Set up Your Amazon Seller Account

Before you can start selling on Amazon, you need to set up a seller account. The process is relatively simple and only takes a few minutes. 

First, go to Amazon's website and click on "Sell on Amazon." Then, click on "Create your Amazon Seller account now." Next, you will need to enter your email address, create a password, and provide some basic personal information. Once you have completed all of the required fields, click on "Create account."

Be sure to know in advance if you want to set up an individual or professional plan as outlined in the previous step.

2. Do Product Research

When it comes to product research for dropshipping on Amazon, there are a few different avenues you can take.

Start by looking at bestselling items in your niche. Take a look at the product listings and see what features are most important to customers.

You can also look at customer reviews to get an idea of what people like and don’t like about certain products.

Another option is to use Amazon’s search tool to find keywords that are relevant to your products. This will help you determine what people are searching for when they’re looking for products like yours.

You can also utilize third-party tools to help with your research. These tools can provide valuable insights into what products are selling well and how you can improve your own listing.

Stay away from Prime products. These are exclusively sold by Amazon FBA registered sellers so it's going to be difficult to compete with.

When it comes to product research, there is no one-size-fits-all approach. However, by taking the time to explore all of your options, you can ensure that you find the right products for your store.

Having said this, you'll need to get approval for some products. Categories like fashion, music, and jewelry require approval before you can set up your Amazon store.

Familiarize yourself with the overview of categories first.

3. Source a Supplier

This is going to take some legwork, but since there are a lot of suppliers that will drop ship for you, it won't take that much effort.

Here are some ways to find them:

Dropshipping Directories

Dropshipping directories are websites that list suppliers who are willing to work with drop-shippers. This can be a great way to find reliable suppliers, as the directories typically only list companies that have been vetted and approved by the directory’s staff.

In addition, dropshipping directories often offer valuable resources and tips for getting started with dropshipping. Salehoo is an example of a dropshipping directory and has a great reputation. You can find a great third party supplier there.

Search on Google

One of the best ways to find a dropshipper is to do a search on Google. You can start by searching for terms like "dropship suppliers" or "dropship wholesalers."

Once you've found some potential candidates, you can research each one to see if they offer the products you're interested in and if they would be a good fit for your business.

Attend Trade Shows

Trade shows can be a great way to find dropship suppliers for your business. By attending a trade show, you can get an up-close look at the products that potential suppliers have to offer.

You can also talk to representatives from different companies to get a better understanding of their operations.

Trade shows can provide an opportunity to network with other businesses in your industry. Attend a trade show related to your business and you may just find the perfect dropship supplier for your needs.

4. Create an Amazon Product Listing

When selling products on Amazon, one of the most important things Amazon sellers can do is create a product listing that is both accurate and engaging. Fortunately, there are a few simple steps that any seller can follow to create an effective listing.

Go to your Seller Central account first. Then head over to Inventory – Add a Product. At the next screen, click on “Inventory – Add a Product.” At the Add Product screen, click on “Create a New Product Listing.”

First, be sure to include all relevant information about the product, including its title, condition, shipping weight, and dimensions. This will ensure that potential buyers have all of the information they need to make a decision.

Next, write a compelling product description that highlights the features and benefits of the item. Be sure to also include any relevant keywords that potential buyers might use when searching for the product.

Finally, add high-quality photos that show the product from multiple angles. These photos should be clear and bright, and they should highlight any special features of the item. By following these steps, sellers can create Amazon product listings that are both informative and eye-catching.

Pros and Cons of Dropshipping on Amazon

There are also several advantages that come with dropshipping on Amazon and they are similar to dropshipping on eBay.

First, let’s discuss the Pros:

  • You can launch your business quickly and with little upfront investment.
  • You also have access to Amazon’s massive customer base, which can help you to quickly scale your business.
  • No Warehousing Costs. Amazon dropshipping allows you to take advantage of Amazon’s world-class fulfillment services. With Amazon Fulfillment, you can have your orders fulfilled by Amazon, which can save you time and money.
  • A lot of opportunities. Since Amazon has over 30 categories to choose from, you'll have the option to pick from many different niches.

Cons:

  • Dropshipping on Amazon can be a great way to get started in e-commerce. However, there are also some potential drawbacks that you should be aware of.
  • Dropshippers are reliant on their suppliers for inventory and shipping. This means that if your supplier runs into any problems, it could delay or even prevent your orders from being fulfilled.
  • Because you don't have control over the inventory or shipping, it can be difficult to provide excellent customer service.
  • Data Exposure. Because Amazon is able to see all of your sales data, they can use this data to maximize their own sales opportunities. They will be able to see exactly how much you’re selling and what products are selling the best. This could lead to higher competition and going head to head with Amazon itself can be monumental.
  • When people buy from Amazon they only understand that brand. They will likely not remember or care much about your store. That’s why it’s very difficult to brand yourself. Unlike a drop shipping store on Shopify, you really have not much chance of building a solid brand name.

