Dropshipping on Amazon is a good way to get started in e-commerce without a lot of the hassle. Dropshipping allows you to spend both less time and less money on your business while potentially making the same profit.
In this post, we’re going to explain how dropshipping on Amazon works so you can get started right away without burning holes in your pockets.
The Basics of Dropshipping on Amazon
Dropshipping on Amazon works the same way as dropshipping on any other platform. You take orders from your Amazon listing, then when they are paid, you send those orders to a manufacturer, distributor, or supplier to fulfill. (For the purposes of this post, we’ll use the term supplier to refer to any or all of these.)
The big plus of dropshipping as an e-commerce selling model is you don’t need to place large purchase orders and warehouse items. When a customer buys the product from your page, you simply request to have it shipped directly to them from the supplier.
You can also arrange with your supplier to private label these products. This way, customers will not even know that the item they ordered came directly from a supplier. This is commonly referred to as repositioning sold goods. A lot of sellers on Amazon, Ebay, Shopify, and other platforms do this.
You can also use dropshipping to sell custom products on Amazon. Customers will place the order and pay for it as usual, then you send the order to your supplier to customize. This works very well for print-on-demand, for instance, where a supplier will have stock of items to print on like t-shirts and mugs, and you just tell them what color and what to print on it. Then the supplier does the job and sends the finished, customized item to the customer.
Why Dropship on Amazon?
Dropshipping is one of the three most lucrative methods of starting a business on Amazon. Wholesaling and private label can be more profitable, but dropshipping on Amazon is easier and faster to set up, without a lot of capital investment.
You can start dropshipping on Amazon as soon as you have a working seller account and an agreement with a supplier. You don’t need to stock inventory, so you simply create a listing and start selling. The items you sell have already been manufactured and are waiting to be shipped out to customers.
You can even automate dropshipping on Amazon with apps and plugins so you don’t even have to actually send orders to suppliers. All you do is track delivery and customer service to make sure you keep your Amazon performance scores up.
On that note, Amazon accepts dropshipping on the marketplace, as long as you comply with their Drop Shipping Policy.
Private label and wholesaling require a huge initial investment. Dropshipping on Amazon requires a minimal investment since you are not purchasing your own inventory. You also get paid by the customer before you place the order with your supplier. You use a portion of the sale to purchase the product and have them ship it out.
Easy Product Research
When you dropship on Amazon, you are selling pre-existing products from suppliers, as mentioned above. Since there is no manufacturing involved, you can easily find products to sell that customers want. You can also automate this process with a product research tool to see how well certain items are selling so you can get in on it.
Caveats to Dropshipping on Amazon
Aside from having to comply with Amazon’s dropshipping policy and all the other regulations of selling on the platform, here are a few other disadvantages to consider.
Dropshipping is so easy that a lot of other Amazon sellers are already doing it. This means high competition. You have to differentiate to be noticed because any other seller can sell the same products. For many, this means putting some effort into product customization.
Other sellers try to compete in terms of price, which is a terrible race to the bottom that cuts into profits. What we recommend, however, is differentiating yourself in terms of quality – superb products and customer service.
Unless you do frequent quality checks or hire someone to do physical supplier inventory checks, you won’t know if the quality has dropped until you get customer complaints. And even if you have that, you still run the risk of products reaching your customers damaged because they are most likely shipped from far away, like factories in China.
You don’t have any items in stock, and you wait for payments to process before sending out orders. This can cause a delay. You are also relying on the supplier to pack and ship orders on time, which is a big deal on Amazon. Moreover, many suppliers are not in the same country, which makes shipping times longer.
How to Start Dropshipping on Amazon
Assuming that you have already set up your Amazon seller account, here’s what you need to do to start dropshipping on Amazon.
Find a Product to Sell
The best way to find profitable products to dropship is to use a product research tool. There are a ton of tools out there that you can find with a quick Google search – we recommend JungleScout or ZonGuru for this. You can also do a manual search on Amazon, looking at top sellers and what they have on offer.
What you are looking for, ideally, is products that don’t have a lot of competition but that are also in high demand. You’re looking for products that can bring in at least 100 sales per month.
You also want products that are not cheap, but also not very highly priced – around $20-$35. You can get off to a good start with products in the categories of home & garden, housewares, and sports & outdoors. They tend to be low-maintenance as well as high-demand.
Find a Supplier
Look for a supplier who allows dropshipping and has a good reputation. You can start on Aliexpress, the biggest business-to-business (B2B) e-commerce platform that acts like a dropshipping network. You can search for the products you want to sell, then connect with the suppliers that pop up. They are rated on the platform, and you can also do outside research to see if they are legitimate and reliable. (Note: you’ll need to create an account to keep track of supplier inquiries and make purchases.)
For starters, ask for samples of the product so you can do a quality check. Then you can set up an agreement with the supplier and gather images of the product and complete product details for your listing.
Create Your Listing
Using the information and images you got from the supplier, create an optimized Amazon listing. Make sure you list in the most appropriate category, use relevant keywords with high search volume, and only upload high-quality images and graphics. You should also consider getting your listing copy written up by a professional so that you can rank higher and convert more.
That’s it! Now you can start selling without all the hassles of holding inventory!
You might want to consider marketing and promoting your product when you have a little money to work with. You will need an optimized sales funnel so that you can be more profitable. Then you can drive purchase-ready traffic to your Amazon listing. You can also use Amazon’s own advertising tools to boost rankings and sales.
You can start with zero budget just talking about the product on social media, but you want to make sure that you have Amazon affiliate links set up first. Yup – you can get affiliate commissions on your own products! Why waste that opportunity?
About the author: Matt Harrison is the VP of Strategy of FreeUp, the preeminent freelance marketplace for hiring high quality, vetted talent. He has hired freelancers from around the world and built teams to service multinational brands resulting from over $100 million in web hosting company acquisitions. He currently lives in St. Petersburg, FL.