Amazon dropshipping📦 has proved to be a successful business model with the gradual increase of worldwide online shopping trends. Considerably, more small investors have started preferring dropshipping on Amazon instead of the fulfillment model to establish themselves as a business brand.
The statistical analysis by Allied Market Research on the dropshipping business estimates a steady market growth between 2021 and 2031. It is projected to increase from $155.6 billion to $1670.1 billion in ten years, with a 27.1% CAGR.
But is Amazon dropshipping profitable? Here, a notable fact is that the average success rate in this segment is a mere 10% to 20% due to reasons like lack of knowledge and planning. Hence, before jumping into the business lane, you must know the difference between FBA, dropshipping, or other modes of online product selling.
I am bringing to you a quick guide on how to start dropshipping on Amazon with standard tips and tricks to make effective strategies for enhanced success📈 and increased sales.
What is Amazon Dropshipping?
Conceptually, an online product-selling business firm creates an inventory of products and lists them on an eCommerce platform. Potential customers can search for the product and make an order. After receiving an order, the firm executes the product packaging and hands it over to the delivery agents.
Dropshipping differs from the traditional format of selling products online. Here, the business firm is only concerned with listing its particular niche of products on the panel. With every order, they connect with the supplier to complete the deal, which includes packaging and delivery fulfillment through third parties.
One of the major benefits is that you need zero investments💰 for maintaining stocks or making arrangements for delivery packets. Storing products requires a dedicated space and care, which is a costly affair. Items with specific shelf life also become a headache for sellers during slow market conditions.
Research data shows about 33% of online stores use dropshipping for fulfillment. The Amazon Dropshipping Business model carries greater potential for generating sales when compared to other platforms and, thus, leads to a higher success rate.
Check out some of the Amazon dropshipping alternatives with high dropshipping revenue.
Here is how Amazon is proving more beneficial for planning a dropshipping business.
♦️Amazon is a World-renowned online shopping portal with a huge customer base. Therefore, you have a better chance of attracting genuine customers and gaining quick profit.
♦️Being a popular and trusted brand amongst its competitors, Amazon gets higher preference from buyers due to its credibility and reliability in the market.
♦️They have a large workforce working in a systematic plan to channel product sales and delivery/ return. Greater accessibility ensures smooth processing, which helps gain trust among the buyers.
♦️The portal allows you to add multiple products for your brand. Hence, you can connect with numerous suppliers to enhance your business.
♦️Amazon offers an easy-to-access on-call tech support system that ensures customers get their problems solved in a quick time.
♦️You get sufficient time to focus on marketing and promotional activities for your business.
Altogether, from an interactive app to quality checks and from timely delivery to return policies, Amazon has gained customers’ trust. Therefore, it serves beneficial business options for all types of vendors.
How Amazon Dropshipping Works?
Amazon dropshipping📦 is a credible business model where sellers only have to list the items with specific details under their brand name. This portal caters to exclusive services to entrepreneurs or hubs in the dropshipping business, which helps authenticate and establish their name in the market.
Dropshipping on Amazon is a seamless process, and you can follow the below given instructions to get going without any hustle.
✨Start your dropshipping business on Amazon by uploading the product’s name and other details like specifications, description, and pictures on your business account.
✨The potential customers interested in your listed item will place the order through their valid Amazon membership account.
✨As you receive an order, you should directly connect with the supplier to buy the product on their quoted wholesale price. Provide the delivery details where the third-parties involved in the channel will complete the order.
✨In Amazon dropshipping business, the sellers on the portal, though, do not physically hold the product at any point but are answerable to the buyers regarding the delivery dates, product returns/ exchange, customer services, etc.
✨Firms dropshipping on Amazon earn a profit margin of the price difference between the supplier’s cost and the final price quoted by them on-screen.
Remember to go through the conditions or policies given by Amazon for dropshipping business.
Is Amazon Dropshipping Legal?
