Amazon Dropshipping: The Ultimate FAQ Guide
This a comprehensive guide on one of the most profitable e-commerce businesses: Amazon dropshipping.
Ever since the concept of dropshipping arose, e-commerce gurus have always been trying to link dropshipping with Amazon.
That’s why we have brought a detailed guide that explains dropshipping on Amazon step by step.
In this guide, you will learn how you can dropship on Amazon, the dos and don’ts of Amazon dropshipping along with other tips to do it legally and more efficiently.
So, if you are related to the field of dropshipping, it is highly advised that you stay connected throughout the article as we plunge into the journey of exploring ways of selling dropship items on Amazon.
What Is Amazon Dropshipping?
Dropshipping is a smarter way of selling things online without having to keep inventory and taking the pain to deliver the items.
It has a simple formula of taking orders on your online store and getting them fulfilled from other stores that are mainly the product sourcing platforms.
Dropshippers run their own online stores for getting orders at a higher price and place the order on original source with the customer’s delivery address.
That’s how they pocket their margins and run a dropshipping business profitably.
But running your own store will come with a challenge of low or zero traffic because your newly launched store would have little credibility and following among online shoppers.
That’s why the idea of Amazon dropshipping popped up in the minds of genius dropshippers. That is to use the Amazon platform for the purpose of dropshipping.
How Does Amazon Dropshipping Work?
Amazon dropshipping works on the same concept as traditional dropshipping. It is just that you would use Amazon as a selling platform.
You open up a seller account at Amazon and enlist your products. When you receive orders on Amazon, you get those orders fulfilled from other sellers.
That’s how Amazon dropshipping works.
Although the process of dropshipping on Amazon sounds very simple, there are a few guidelines while selling on Amazon via dropshipping model. We will discuss those limitations and techniques in a separate section of this article.
Is Amazon Dropshipping Legal?
Yes. Amazon dropshipping is legal and does not count under any financially or commercially illegal activity.
New dropshippers often ask this question, “Is dropshipping allowed on Amazon?”
The answer is yes. Amazon itself allows dropshipping on its platform.
But Amazon dropshipping is not as simple as other forms of dropshipping. There are a few Amazon dropshipping rules and regulations that you need to follow.
To comprehend the answer to this question in full letter and spirit, you need to understand what the preferences of Amazon are.
You have to be in Amazon’s shoes to know the real idea behind why dropshipping on Amazon should be legal or illegal.
Consider yourself as the owner of Amazon for a moment. What would your preferences be to make Amazon flourish more?
Would you allow sellers on Amazon who have opened their shops on Amazon with one name and their customers get their products with a different name?
Additionally, won’t your customers be offended if they receive orders after 45 to 60 days of payment?
Won’t such factors affect the credibility of your gigantic e-commerce platform?
But at the same time, you would not want to miss sales of the products that are not available on your platform because the core purpose of your online business would be to become more profitable.
So, you would have to chalk out some rules that your customers should not be getting an invoice or a tag or anything that shows that some other seller has served the product to them.
Similarly, you would have to make another rule that your sellers should make their orders delivered within some maximum days limit.
To address such issues, Amazon has devised some rules for dropshipping that Amazon sellers have to follow. These rules are called Amazon Dropshipping Policy.
While this dropshipping policy of Amazon may be self-explanatory, we have rephrased its points in a simpler language.
- Show yourself as the real seller of products you’re selling.
- The product and its relevant documentation must show you as the seller instead of anyone else.
- The delivered package must not contain anything that shows a third-party seller in between you and your customer.
- You must show yourself responsible to process customer complaints and returns, etc.
- Adhere to all other policies and rules of Amazon related to non-dropshipping items.
So, you must have understood by now that dropshipping on Amazon is legal and can be possible by taking care of the rules and regulations mentioned above.
How Do I Start a Dropshipping Business on Amazon?
Let us learn the process of dropshipping on Amazon step by step.
There are two main ways of dropshipping on Amazon.
- Amazon Dropshipping via Shopify
- Amazon Dropshipping via Amazon FBA
Let’s discuss both ways.
1. Amazon Dropshipping via Shopify
If you’re a Shopify dropshipper, it is highly likely that you already know that Shopify has added Amazon as one of its sales channels.
