Amazon has more than 190 million active customers every month, making it the most popular online store in the world. However, due to its user-friendliness, eBay is the platform of choice for dropshipping.
Though dropshipping on Amazon presents its own unique set of challenges, the potential rewards are substantial thanks to the site’s large customer base and relatively small number of sellers.
Selling on Amazon differs greatly from selling on eBay in many ways, including creating offers, securing the buy box, and handling inventory. This book will serve as a blueprint for starting an Amazon dropshipping business from the ground up.
What is Dropshipping?
With its meteoric rise to prominence beginning in 2006, dropshipping is now relied upon by thousands of retailers and online sellers worldwide, including some multibillion dollar brands like Wayfair.
With dropshipping, you don’t have to buy products in advance or keep any physical inventory on hand, in contrast to the conventional approach to running an online store, which typically entails sourcing products in bulk and reselling them individually.
There is no need to make an initial stock purchase.
There will be no need for stockpiling
Shipping and handling costs are covered.
Minimal initial investment and operating costs
By eliminating the need to ship orders and manage returns, dropshipping reduces the overhead of running an online store. Products are instead purchased from manufacturers and shipped directly to consumers.
The vendor is responsible for all aspects of order fulfilment, from item collection and packaging to shipping and delivery. You get all the benefits of running your own warehouse with a full staff without spending a dime.
Why Dropship on Amazon?
According to the introduction, Amazon attracts hundreds of millions of customers from all over the world, many of whom are unique to the site. As of 2019, Amazon reported more than $300 billion in sales, while eBay reported a more modest $10 billion.
In addition, Amazon’s market share is much higher; the company is responsible for more than 13% of all ecommerce sales worldwide and a staggering 50% of the US market.
More customers can be reached and fewer sellers must compete with on Amazon thanks to the site’s favorable buyer-to-seller ratio.
If you’re not dropshipping on Amazon, you’re leaving money on the table. For long-term success in dropshipping, it’s crucial to sell on multiple marketplaces, Amazon included. Choosing to sell only through one channel is akin to putting all of one’s money in a single bank account.
The Pros & Cons of Dropshipping on Amazon
Dropshipping on Amazon has the potential to generate a lot of revenue, but there are some drawbacks that you should think about. Here are some of the advantages and disadvantages of using this platform to sell your products so you can make an informed decision.
Millions of customers all over the world
There are no listing fees or volume requirements.
Simple to post ads and make deals
Fewer vendors means less competition
Increased margins of profit
Professional, Personalized Assistance Simplified Performance Criteria for Sellers
Profit margins that are reasonable for vendors
Costs to get started are relatively low
There should be more stringent regulations regarding sales.
Withdrawals from sellers take longer than usual.
Use a common product information page
The ability to manage listings and product descriptions is being reduced.
Procedure for verifying sellers is required.
Audits of the accounts are conducted at random and frequently.
Understanding The Amazon Marketplace
If you want to be successful selling on the Amazon marketplace, you must first gain an in-depth familiarity with how it operates. Amazon, in contrast to eBay, places a greater emphasis on brand names and offers a more organized catalog of goods.
In contrast to eBay, where individual listings are created for each item, Amazon sellers frequently use the same product description page.
A good example is the following Russell Hobbs Kettle, which can be purchased from Amazon for just £24.99 plus free shipping. To see additional options for making a purchase, click the link that appears below the current (main) offer.
If you click the link, you’ll be taken to a page showing your complete selection of similar products from different vendors.
Sharing a product details page with other sellers is unavoidable unless you’re selling products under your own brand name or ones that aren’t already listed on the Amazon marketplace.
Considering that Amazon strives to be an open and honest marketplace, it is against their policy to create a new listing for a product that is already for sale there.
Amazon’s marketplace is structured very differently from eBay’s, which is both a huge benefit and a glaring disadvantage.
Although it may be more difficult to compete with other sellers when they all use the same product details page, this method of listing items for sale certainly speeds things up.
In addition, it saves customers time by eliminating the need to sort through countless search results before finding what they need at the best price.
When viewing a product’s details page on Amazon, there is only one Add to Basket button, or buy box, from which to place an order.
In this article, we’ll go over some of the factors that go into Amazon’s decision about which seller to feature in the buy box.
Put simply, if you want to sell something that already exists in the Amazon marketplace, you must make an offer on the product details page for that item.
You can make an offer on a product already listed on Amazon by simply setting a price and the number of units you are willing to sell. However, you will need to make a new listing if the product you are selling is not currently available on the Amazon marketplace.
Here I will show you the ins and outs of creating a new Amazon listing and also setting up offers on existing listings. The next section will go into greater detail about the factors that will determine the best way for you to list products for sale.
Creating a Business Plan
Creating a successful Amazon dropshipping business can be done in a variety of ways, including the introduction of a new private label brand or the sale of established name-brand products.
The first step is to develop a strategy, as this will determine how you go about finding suppliers and posting products on Amazon, among other things. When doing dropshipping on Amazon, the most common business models are:
Selling Own Brand Products
Selling your own brand products is widely regarded as the most efficient way to gain an edge over competitors when dropshipping on Amazon. This method entails locating suppliers of generic, unbranded products and attaching your own brand name to them.