Dropshipping is a globally accepted business model, and Amazon legally allows such firms on its platform. But they clearly mention certain regulations, which say that the end customer must not be aware of the supplier.
Therefore, you must remove all the tags, if any, mentioning the supplier’s name, and make sure to resolve all the queries related to the product as well as manage returns at your end.
How to Get Started with Amazon Dropshipping?
Dropshipping is a suitable way of transforming an online retail business idea into reality without worrying about factors like investments, staffing, or storage management. Amazon is an optimum platform to start working on your concept and build a brand name. Here is how to start dropshipping on Amazon.
#1. Research and Selecting Niche
It is critical to know the fundamentals of any particular job before beginning on its practical applications.
🟢You should initially go through the Amazon’s policies for dropshipping business policies in detail, and follow them as instructed. Often companies not following the regulations face restrictions for a due time.
🟢It is evident that you should focus on a profitable niche of products based on your business interests. You must stay informed about the features along with shortcomings of the item to instruct the consumers and provide online support if needed.
🟢Evaluate the product’s price charged by the supplier and Amazon for completing the delivery process. It will help you make a lucrative offer for your potential customers.
Always remember to analyze the competitors in the segment to know what’s trending.
Use these product research tools for dropshipping.
#2. Setting up an Amazon Seller Account
The thing to do with dropshipping on Amazon is to create an appropriate seller account on Amazon Seller Central. The business account is different from the regular membership account for buyers.
You can opt for the Individual selling plan, which is a free business account. Firms with few products for online sale or who are new on this portal prefer this plan to gain more insights about dropshipping business on Amazon. It is currently available for $0.99 per sale.
As an experienced business person willing to go for dropshipping on Amazon, the Professional selling plan is best suited if you have a long list of products to sell. This plan has a fixed charge, which is currently available for $39.99 per month, while you can add unlimited products🎁.
You can switch the plans alternatively, anytime, and they also offer optional programs for the sellers.
#3. Finding Reliable Suppliers
Suppliers🚚 have a vital role in the dropshipping business. This is pretty obvious because they directly send the purchased item to the customer, which is sold by your brand name. Therefore, it is essential to research evidence and link it with an authentic product supplier.
Here are some of the factors on which you can regulate a deal with the supplier.
✔️You must ensure that Amazon’s seller account credentials are handled by you or your team and not get shared with any third person.
✔️The seller should be an authentic person and is legally authorized by the manufacturer to sell the products.
✔️Before making a deal with a supplier, you must also find out if they provide tech support on call, whenever required.
You can enquire with experienced suppliers who have previously collaborated with firms for dropshipping on Amazon. They can guide you initially in managing your business process according to Amazon policies.
#4. Uploading Products to the Amazon Store
Once you are ready with your seller account on the Amazon portal and have read the dropshipping policy, now is the time to upload your brand’s product list on the panel. Products uploaded here will be visible to the consumers, who can search and find them in specific categories.
It is an easy process and takes a few steps to list your products online. With the “Inventory Upload” method, you can bulk upload up to 500 items at once via “.csv” or “.tsv” format. While the “Add a Product” process allows adding items one by one from Amazon Seller Central.
The panel provides a dedicated section to enter details like title, description, brand, category, images, keyword, price, etc.
#5. Maintaining Inventory and Fulfillment
Technically speaking, you do not need to worry about managing the inventory in the Amazon dropshipping business. So, inventory or stocking of products is reserved at the supplier’s end.
However, you can regularly schedule a brief communication with the supplier to stay updated about new entries, alterations in product or price, and stocks for sale.
In the same way, a third party will manage the fulfillment. Your supplier will create the packaging of the products as per the online orders and hand it over to these package fulfillment firms to complete the deliveries.
Your role should be to choose a reliable supplier who follows the timelines and provides accurate information. Ensure that the supplier maintains the standard quality of product to the customers as declared by you on the app.