To understand the complete process of dropshipping on Amazon via the Shopify store, we have broken down this process into 6 simple steps in the following.
1. Register Yourself on Amazon as a Seller
Log in to Amazon.com and try to locate and click “sell” from the homepage as shown in the screenshot below.
Another page will open that would say “Become an Amazon seller” and will ask you to sign up.
Click on the sign-up button to continue registering yourself as a seller.
The next pages will ask you to provide the following information:
- Business Information
- Seller Information
Caution: You are advised to provide real information about your business and personal details because once updated, you cannot change any part of the information.
Important Advice: Never use your personal email address to register as a seller on Amazon. This is because you may have to sell your Amazon store in the future and for that, you would have to give your email login and password details to the buyer.
While setting up your Amazon seller account, you will have to choose from the following plans:
- Individual Plan
- Professional Plan
In the individual plan, there will be no monthly fees but there will be limited options like the freedom to choose a few product categories, etc. Amazon will also charge you $0.99 per sale.
In the professional plan, there will be no limit to choosing product categories but there will be a monthly fee of $39.99 that Amazon will charge you.
Amazon will not charge per product on a professional plan.
2. Choose the Right and Profitable Products to Sell on Amazon
The next step will be to choose the products that have a high probability to be sold on Amazon. This needs to be a different yet extensive product research practice as you are about to sell on a different platform.
Obviously, you would have to find and enlist products that have high-profit margins but low competition on Amazon.
Initially, you would feel that every other product that you want to sell is already present on Amazon. But if you dig deep, you would come up with some great product ideas which could kickstart your journey as an Amazon dropshipper.
Pro Tip: Try to find the products from AliExpress that are new to the online field and check their availability on Amazon. Even if you find a potential winning product that has little availability on Amazon, you can go for it.
But remember, that timing to launch a product is everything in e-commerce.
3. Integrate Your Amazon Store with Shopify
Login to your Shopify account and try to locate the option of Sales Channels. Press the “+” button to add Amazon as one of your additional sales channels.
If you can’t find Amazon by pressing the “+” button, you should go to the Shopify Marketplace and search for “Amazon”.
You will find the result as shown in the screenshot below.
Install this Amazon Channel app on your Shopify account and you are good to move on to create product listings on Amazon.
4. Create Your Amazon Product Listing
The next step is to create your Amazon product listing. You can access this option in two of the following ways:
- Product Listing from Amazon Account
You can find the product listing option on your Amazon account on the top left side by clicking the “Inventory” and then clicking “Add a Product”.
- Product Listing from Your Shopify Account
On the left side of your Amazon sales channel, try to locate the option of “Create Listing”. Follow the process shown in the video below to add products to Amazon directly from your Shopify Account.
5. Sync Your Amazon Shop with Shopify
It is very important for you to synchronize your Amazon shop with your Shopify account. You would have some benefits like Shopify would make sure to keep your Amazon updated about your inventory levels.
That is an important step towards what we call automated dropshipping. While it may not be fully automated but it would be the right step towards achieving it.
6. Promote Your Amazon Store
Having a store on the topmost e-commerce platform in the world does not necessarily mean that you could be having a lot of sales. That is because there will be so many other sellers from all around the world trying to sell their products via Amazon.
So, to stand out from the crowd, you need to promote your Amazon shop just like you promote your Shopify dropshipping store.
The basic purpose of promoting your store should be to bring more traffic. The more the traffic, the higher will be the chances of success at Amazon or any other dropshipping platform for that matter.
Some of the most popular promoting methods are listed below:
- Amazon Advertisement
- Search Engine Optimization (SEO) by keywords optimization
- Making use of Social Media
- Influencer Marketing
- Email Marketing
Pro Tip: Amazon dropshipping is different from Shopify dropshipping. At Shopify, the traffic is only limited to checking out the products that your store is offering. There will be no internal competition.
But at Amazon, even if it is you who brought the traffic, there might be a chance that a visitor buys the same product from another seller. That is because Amazon itself suggests every visitor check out similar products from other sellers.
