With approximately 10 million sellers, Amazon is one of the biggest marketplaces to sell your products. It is one of the most popular shopping Apps in the United States, with over 3 million sellers residing in the country, and if you ever think of dropshipping, it is the first platform to strike your mind.
So, if you are wondering how to start dropshipping on Amazon, we have got you covered.
In this article, I have provided detailed steps to dropship on Amazon. I have also added information about the dropshipping policies of Amazon and all other details you need to know.
So let’s get into it.
How To Dropship On Amazon: In A Nutshell.
If you are in a hurry and don’t have sufficient time to get into the details, this section includes a brief idea of the steps you must follow to dropship on Amazon.
Step 1: Select a niche for your business.
Step 2: Carry out competitor research.
Step 3: Find a good drop shipper.
Step 4: Create your seller account.
Step 5: Perform a Keyword Research
Step 6: List your products.
Step 7: Market your store and products.
Step 8: Track your sales.
Step 9: Analyze and optimize your product listings.
Can You Dropship On Amazon?
Yes, You can dropship on Amazon. To dropship on Amazon, you can contact a wholesale supplier or manufacturer, and once the order is placed, they will ship and deliver your orders to the customers.
If you use the dropshipping business model, you don’t have to worry about inventory management and storing your products. Plus, you also save your Amazon costs of shipment and delivery.
However, if you want to dropship on Amazon, you must follow some of the housekeeping rules of Amazon. I have included details about it in the next section.
What Are The Dropshipping Policy Of Amazon?
You must follow Amazon’s dropshipping policy to keep selling on the Amazon marketplace.
Here are some of the crucial Amazon dropshipping policies that the dropshippers must make a note of:
- Do not includes the name or other details of the suppliers or manufacturers in the packaging items or the product descriptions of your store.
- The packaging slips, invoices, external packaging, and other product items must include your details as a seller.
- You must be responsible for the communication with the consumers.
- You are responsible for accepting returns and processing them.
- You must comply with Amazon’s terms and services.
For other details related to the dropshipping policies of Amazon, you can check out this page.
How Much Does It Cost To Dropship On Amazon?
The costs required to dropship on Amazon vary according to the product niche and the type of selling plan you choose. However, in the dropshipping model, you can save the extra costs required for delivery, shipments, and storage of the products.
Selling Plans:
The first cost you will encounter while starting your dropshipping business on Amazon is its selling plans.
There are two selling plans on Amazon: Individual plan and Professional plan.
- Individual plan: $0.99 per item sold.
It is best for new sellers selling fewer than 40 products per month. This is suitable for sellers in their early stages who haven’t decided yet about the niche they want to sell in.
- Professional sellers: $39.99 per month.
This plan is suitable for sellers that sell more than 40 items in a month and want to qualify for the top placements. Also, this plan allows you to use advanced tools and helps you advertise your products.
Referral Costs:
The next cost you must take care of is referral costs. These costs differ in all the product categories, and the minimum referral fee in all the product categories is $0.30. Besides, the referral fees usually range between 8% to 15% of the product sold.
- Additional Costs:
The additional costs required to sell on Amazon include Advertising fees, premium account services, etc.
For further details about Amazon costs, you can check out here.
How Does Amazon Dropshipping Work?
In dropshipping model, the sellers do not have complete control over their product sales. In some dropshipping agreements, the seller handles the customer service, while the manufacturer or suppliers are sometimes responsible for managing the consumer complaints.
The manufacturers or sellers are also responsible for physical services like managing goods and fulfillment. Besides, the logistics of the dropshipping depend on the arrangement made between the seller and the supplier, but the usual process can be as follows:
- Sellers find a drop shipper to start their business.
- The seller signs an agreement with the drop shipper.
- The seller lists the products on Amazon.
- Customer orders product from the sellers.
- The customer receives an order confirmation.
- The seller forwards the order to the drop shipper.
- Dropshipperpacks the order.
- Dropshipper ships the order to the customer.
- The customer receives the products.
Dropshipping is one of the most convenient models for starting your online business. However, the competition in the field has increased drastically, and the sellers will have to compete on small margins leading to lower profit rates and, at times, even leading to losses.