Best Strategies for Amazon Dropshipping
Amazon dropshipping seems a straightforward concept of launching an online retail business in few clicks, and making connections with suppliers. However, there is no such thing as easy money 💵. You need to plan your actions systematically to successfully establish your brand and enhance sales.
Here are the best Amazon dropshipping strategies for beginners to manage their online business.
Niche and Product Research
Before diving into the Amazon dropshipping business, you need to do thorough research on the selected niche and its segment. It helps in choosing a suitable product to sell online.
✨Usually, products that are regularly purchased are targeted by many sellers online. An increase in market competition will bring you lesser sales, especially if you do not compromise with profit margins. Initially, you can select products that are less in demand and with lower competition.
✨Always prefer going with the best quality products in the chosen segment. This will standardize your brand name sooner, and you will start fetching more customers. You can look for reputed products from authentic suppliers to avoid unwanted troubles from the customers.
✨Going through customer reviews, advertisements, and features, as well as self-tests, will help you finalize a best-selling product for which you can stand confidently.
✨Find multiple products from different categories and suppliers to cover wider consumers and avoid market saturation.
You can focus on many such parameters during niche and product research.
Optimize Product Titles
Product title is pretty important in the dropshipping business because that is the primary source of appearance on search results for a customer. A buyer would generally type a product’s category name and click on items appearing on the top.
Therefore, optimizing the product title effectively will improve its position in searches. You can use the most common keywords instead of complicated jargon. Often, writing about identifying features of the product optimizes the title effectively.
Optimal Pricing for Profitability
For Amazon dropshipping business, you make a deal with the product’s wholesale supplier and resell it at a higher selling price. Now, the difference in amount is your actual earnings. But you also need to pay the charges incurred by Amazon as per the chosen plan, and there are other spending too in the process.
Bigger firms🏢 are able to afford lesser profit on each sale while they make up for the cost due to bulk sellouts. Often, putting unusually low prices on products turns down buyers who perceive them as low-quality products.
Therefore, pricing your product optimally plays a vital role in retail sales. While researching the market for products, you must also analyze the price structure of other sellers. Keep your product’s price at average levels to gain genuine profits and customer response.
Maintain 95% Seller Rating
Amazon gives a rating to the sellers on its portal. It is based on various factors like quality of products, shipment time, customer rating, variety of products, etc.
High seller rating⭐ definitely builds customer’s trust in your brand, and they tend to buy the goods. Another benefit of gaining high seller rating is the improvised search ranking, which ultimately results in high sales.
If you manage to maintain up to 95% of seller ratings, then your Amazon dropshipping business will boost up relatively.
Avoid E-Commerce or Retail Sites
Often, novice entrepreneurs think of buying products from different eCommerce sites and reselling them on Amazon at higher costs. This may initially seem to serve the whole phenomenon of dropshipping business, but it might disobey Amazon’s policy for sellers.
Amazon has strict recommendations for authenticating the brand name on the product, and no other tag should reach the customer. While finishing the delivery on time, you might forget to remove the tags. Buying from another eCommerce site
The profit margin definitely decreases because the seller on another site has already charged higher on the product’s wholesale price. Due to competition in the market, you cannot charge above the average cost and are bound to compromise with lesser profit.
If, by mistake, the other seller sends a low-quality👇 or different product, then you are bound to return it. The time taken in your product return process will lead to order cancellation on Amazon and tamper with your brand image.
Offer Discount and Coupons
Direct discounts or discount coupons are a great way of attracting customers. You can occasionally offer discounts on your products after calculating a specific percentage of profit on each sale.
Similarly, Amazon also provides an option to offer coupon discounts to its customers, provided it follows all the regulations. Buyers can find these coupons under the product price or description. You can offer deals like buy-2-get-1, a certain percentage of discount, etc.
Customer Feedback and Reviews
People surfing on eCommerce sites look for customer reviews and feedback to know intrinsic details about the product. General perception is that companies might misinform, while genuine buyers would share the critical pros n cons without hesitation.
