Entrepreneurs looking for a quick and hassle-free way to start a business on Amazon can always consider dropshipping as a viable strategy. Not only is Amazon one of the largest eCommerce platforms and marketplaces in the world (with over 500 billion dollars in annual revenue in 2022 alone), but it also supports the dropshipping model for anyone who wants to start a business selling products online.
Dropshipping itself has remained a relatively lucrative method of starting an online business. Around 20-30% of all Amazon sellers have adopted a dropshipping model as a side gig and still post a reasonable profit. It’s not complicated to understand either, with five major steps in the process:
The ease of this process (combined with Amazon’s record annual sales trends) makes this business model highly appealing to any new or experienced entrepreneur. And with a little work and some of the best tools on the market to help you, you too can leverage this opportunity for a reasonable profit.
Here’s our comprehensive guide on how to get started with a dropshipping business on Amazon.
As mentioned, Amazon remains one of the most successful platforms for online sales. The process of becoming an Amazon seller is easily accessible to first-time sellers, and the platform itself is built for engagement and sales.
Here are the three major benefits of dropshipping on Amazon:
Amazon maintains a large network of suppliers across the globe, helping dropshipping businesses source goods without the need to look for manufacturers themselves. This allows you to sell a variety of products across different niche markets, spreading out your investments for more profit opportunities.
There’s no need for any long processes for setting up your own Amazon store. A dropshipping business doesn’t require inventory or warehouse space either, only an Amazon Seller Account to start. We’ll discuss the exact steps further in this guide—but essentially, all you need to do is make an Amazon Seller account.
By far the most appealing reason to dropship on Amazon is that it’s easily recognizable—a brand that’s known globally with many possible areas of exposure for your business. The potential customer base that you can build with Amazon is nearly limitless in size if you use the right tools and strategies.
Of course, there are also some drawbacks to the dropshipping model:
Your supplier will handle every part of the product: from manufacturing, packaging, and shipment. You essentially trust that they’ll be quality enough to satisfy your customers.
With dropshipping being so accessible to anyone, competition on Amazon is fierce for anyone looking to start an online business. You need to do your research on the products you want to sell, employ effective marketing strategies, and carefully nurture your customers to remain competitive.
So what are the steps you need to follow to start your dropshipping business on Amazon? Fortunately, Amazon has streamlined the entire process needed to set up a shop. Their online portal for sellers has all the resources you need to get started.
But if you need a quick reference on what to expect, we’ll be outlining the specific actions you need to take.
An Amazon Seller Account is the bare minimum that you need to get started on Amazon. You’ll need to put information like your contact information, the details of your dropshipping business, packaging centers, and other financial obligations like tax information.
A question that many sellers often ask is: should I go with an individual or professional Seller Account? The answer is ultimately up to you since the added fees can be a bit much if you’re just starting out. A good rule of thumb is that the more products you’re selling, the better it is to get a professional account—at least to the point where the profit margins swing in your favor.
Not all products can go on Amazon’s platform without approval. Physical items like fine art, jewelry, and other goods all need approval before you can put them in your Amazon store. This is necessary to make sure that your store passes quality control and is compliant with all regulatory requirements.
Products that don’t require approval are mostly home and kitchen products, electronics, or books. You can put these on your Amazon store without applying for approval. Amazon also has a list of restricted or banned goods that can’t be sold at all. Make sure to check this list regularly so that your store stays compliant.
When you add a product to your Amazon storefront, you need to make sure that the listing falls under Amazon’s dropshipping category. Brands that produce their own products will need to acquire a UPC (or Universal Product Code) before they can be indexed by the Amazon algorithm.
Dropshippers don’t have to do this. All you need to do is to select a product that you want to sell and publish the details from there. Keep in mind that Amazon has millions of possible products available for dropshipping, so make sure you do your research on which ones you want to sell.
Amazon also supports cross-linking products and storefronts across some eCommerce platforms. One of the more popular options is Shopify—mainly because the Shopify platform itself already makes the linking process easier. All you need to do is to link your Amazon store to Shopify’s Sales Channels.
Linking other eCommerce sites will allow you to sync inventory, increase the visibility of your products, and otherwise cross-promote without having to invest too much time and effort. You also get access to tools that other eCommerce websites have, which can allow you to manage your storefront easier.
Technically, dropshipping as a business model isn’t exclusive to Amazon; plenty of other eCommerce sites allow for this practice. However, Amazon arguably has some stricter requirements for sellers who want to dropship on their platform.
There are several rules you need to follow to make sure that your dropshipping business is Amazon-compliant, such as:
This covers everything from packaging slips, shipping manifests, receipts, and customer records: anything related to the product must explicitly identify you as the only seller. This is so your customers—and by extension, Amazon itself—don’t run into any confusion about who needs to be held accountable if something goes wrong.
While you can dropship almost any product on the Amazon platform, you cannot dropship a product that’s already on Amazon that’s being sold by another business, company, or brand. While this can be a way to help manage inventories and customer expectations, it’s also Amazon’s way to stop sellers from artificially affecting prices.