How To Dropship On Amazon: A Detailed Guide.
Dropshipping on Amazon is the same as having your online business. However, you are restricted to a certain extent by the policies of Amazon.
If you want to start your dropshipping business and are not certain about where to start, the following steps will help you in building your dropshipping business on Amazon:
Step 1: Select a niche for your business.
There are a variety of niches to choose from when starting your dropshipping business. Although there is no restriction on the number of products you can sell or the type of niches you sell your products in, it is better to choose a single niche that will help you to stay at the top of the competition.
This will also help you to create your unique brand identity, and you will be able to differentiate your products from the customers.
To select a niche for your products, you can research the market and find a niche with the lowest competition and more demand.
Step 2: Carry out competitor research.
Before you decide on a niche, pick up the top three niches you want to sell in and look at what the competitors are doing. This will help you to find the points where you can outstand your competitors, and you will be able to find a less saturated market.
You can also check out how the top-ranking competitors are performing and what distinguishes them from each other.
Step 3: Find a good drop shipper.
You must find a reputed business to outsource your products to a supplier or manufacturer. Their products should be of excellent quality and help your products stand apart in the market.
Hence, ensure you find a reputed drop shipper that will fulfill all your needs and provide your consumers with in-time delivery.
If you are not sure about how to find a good drop shipper? I have elaborated on how to find a good drop shipper in the section below.
Step 4: Create your seller account.
Once you have found a trusted drop shipper, create your Amazon Seller account.
To create an Amazon seller account, visit this link and enter all the required details.
Step 5: Perform A Keyword Research
Keyword research is crucial to rank your products in the Amazon search. The target for the searches with low competition and not too many brands are targeting for that term.
One of the ways to carry out keyword research is the Amazon search bar. You can also utilize other keyword research tools like Helium 10 and Jungle Scout.
Image source: Amazon.
Step 6: List Your Products.
Once you have created an online seller account, the next step is to list all your products. You can begin by listing a few products and eventually increase the number of products in that niche.
Step 7: Advertise Your Store And Products.
You must market your products to capture your audience’s attention and drive traffic to your store. You can set up paid ads on search engines and social media platforms to advertise your products.
Step 8: Track Your Sales.
After listing and marketing your products, you must track your sales and your store’s performance. You can track your sales using the Amazon Seller app or Seller Central.
You can use these tools for:
- Track your daily sales and inventory.
- Monitor the metrics of the customers to know more about your buyer.
- Handle payments, refunds, and returns.
- List new products or update products.
Step 9: Analyze And optimize your product listings.
You can use the brand analytics dashboard of Amazon to keep track of your store metrics. This data can gather information about sales trends, the medium through which the customers reach you, and details about the products most preferred by the consumers.
Additionally, this information can be used to leverage your store’s performance, and you can also optimize the product listings according to rank higher in the product searches.
How To Identify A Good Dropshipping Supplier?
Identifying a good drop shipper is crucial for your dropshipping business, as they have much control over your products and can help you succeed in your online business.
Ensuring you have a good dropper will save you from dropshipping issues like late shipment, missing products, bad quality products, etc.
Here are some tips you can consider when selecting a drop shipper for your business.
- Outsource your products directly to the manufacturer to reduce the mediators’ hassle.
- Go through the drop shipper’s website to check whether they are genuine and have a good reputation for outsourcing products.
- Test the drop shipper’s customer support and note how long they take to reply to your query and complaint and how they resolve your issue.
- Review the customer reviews and check out what other businesses say about the supplier.
- Request a sample of the products to measure the shipping speed of the drop shipper. This will also help you check the product quality and help you decide if you should proceed with them.
Apart from that, you can also note the following points:
- A genuine supplier will never ask for control of your account.
- He will have proof of authorization to sell the products of the specific brands.
- They would have dropshipped with a seller before and will have the experience of dropshipping with a business.
- They will offer customer service for your dropshipping brand.
What Is The Difference Between Amazon FBA And Amazon Dropshipping?