Therefore, it is advised to sell the best quality products on Amazon and wait for the customer’s rating. Reverting on feedback is a nice gesture and shows your active participation in communicating to resolve the queries or just greeting the buyers.
The potential customers analyze the reviews and responses received, which affects their mindset positively to click the Buy Now button.
Get the Buy Box
Amazon has a special Buy Box section. It features a few products on the right side of the product detail page. You can directly add these products to your cart by clicking the “Buy Now” button next to it. The benefit of getting featured in the Buy Box section is that customers tend to buy them sooner than the searched item.
The algorithms on Amazon apply various factors to choose an item and bring it over to the Buy Box. Products with lower or competitive prices, positive feedback💬 ratings, high inventory status, and fast delivery possess higher chances of reaching the Buy Box.
Monitoring and Analyzing Performance
The dropshipping business model keeps you carefree regarding inventory management, delivery procedures, etc. But you still need to monitor the sales of products and market trends📊.
With regular analysis, you can find out which products are attracting buyers and which ones are not getting any customers. In this way, you can work on promotional activities or offer special discounts on products that are not performing well.
Build Brand and Customer Loyalty
Regardless of the business, the key to success is establishing a strong brand name and gaining customers’ trust in the product or services provided. In Amazon dropshipping business, you are dependent on the supplier to deliver the correct product within the stipulated time⌛.
Amazon suggests only selling high-quality products from the panel. Other than that, if you commit to delivering the product in five days, then make sure it gets delivered within five days or lesser time.
By ensuring that your supplier delivers true standard quality, you will gain loyal customers who will buy the product and also recommend your name to others.
How to Select Amazon Dropshipping Supplier?
Suppliers have a key role in your Amazon dropshipping business. Fundera says 84% of eCommerce retailers drop the idea of dropshipping business because they couldn’t find reliable suppliers.
It is essential to form a network with a trustworthy supplier on whom you can depend to deliver the right product within the committed time. Any discrepancy can affect your sales and brand value.
You must follow the below given criteria while selecting a supplier.
Location Your Supplier Support
Make sure that the supplier you choose is willing to accept deliveries in the locations📍 that you assign to serve. Canceled orders due to non-deliveries will hamper your seller rating and earnings. It is better not to accept the order than to cancel it later.
Supplier Fees
It isn’t a healthy trend for a few suppliers to make conditions to charge a fixed amount on a monthly basis other than the actual cost. I always recommend drop shippers avoid linking with such suppliers who act mischievously, as their motive is only to extract money and not a business enhancement.
Product Availability
While selecting a supplier for your business, you must also ensure that they have sufficient storage to update the inventory. Suppliers must be able to serve the orders regularly during high sales. Taking extra time for delivery🚛 due to non-availability of items is not good for online retail.
Quality of Products
Your supplier must undoubtedly provide the best quality in the segment. A slight compromise with the advertised quality would diminish customer’s trust in your brand. You may get product returns, bad reviews, and feedback, which results in a decrease in customer ratings and, altogether, a slowdown in your Amazon dropshipping business.
Reputation and No Red Flags
You should dedicate sufficient time to research about the background of the supplier. You may keep a check with retailers to find out if they hold good or bad reputations regarding business ethics. There should be no red flags🚩 as it could also disturb your brand image for your customers.
Shipping Efficiency
Product delivery time is an important factor in increasing online sales for customer-ready products. Buyers tend to click the “Buy Now” button if the delivery time is sooner than longer. Therefore, the supplier must make sure to work in collaboration with the shipment team for efficient delivery.
Detailed Dropshipping Dashboards
A well-resourced supplier usually works in an equipped system that has all the business management on their computer’s dashboard. A detailed dashboard is always essential for suppliers to manage online business, as it increases efficiency, and you don’t miss out on critical information. In this way, they keep track of inventory, sales, awaited orders, and revenue.