So, to grab your visitors and keep them to your products only, you would have to beat your competition at Amazon in terms of pricing, services, and reviews, etc.
2. Amazon Dropshipping via Amazon FBA
The other method is somewhat a step ahead of traditional dropshipping. This method is known as dropshipping with Amazon FBA.
FBA is Fulfillment By Amazon. In this method, you have to send your products to Amazon which is then Amazon’s responsibility to keep them stored and shipped to customers when Amazon receives orders for those products.
The FBA model of dropshipping has been shown in 7 steps as under.
- You purchase products from a third party.
- You send those products to Amazon.
- Amazon stores your products in its own warehouses and keeps charging you for this facility.
- You update your Amazon shop with the details of your products.
- Amazon customers place orders for your products.
- Amazon picks the products from its warehouse, packs, and ships the products to the customer address.
- You get the sales amount from Amazon after Amazon deductions.
The FBA model is not really dropshipping in its true essence because once you have purchased the products and sent those products to Amazon, it no longer remains dropshipping because you have become the legal owner and custodian of the products.
It is just that you would still not be storing, packing, and shipping products to your customers. It is Amazon that would be doing so for you.
Pro Tip: If you are confused regarding the best product sourcing at the best price, NicheDropshipping has got your back. You must utilize our product sourcing services from China at the cheapest rate and trustable quality.
Is It Better to Dropship on Amazon or Shopify?
This is one of the most common questions that struggling or aspiring dropshippers ask. The answer to this question is quite relative.
If you have stepped into the field of dropshipping, there is only one key to success: Never leave any stone unturned.
While it may be argued which platform generally has a higher chance of success with dropshipping, it is always advised to check for yourself what suits best for your business.
For the beginners in dropshipping, it is advised that they should start dropshipping from Shopify with higher liberty and comfort.
You would have to be extra conscious of dropshipping items at Amazon because they have some strict rules that can even lead to getting your Amazon account banned.
Can You Dropship on Amazon from AliExpress?
Yes. Technically, you can dropship on Amazon from AliExpress but you need to do it very carefully.
So, how to dropship on Amazon from AliExpress that does not put your Amazon account in trouble?
We are sharing some tips to dropship on Amazon from AliExpress. You need to follow the tips mentioned below if you want to dropship items successfully from AliExpress to Amazon.
Choose Trustable Suppliers on AliExpress
Choosing the right suppliers on AliExpress is the key to a successful dropshipping business on Amazon. It would be ideal if your supplier has previous experience of dropshipping on Amazon.
In that case, your supplier would already understand how to legally dropship on Amazon.
If your supplier is not clear about Amazon rules, you need to talk to him in detail and agree on the points shared in Amazon Dropshipping Policy.
It would be great if you can let your supplier know about other rules of Amazon so that your supplier does not send any product that does not fall under the allowed list of Amazon products.
AliExpress supplier rating and the number of years that supplier has been present on AliExpress should be your prime factors to observe before selecting a supplier for Amazon dropshipping.
Suppliers Should Have Warehouses in Your Customers’ Countries
AliExpress has many suppliers that have warehouses in western countries such as the USA, UK, Spain, and France, etc.
Choosing these suppliers would give you an extra edge of getting your products delivered in shorter periods which is one of the prime priorities of Amazon.
Ask Your Suppliers Not to Include Anything in the Package That Shows Him as the Seller
You must have recalled the points shared in the Amazon dropshipping policy earlier in this article after seeing this tip.
You must strictly bind your supplier not to include anything that shows that you are not the real seller of your products.
This is a point that every dropshipper has to maintain irrespective of the fact that he is dropshipping via Amazon or Shopify.
Experienced suppliers on AliExpress know this very well but still, you have to double-check with your supplier and ask him not to include any receipt, promotional material, or AliExpress shop logo in the package.
Choose the Services of an Agent
The smartest move to getting your products fulfilled by AliExpress would be to hire the professional services of an agent.
The core purpose to dropship from AliExpress is to grab higher margins. A professional agent in China is already well-versed with such techniques.
An agent like NicheDropshipping could be your best choice for getting your products fulfilled more efficiently and more cheaply.
An agent will not only look for the required item on AliExpress but will also check the product availability on other Chinese platforms.