Amazon FBA and dropshipping may seem similar to beginners. However, there is a huge difference in these selling methods. Let us examine the significant differences in dropshipping on Amazon and Amazon FBA.
Dropshipping:
In dropshipping, the products are directly shipped by manufacturers or suppliers to the consumers. The seller or the drop shipper is responsible for customer service.
You can receive orders from the customer first and inform your drop shipper about your customers’ requirements, and they will deliver the products to the customers.
Amazon FBA:
In Amazon FBA, the seller has to send the product stock or the inventory items to the Amazon warehouse. Amazon handles the packaging, shipment, and delivery of the products.
It also takes care of customer service, and the platform processes returns or exchanges.
In the Amazon FBA method, you must purchase and store the products in the Amazon warehouses before receiving an order. Hence, you must pay extra for inventory storage and other charges like shipment and delivery.
Pros And Cons Of Dropshing On Amazon
Every business model has pros and cons that can be a deciding factor for the sellers on whether the business model suits their requirements.
Here are some of the Pros and Cons of the Dropshipping on Amazon.
Pros:
The pros of selling on Amazon are:
- The seller saves money on inventory costs and other overhead costs.
- Low starting costs.
- Less risk of lost merchandise.
- Sellers can sell their products on multiple Channels.
- You can work from anywhere, regardless of your operating location.
- You can increase orders without worrying about storage.
- You can easily increase the number of items sold.
- Flexibility in selling.
Cons:
Here are some of the cons f dropshipping on Amazon.
- Dropshipping on Amazon is highly competitive.
- Reduced involvement in product handling.
- It may reduce product quality.
- Difficult to create your brand authority.
- Low profit margins.
- No control over order shipment and packaging.
- No control over inventory management.
- Sellers cannot provide discounts or offers.
- Challenging to manage consumer services.
Top Amazon Softwares
Some of the available software makes it easy for users to conduct product research and other analyses. I have listed some of the top tools you can use for tasks like keyword research, competitor analysis, etc.
1. Jungle Scout:
Jungle Scout helps users to create optimized product listings. You can also carry out keyword research for your products and see the trending product categories and brands.
Plus, the tool also helps the sellers to evaluate emerging search trends, identify their competitors on Amazon, and forecast sales and inventory needs.
2. Helium 10:
From product listing and keyword research to listing optimization and sales analysis, Helium 10 helps you to track every move of your Amazon store.
It helps the sellers in tasks like Product validation, Keyword research, Fraud protection, Amazon PPC management, Refunds, Competitor research, Sales analysis, inventory management, Email automation, and more.
Related Read:
Conclusion: How To Start Dropshipping on Amazon In (2023)
That was all about dropshipping on Amazon from my side.
Dropshipping on Amazon may seem easy, but it has become highly competitive over the past years. With thousands of sellers joining the platform daily, Amazon has become the most crowded platform making it challenging for new sellers to survive.
Hence, ensure that your product stands out and provides value to the purchasers.
For other articles related to Amazon, you can check out our platform.
FAQs
Over 50% of the sellers that started to dropship on Amazon required approximately $2,500 as the initial investment. Besides, 17% of the dropshippers invested less than $500 as an initial investment. This investment varies from person to person and depends upon your chosen selling plan and the services you need.
When dropshipping on Amazon, sellers must consider different factors like inventory costs, shipping costs, selling plan costs, etc. Hence, if you can generate a good profit after paying for all the Amazon costs, then Amazon dropshipping is surely worth it.
Anyone can be a drop shipper on Amazon if they follow the platform’s policies and protocols. Hence, you must create your seller account on the platform to become a drop shipper on Amazon. Next, go through all the charges required to sell your product on the platform and create the plan accordingly.
On average, the dropshippers on Amazon earn between $1000 to $ 30,000 per month. This number may vary for all the sellers depending on the niche they sell in and the years of experience they have. Also, the quality of your product and the amount of investment you make will affect the returns you earn.
When starting your dropshipping journey, you can begin to dropshipping the products that belong to the niches like fitness, beauty products, fashion, phone accessories, yoga accessories, and other related niches. Plus, you can also consider selling pet accessories and merchandise products.