Order Processing Time
You may choose to work as a one-man show to manage your Amazon dropshipping business. But your supplier must have sufficient staff members to manage orders. Once the customer places an order, the information gets automatically transferred to the supplier. And they must ensure to keep a check on order processing time so that the product gets delivered within the slot.
Customized Packaging
A necessary job that your supplier needs to do for you is to provide the package according to the norms of the Amazon delivery system. The delivery package must have your brand name, mailing slips, and invoices tagged over it. This is how every Amazon package looks like, and a supplier willing to work accordingly can only be your dropshipping business partner.
Brilliant Customer Service
It is essential for a business person to provide quick and accessible customer support. Since you are dealing with a potential supplier, they must adhere to serve the support system whenever required. They must responsibly address all the inquiries of the customers, and keep you updated with the stocks, delivery schedules, and price alterations.
Amazon Dropshipping Vs. FBA
FBA or Fulfilment by Amazon is a popular product selling mode on the platform, and like the dropshipping business model, in FBA yo,u do not need to store the selling items at your end. But there are some major distinguishing factors between the two methods.
Here is a difference table showing the difference between Amazon dropshipping and the FBA model.
| Parameters | Dropshipping | FBA |
|---|---|---|
| Inventory | It is held by the supplier. | It is held at Amazon’s warehouse. |
| Fulfilment | You manage the process by coordinating with the supplier. | Fulfillment |
| Customer Support | Either you or the supplier stands responsible for resolving issues and returns/ refunds. | Amazon handles customer support, and returns/ refunds. |
| Charges | You pay the cost incurred by the supplier, along with shipping, returns, and order processing to Amazon. | Amazon handles customer support and returns/ refunds. |
| Initial Cost | You don’t buy the product and only pay the processing fees. | It is easy to begin with the least risk and minimal investment. |
| Branding | You cannot use Amazon Prime Branding | You can use Amazon Prime Branding. |
| Role | You depend on the supplier for product quality, packaging, etc. | You control the product quality and packaging with Amazon. |
| Business Type | You pay storage and fulfillment charges to Amazon. | Money invested in buying wholesale products is locked until they get sold out. |
| Profit | You had to pay multiple charges to Amazon and the supplier, so the profit margin is less. | You only pay to Amazon for inventory management, so the profit is higher. |
Dropshipping is always a suitable business option if you are new to online retail. You can start with a small amount, with zero loss, if the products don’t sell out. Eventually, you can add multiple products to the list by linking with different suppliers.
However, if you grasp the practicality of both models, then using them jointly on the portal can deliver immense benefits in online retail.
How to use Amazon Dropshipping and FBA Together?
Both Amazon dropshipping and FBA business models possess specific benefits, and you can strategically design your business to maximize your profits. Here is how you can expand your online business by utilizing the key features of these business models together.
🔷You can use dropshipping to induce new items in the list of which you are unsure regarding the market demands.
🔷FBA is always a better choice if you are experienced and have products that quickly sell out.
🔷FBA is suitable for products that need quick shipment, which is also applicable in Prime membership.
🔷Products with rare sales can be kept for drop shipping and prevent storage charges at the warehouse.
🔷If you regularly keep a check on inventory numbers, then you can balance the orders by switching between the two models.
🔷It is usually suitable for selling big-size or weighted products via dropshipping and smaller items that take less storage space via FBA.
With careful planning, and efficient management, you can make definite profits in jointly using FBA and dropshipping models.
Importance of SEO and Marketing for Amazon Dropshipping Business
SEO is a prominent technique in digital marketing of optimizing the content, and enhancing its search ranking. It is often mistaken for applicability in blogs, web pages, or social media. But even eCommerce sites like Amazon can deliver fruitful results if the product’s page is properly optimized.
Here is how SEO and marketing can be helpful for Amazon dropshipping business
✨You can look for relevant keywords for any product and utilize them for title or description to enhance its rank on searches.