This way, you can increase your Amazon dropshipping sales, reduce fatigue, and pocket more margins.
So, are you allowed to dropship on Amazon from AliExpress and sites like Alibaba, and DHgate, etc? Yes, you can dropship on Amazon from these sites provided you take care of the rules that are described above.
How Much Money Do You Need to Start Dropshipping on Amazon?
It depends on how big you want to make your dropshipping business on Amazon.
The basic charges you need to bear while starting a dropshipping business on Amazon have been mentioned below. You must calculate your overall cost after adding up the following Amazon drop shipping fees.
Amazon asks you to choose from two selling plans named Individual Plan and Professional Plan.
Individual Plan charges you $0.99 per unit sold while the Professional Plan costs you a flat monthly fee of $39.99 with no charges per unit.
Referral fee or Amazon Commission is the percentage that Amazon charges for selling products on its platform. The referral charges vary from product to product.
The referral fees for most items sold on Amazon range between 8% to 15%.
The highest Amazon referral fee is charged at selling Amazon device accessories (45%) while it charges 8% on consumer electronics, and 15% for Home and Garden products including Pet supplies.
Fulfillment fees apply to the Amazon FBA program because Amazon is responsible for storing your inventory in its warehouses along with packing, shipping, customer services, and return, etc.
Amazon charges per cubic foot of the space occupied by the products in its warehouse. To have an idea of Amazon inventory storage fees, please see the charges below.
- Amazon charges $0.75 per cubic foot from January to September.
- The inventory charges are at the peak from October to December @ $2.40 per cubic foot. This is because of the high demand for products at this time of the year.
Promotional charges largely depend on the seller whether or not he chooses to promote his products on Amazon.
Advertising on Amazon pretty much works the same as it works on other platforms like Google and Facebook, etc.
The cost of advertisements depends upon you. You set your maximum limit of spending an amount on your advertisement. If your competitor offers a higher price to Amazon, his advertisements will be shown on top.
Caution: Just like the inventory storage costs, the cost of advertisements is highest in the peak season of Amazon sales i.e. (October to December).
This is because sellers are at war with each other due to the back to back events like Halloween, Black Friday, Christmas, and New Year.
So, to stay profitable with Amazon dropshipping, you need to adjust these costs in your product pricing otherwise, you may not be as profitable as you wish to be.
Is Amazon Dropshipping Profitable?
Yes. Amazon dropshipping is profitable provided you plan it for the long term.
Amazon has over 215 million unique monthly US visitors. That makes it a huge e-commerce opportunity for all online sellers including dropshippers.
But what’s the catch to nailing it while selling on Amazon? It is the repeat customer base that you need to increase by developing your seller profile on Amazon.
This is necessary to keep repeat customers intact because shopping from Amazon has largely become a norm in Western countries especially after the trend of mobile online shopping.
Sellers come and go on platforms like Amazon but a true achiever or a successful seller is the one who shows consistency and keeps serving orders with full focus on delivering quality products.
With the massive customer base on Amazon, you need to grab the maximum number of Amazon visitors by showing them unique products that deliver true value to your customer along with exceptional customer support.
That’s why Amazon dropshipping is considered to be a tough call for most dropshippers.
Pro Tip: The key to nailing Amazon dropshipping is the lightning-fast delivery and average margins along with the increased number of volumes.
Pro Tip: You should aim for selling 1000 items with $5 profit per item to make $5000 per month instead of aiming to sell 500 items with $10 profit per item.
Do You Need a Business License to Dropship on Amazon?
No. There is no compulsion of having a business license to dropship on Amazon.
You don’t even have to own a formal business to start selling on Amazon.
In fact, Amazon itself promotes new sellers on its platforms. That is why Amazon asks buyers to sell on Amazon if they have a similar product that they have bought. This type of selling is called “Me too listing” on Amazon.
While having a business license may give you credibility in the eyes of Amazon, it is not necessary for regular selling or dropshipping on Amazon.
What Are the Dos and Don’ts of Amazon Dropshipping?
There are some dos and don’ts for starting an Amazon dropship business that you should take care of.