It’s not always possible to get dropshipped products with a completely clean slate—a good example would be some white-label products—so it’s your responsibility to remove any of these identifiers before your product reaches your customers. Again, this is to ensure that there’s only one person that both they or Amazon can consult in case of complications.
Because dropshipping already takes place outside of Amazon’s distribution centers, it falls to you to handle any customer complaints or returns. Remember that none of your products have been handled by Amazon at any point in time between purchase, sale, and delivery. This makes you (or sometimes your supplier) the sole entity liable for any customer concerns.
The Amazon BSA outlines all the responsibilities you must follow as a seller on the Amazon platform. More importantly, it also contains the different liabilities you and Amazon have for as long as you sell on the platform. There may also be other policies that can apply to your business depending on what you sell or where you are located, which you need to follow as well.
Failure to comply with any of the rules above can result in heavy penalties from Amazon and a possible suspension or revocation of your selling privileges on the platform. Fortunately, some tools make compliance easier, such as SellerRunning’s crowdsourced common pool of products. With this information, you can see which products are likely to be non-compliant and avoid selling them.
One possible way to help you make up your mind about the best products to dropship is to look at which products perform well on retail arbitrage. We’ve talked about retail arbitrage on Amazon before, but the gist of it is that you look for products that you can source from retailers and then sell them on Amazon for profit.
For dropshipping businesses, looking at retail arbitrage is a great way to figure out which suppliers are in-demand enough to partner with for a dropshipping arrangement. It’s also far less costly since you eliminate the middleman of buying from the retailers and partner straight with the supplier themselves.
Tools like SellerRunning can make this process far easier. The platform has an extension tool that allows you to search and find 100s of profitable products in seconds. The extension runs a search on Amazon.com and lets your dropship these products in 16 Amazon marketplaces such as Amazon Canada, UK, Mexico, Italy, UAE and etc.
With the SellerRunning you can also ensure you are outdoing your competition and winning the BuyBox, which is the easiest way to increase sales on Amazon.
And even once you’ve formally begun your dropshipping model, SellerRunning can still help your business grow by allowing you to expand to new marketplaces and take care of the order fulfillment for you with the help of SellerRunning Warehouse.
With a cloud-based infrastructure and beginner-friendly design, SellerRunning promises to be one of the essential tools that any dropshipping business can use to start, scale, and maintain its operations. SellerRunning covers all stages that any dropshippers needs: finding right products, creating product listings in seconds, ensuring competitive pricing strategy and increasing BuyBox wins and lastly managing product delivery to the end customer and customer campaign management.
Dropshipping on Amazon needs to be done carefully to avoid pitfalls and generate profits. Here are some tips you can keep in mind when you’re trying to increase your sales:
Dropshipping on Amazon is even easier when you take advantage of the many tools and software that can help with managing and growing your business. All these tools give you data—data that you can use to grow your business, avoid making bad decisions, and overall increase your profits.
Aside from being the hub for your entire business on Amazon, Seller Central has all the basic features you need to manage your business day-to-day. It’s where you’ll communicate with your customers, keep track of your inventory, and acquire orders that you’ll pass on to your suppliers.
More importantly, it’s also the best place to reach Amazon’s support team. Dropshipping on Amazon is largely self-contained: if you follow all of Amazon’s policies you shouldn’t have any issues. But if you do run into issues with your storefront, the best way to get help for it is through Amazon Seller Central.
Threecolts is another tool that helps you optimize your Amazon business by giving you useful insights into how your products are performing. This is crucial to evaluating your overall market performance and whether you need to adjust your selling strategy.
It also helps organize your inventory better with a streamlined inventory management system. This allows you to stay on top of your inventory status at any time, allowing you to respond to customer demand without too much delay. This improves your customer experience overall—arguably one of the most important parts of an Amazon store.
If you’re looking for possible products to dropship on Amazon, Viral Launch is a good choice. Its suite of features is geared toward increasing your product’s profitability, especially when you’re about to launch your products. You can optimize your listings, analyze competitors, and much more.
This is especially useful if you’re just in the planning stage of your dropshipping business. You’ll need all the data you can get to launch your products successfully. The more data you have about your products, the more you’ll be able to plan around their marketing and sales.
An important part of running your Amazon dropshipping business is customer relationship management. FeedbackWhiz simplifies this process by giving you an easy way to engage with customers and their feedback, improving your reputation on Amazon and building a loyal customer base.
Being trusted by your customers is what allows you to scale your business and ultimately generate more profit, and listening to their feedback is an essential step. By improving your impressions, you ultimately become a more appealing choice for long-term and first-time customers.
All these tools can help turbocharge your performance on Amazon, especially as a dropshipping business. With the proper use of the data they provide and integrating your performance in future marketing and sales strategies, you can turn great profits with your business.
We hope this guide has helped set your expectations on how to get started with a dropshipping business on Amazon and given you concrete goals to work toward success. If you’re looking to kickstart your dropshipping operations, especially when it comes to fulfillment, sign up for SellerRunning today.