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How to Do Amazon Compliant Dropshipping in 2024

Threecolts
Geri Mileva
Published
June 2, 2023
Modified
March 1, 2024
How to Do Amazon Compliant Dropshipping in 2024

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:

  • A customer sees an item you have listed on Amazon and purchases it
  • You receive this order and purchase it from the manufacturer with part of the payment you got from the customer
  • The manufacturer ships the order to you or the warehouse of your choice
  • You or the warehouse fulfillment center makes sure you are the seller of record. No one other than you should appear on packing slips, invoices, or external packaging. 
  • The order is sent to the end customer. 

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.

Why Dropship 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:

Easy Access to Suppliers

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.

Easy Store Setup

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.

Brand Recognition

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:

No Quality Control from Your End

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.

Plenty of Competition

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.

How to Get Started with Dropshipping on Amazon

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.

Make an Amazon Seller Account

How to Get Started with Dropshipping on Amazon

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.

Submit an Application for Your Product Category

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.

Create Your Product Listing

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.

Link Your Other eCommerce Platforms

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.

How to Do Amazon-Compliant Dropshipping In 2024

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:

You must be the identified seller on record for any product you sell.

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.

You cannot purchase or sell products that are sold by another retailer already on the Amazon platform.

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.

You must remove any possible third-party identifiers on invoices, packing slips, and any other information on your products.

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.

You must handle customer returns yourself.

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.

You must follow all regulations in Amazon’s Business Solutions Agreement (BSA) and other policies.

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.

Amazon, Cross-Border Arbitrage, and SellerRunning Support

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.

Setting Up with SellerRunning

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. 

Scaling Up with SellerRunning

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.  

Tips on Boosting Your Overall Sales

Tips on Boosting Your Overall Sales

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:

  1. Don’t underestimate product copy. Product descriptions are essential content. They’re not only for telling your customers what they’re buying but also for making sure that your products show up on Amazon’s algorithms. Spending even a little time and effort for creating quality copy can go a long way.
  2. Invest in customer relationships. Your seller rating plays a huge role in how likely people are to purchase from your store. Keeping it well above 90% is required for at least a favorable first impression. By responding to customer feedback and ensuring your dropshipped products are of the best quality, you can reliably increase trust in your brand.
  3. Calculate your fees early. Amazon may be a great place to turn a profit, but make sure that you calculate your profit margins carefully. A lot of this relies on juggling your profits vs. your seller fees. Fortunately, there are tools and software that you can use to make this easier.
  4. Cross-sell on other platforms. While Amazon is arguably the most popular eCommerce platform, it’s not the only one that you can dropship products to. Social-based shopping on places like Facebook and Instagram are great alternatives, with other platforms like Shopify a close second.
  5. Always do product research. Your products are the heart of what makes your business run—and they need the time and investment to make sure that they sell. Always monitor the performance of your products, and research upcoming trends to figure out what sells best.
  6. Grow your opportunities for organic search. Paid advertising is allowed (and works) on Amazon, but customers are far savvier about promoted products. Try to grow more of an organic following around your products, mainly by maintaining a high seller ranking and optimizing your product listings.
  7. Evaluate your suppliers carefully. A significant portion of your dropshipping business will rely on whether your partner company can keep up with your goals and product demand. Always vet whoever you’ll be partnering with. This is easier than you’d think since Amazon does have a vetted list of suppliers you can choose from.
  8. Aim for the Buy Box. The Amazon Buy Box is the most visible (and therefore most valuable) place your products can show up on the Amazon site. Optimizing your products, improving your seller rating, and simply performing well in sales can be enough to take you into consideration for the pool of featured products. Long term, this can lead to a massive gain in both visibility and sales.

Tools and Resources That You May Find Useful

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.

Amazon Seller Central

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

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.

Viral Launch

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.

FeedbackWhiz

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.

Experience Flawless Amazon Fulfillment Sales with Expert Support

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.