These precautions and tips would help you progress fast as a dropshipper. The list of the dos and don’ts of Amazon dropshipping is as follows.
Dos of Amazon Dropshipping:
- Make deliveries as fast as you can.
- Try to be included in Amazon Buy Box. This will bring more sales to you but you have to have a professional seller account and exceptional seller record to be included in this category.
- Be truthful and honest with Amazon and your customers by providing true information about you and your business details.
- As stated earlier, make your Amazon store with a newly made or especially made email ID so that you are in a position to sell your shop for a good price in the future.
Don’ts of Amazon Dropshipping
You have to show a thoroughly professional code of conduct while doing business on Amazon.
Following are the points that you need to avoid while doing Amazon dropshipping. These instructions can be traced from Amazon Seller Central here.
- Don’t get caught talking directly to your customers via any platform other than Amazon.
- Avoid fake sales and reviews.
- Don’t let your customers know that you are dropshipping.
What Are the Pros and Cons of Amazon Dropshipping?
Starting an Amazon dropship business comes with a lot of benefits but at the same time, it has some disadvantages as well.
Following is the list of pros and cons of being an Amazon dropshipper.
Pros of Amazon Dropshipping
Large Customer Base
Amazon is undoubtedly one of the top-tier e-commerce platforms in the world. It has millions of unique visitors that purely come here for online shopping.
Being a part of the Amazon vendor list will give you exposure to a very large audience.
Amazon has evolved into becoming a top-notch e-commerce website, especially in western countries. So, you would also have an opportunity to bag on its huge credibility.
Customers will trust your products and will take you as a credible supplier.
You don’t have to worry about customer service and handling when you work with Amazon as it prefers to do it on its own. That is why Amazon charges you a handsome amount for its services.
With Amazon, you just have to do your best and enjoy sales on a regular basis.
When you become a trusted vendor at Amazon, you will have a long-term business opportunity with growing customers at a regular pace.
You can also expand your avenues by adding more products to your Amazon store. You can also start private label dropshipping with Amazon.
The Benefit of Amazon SEO
Amazon, like any other mega-store, has its own search engine. So, you can benefit from the power of keywords and come up in Amazon search results by applying good SEO techniques.
Advantage of Amazon Affiliates
Amazon has its own affiliate programs where it offers a set percentage for promoting and selling Amazon products. Affiliate marketers are free to choose from the list of products that Amazon offers.
So, it is very much possible that some independent Affiliate marketer selects your products and starts marketing them. It would be a win-win situation for both of you.
Opportunity to Flip Your Amazon Store
If your Amazon store has steady and regular sales, you can also opt to sell out your store for a handsome amount. It would be a great source of instant profit for you.
You can sell your Amazon store on sites like Empire Flippers and charge a handsome one-time amount to pocket a huge return.
Cons of Amazon Dropshipping
No business is perfect enough to be free of any cons. The same is the case with Amazon dropshipping. Some of the cons in dropshipping on Amazon are listed below.
Easy Customer Distraction
You may think that you would be offering your products to a very large audience and hence, your chances of success would be higher. While this is true but it may be the other way round too.
While the customers are checking out your products, Amazon shows the list of similar products to them. So, if they find a better product or the same product with better pricing, they may divert to purchase them from other sellers.
As the competition on Amazon is getting higher day by day, you would have to squeeze your margins to stay competitive.
Another factor to a squeezed margin is the high amount of Amazon charges as discussed above. If you add up those charges to the final price of your products, there would be a little amount of profit margin left for you.
Extra Cost of Storage
This specifically applies to Amazon dropshipping via FBA. You would have to pay for Amazon warehousing and fulfillment facilities even if your products are not selling.
Higher Returns & Refunds
Amazon cares for its customers more than the sellers. The Amazon customers know about this.
So, you may have to deal with higher returns and chargeback when working with Amazon in comparison to other forms of dropshipping.
You have gone through the most extensive Amazon dropshipping guide. We have tried our best to answer the most important and critical questions regarding how to start Amazon dropshipping.
Tell us if you got value from this article in the comments section and let us know if you are planning to start Amazon dropshipping in the future. Do contact us for any confusion or additional questions that you may have regarding dropshipping business on Amazon.
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