Tips for Success When Dropshipping on Amazon

Now that you understand the mechanics of Amazon dropshipping, here are some tips to help you reach the most success possible.

Promote Your Listing

If you want to succeed on Amazon, it's essential to promote your listing. One way to do this is to invest in pay-per-click advertising. This will help to ensure that your listing appears at the top of the search results, making it more likely to be seen by potential customers.

You can also use social media to generate interest in your listing. By sharing your listing on Facebook, Twitter, and Instagram, you can reach a wider audience and increase the chances of making a sale.

Don't forget to optimize your listing for SEO. This will help to ensure that your listing appears high up in the search results, making it more likely to be seen by potential customers. By following these tips, you can give yourself a better chance of success when dropshipping on Amazon.

Win the Buy Box

The Buy Box is the box on a product listing that allows customers to add the item to their cart. It's prominently displayed, and winning it can give you a significant advantage over your competition.

There are a few things you can do to improve your chances of winning the Buy Box, such as offering competitive prices and maintaining a high level of customer service.

But even if you don't win the Buy Box every time, there are still plenty of sales to be had on Amazon. So don't get discouraged if you don't always come out on top. Just keep working hard and you'll eventually find success.

Be Customer-Focused

One of the most important tips for succeeding with Amazon dropshipping is to focus on the customer. This may seem obvious, but it is often overlooked by sellers who are focused on making a quick profit.

It is important to remember that customers are the reason that Amazon exists, and they should always be the top priority.

Dropshippers who provide good customer service, fast shipping, and quality products will be more successful in the long run than those who do not.

It is important to always be learning and improving. Amazon is constantly changing, and those who are able to adapt will be more successful than those who do not.

Target a 95% Seller Rating

Aim to maintain a rating of 95% or higher, as this will give you the best chance of success. Here are a few tips to help you achieve and maintain a high seller rating: 

First, always ship your items on time and provide tracking information to your customers. This will help to ensure that they receive their items in a timely manner and that they can track their shipment. 

Second, respond promptly to any customer inquiries or problems. If there is an issue with an order, do whatever you can to make it right. 

Finally, take the time to write quality product descriptions and offer competitive prices. The more information you can provide about your products, the better. And, by offering low prices, you'll be more likely to attract buyers and build a loyal customer base. 

By following these tips, you can increase your chances of success when dropshipping on Amazon. Remember, aim for a seller rating of 95% or higher and always strive to provide excellent customer service.

Consider Buying Samples of Products you want to Sell

Buying samples of the products you're interested in selling, it helps you in a few different ways.

  • It will give you a chance to see the product quality for yourself and make sure it's something you're comfortable selling
  • It will help you take better product photos since you'll have the actual product to work with rather than just relying on stock images.
  • It can also give you a chance to test out the dropshipping suppliers shipping times and customer service before making a larger commitment.

Offer Better Discounts Than Competitors

Another strategy is to offer a better coupon discount than your competitors. This can help you attract more customers and get them to purchase from you instead of from someone else.

There are a few different ways to go about this.  

  • Offer a higher percentage off.
  • Offer  a higher dollar amount off.
  • Offer  a combination of both a higher percentage and a higher dollar amount

Whatever approach you take, make sure that your coupons are attractive and easy to find so that customers will be able to take advantage of them.

Do Keyword Research

You need to make sure you do your keyword research thoroughly.

This is one of the most important aspects of successful dropshipping, as it will determine what products you sell and how well your listings rank in Amazon's search results.

There are a number of different tools and methods you can use for keyword research, but the important thing is to take your time and do it properly. Once you have a good selection of keywords, you'll be well on your way to success with your Amazon dropshipping business.

What about Dropshipping with Your Own Online Store?

Dropshipping on Amazon can be fairly lucrative, but you should also consider your own ecommerce store hosted on a platform like Shopify or Woocommerce. 

This will give you more control over your brand, product selection, pricing, and the overall customer experience. Plus, it can be a great way to build an asset that you can eventually sell. If you're interested in learning more about setting up your own online store, check out my article on how to start an eCommerce business.

Invest in a Dropshipping Course

If you're not sure how to start a dropshipping business on Shopify, I recommend investing in a dropshipping course. This will give you all the information and resources you need to get started, including how to find suppliers, set up your store, market your products, and more.

Plus, it can be a great way to get started quickly and without a lot of upfront investment. I've put together a list of the best Shopify dropshipping courses here.

Conclusion

I hope this article has given you a better understanding of dropshipping on Amazon and how you can be successful with this online business. Amazon dropshipping can be a great way to get started in eCommerce. However, there are also some potential drawbacks that you should now be aware of.

Has this article answered all your questions? Leave a comment below!


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Drew Mann

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