✨You can target location-based keywords to target visitors from specific regions where the product can make better sellouts.
✨Effective optimization of product listing delivers long-term results as visitors searching after months would also find it in search results.
✨It is quite often that dropshippers use digital marketing tactics like social media campaigns to establish their brand image and increase sales.
✨You can promote special offers and discounts and advertise features through marketing to attract more buyers.
✨One of the marketing tactics is to engage with potential buyers on social sites and find out about their preferences.
Applying best practices of SEO and marketing for Amazon dropshipping business will sustainably enhance your product’s sales while successfully promoting your brand name.
Pros and Cons of Amazon Dropshipping
Amazon dropshipping is an affordable business model. It is advantageous in multiple sects but has a few disadvantages, too. Let us discuss them in brief.
Pros of Amazon Dropshipping
Here are the major advantages of Amazon dropshipping.
✅A willing business person can start dropshipping on Amazon with a small set of amounts.
✅No need to allocate space for stocking products.
✅You can sell a large variety of products under your brand name without worrying about inventory management or investments.
✅From packaging to delivery, everything is managed by a third party.
Even if you have lesser acumen about buying and selling, you can start earning as a dropshipper.
Cons of Amazon Dropshipping
Here are the major disadvantages of Amazon dropshipping.
❌You have to rely on the supplier for shipping the quality of the product as committed in the description. Mistakes made by them would damage your brand name.
❌Often, the deliveries take longer time in this model because the suppliers have to work on the fulfillment.
❌If the suppliers don’t follow Amazon’s guidelines, you may suffer from the abandonment of your business account on the Amazon portal.
As a business person, you need to make in-depth research about reliable suppliers to succeed as a dropshipper.
FAQs
The dropshipping market is expecting a continuous rise from $301.11 billion in 2024 to $372.47 billion in 2025 and $476.10 billion in 2026. Therefore, dropshipping is a profit-making business model, and it is best to list your product on Amazon, which is among the most accessible platforms for online sales.
So, if you choose your selling products wisely, considering its market demand, and the suppliers work according to the guidelines, then you can precisely fetch more visitors and turn into buyers.
Yes, Amazon completely allows dropshippers to sell products on its platform. In fact, there is a specific Amazon policy document that all dropshipping sellers should follow. In case of errors, the product list may get removed or even lead to account suspension.
Amazon Dropshipping takes a bit more time to give you considerable earnings. Since there are charges on multiple levels, you may observe a little profit from sales during initial times. But as your business picks up the momentum, the earnings start to increase. On average, a dropshipper working with Amazon makes up to $30,000 per annum.
No, Amazon FBA or Fulfilment by Amazon is different from Amazon’s dropshipping business model. Both these frameworks keep the seller free from the responsibility of handling the inventory or order shipment.
But other than that, there are some fundamental differences like investment amount, inventory handling charges, blocked money due to unsold stock, business risk, dependence on limited products, etc. These are some differences that make business persons choose Amazon dropshipping over FBA.
Author’s Note
You wish to become a business person and possess a detailed understanding of a product, but you are afraid that the idea won’t work and the investment goes in vain.
Now, one of the best things I found about Amazon dropshipping📦 business is that you do not need to arrange for a bank balance or loan to purchase goods and wait till it gets sold out. If you are thinking of dropshipping on Amazon without money, just go ahead. And since the product reaches directly from the supplier to the customer, it also eliminates the need for storage space as well.
The dropshipping business concept is lucrative as you don’t have to research the trends of a particular product. Because in Amazon dropshipping, you can strategically coordinate with multiple suppliers and add a variety of products to your list.
However, a bit of research about the product is helpful, along with optimizing the title, description, etc. to make it visible in search results. Keep monitoring the sales performance and offer discounts to get positive👍 feedback from customers. Amazon also provides high seller ratings and Buy Box if you carefully follow Amazon Policy and deliver the shipments on time.