White labeling and private labeling are two names for the same practice, which entails selling under one’s own brand name.
Therefore, there won’t be a lot of other sellers vying with you for the buy box. You’ll also be able to modify the text, images, and other details of each product.
New Amazon listings are a worthwhile long-term strategy, but they require more work and time to develop.
New listings take more time to gain authority and start generating sales by reaching top spots in the Amazon search results because there is already traffic and buyer activity for existing listings in the form of sales, questions, and reviews.
Locate a wholesaler of generic goods and start making money off of them under your own label.
Make brand-new product listings on Amazon with personalized titles, descriptions, and other details.
Bring more eyes to your listings to boost your reputation and sales.
Selling Existing Brands
Most Amazon FBA sellers stick to dropshipping well-known brand names.
The fastest way to get offers on Amazon and start generating sales without having to create custom descriptions, item specifics, or images is to simply share the description page with other sellers.
An additional perk is that you can make deals based on already-live Amazon listings that have already attracted customers and generated sales.
Locate reliable distributors of name-brand goods sold by reputable businesses.
Make use of already established Amazon product pages, complete with reviews, traffic, and sales, to promote your products.
The key to getting the buy-in is to build up your sales, reviews, and track record.
Creating a Specialist Brand
If you want to establish yourself as an industry expert, focus on selling products to a specific market segment. Becoming known as an expert in the pet supply industry or the women’s accessory market, for instance.
Commonly, specialty brands sell both their own and other companies’ products in an effort to dominate a specific market segment.
Don’t try to do everything.
Sell items under your own label as well as those of other manufacturers
Make announcements and deals on current listings.
Creating a Generalist Brand
A generalist brand is one that does not focus on any one area but rather offers a wide selection of products across many industries.
A company that specializes in mobile phone accessories might also market clothing and children’s toys under the same name. Since dropshipping doesn’t require you to keep any inventory on hand, you can theoretically sell as many items as you like without worrying about running out of money or running out of space.
Therefore, it is in your best interest to develop a generic brand that can serve multiple niches.
Move a wide variety of items across many different markets.
Make it a priority to quickly create many Amazon product listings.
You can choose to sell either third-party or your own-brand goods.
In conclusion, when developing a business plan, it is important to consider the kind of company you wish to establish and its long-term goals.
Some people want to start their own niche brand, while others want to sell everything under one roof. There are benefits and drawbacks to every possible sales approach; choosing the one to use ultimately comes down to your individual preferences and long-term objectives.
Establishing a Brand Name
A catchy, memorable, and unique brand name is crucial whether you intend to sell private label products or a combination of existing brand products. Get started by coming up with a few ideas and a list of possible solutions.
Keep in mind that the name you choose for your company is a reflection of what you stand for. As a result, picking a victor should not be rushed. Some suggestions and guidelines for creating a brand name are as follows:
Examine the results of a business name generator like NameMesh or NameSnack.
Make use of keyword research tools like WordStream and the Google Keyword Planner.
Keep it succinct, memorable, and on-topic for your specific field.
Verify that the name is available for use without infringement on the rights of any other business.
Run a search on GoDaddy to see if the domain name you want is available.
Find suitable dropshipping suppliers to source products from now that you have a better understanding of how Amazon works, a clear business plan to follow, and a memorable brand name.
The following methods will help you quickly locate reputable and trusted suppliers of branded and unbranded products, whether you want to sell existing (third party) brand products or create your own private label brand.
Searching Google by hand for suppliers is still one of the most efficient ways to find dropshipping suppliers. The fastest way to find relevant businesses is to learn how to perform a sophisticated Google search.
On the other hand, you can narrow your search results by using long-tail keywords in combination with a regular Google search.
Join Online Forums
Drop shipping suppliers can also be found through participation in online discussion groups. Forums, which are essentially online communities where like-minded individuals can share, discuss, and debate topics or ideas, typically contain accurate, trustworthy, and objective information.
Any topic or niche, including dropshipping, has its own forum, from the newest blockbuster movies to pet care or kids’ crafts.
Searching Google for “wholesale, dropshipping, or product sourcing” will return a long list of forums, many of which contain helpful recommendations or advice on where to source products.
Try Automation Software
Investing in automation software is another viable option for locating dropshipping suppliers. It has become common practice in the world of dropshipping to use automated software that provides a one-stop-shop for locating suppliers and creating listings on popular selling platforms such as Amazon.
Most software is compatible with a predetermined selection of the best dropshippers, so you never have to waste time searching for them on your own.
Opening an Amazon Seller Account
Amazon currently operates 14 international websites in the most important e-commerce markets worldwide.
Choosing a marketplace to sell on is the first step in creating an Amazon seller account. If you live in the United Kingdom, you can sell on amazon.co.uk; if you live in the United States, you should focus on amazon.com.
Among the many advantages of dropshipping is the elimination of the need to set up shop in each individual country in which you intend to sell.
However, before you can start selling on Amazon, you may need to go through a verification process (details below).
Consequently, it is critical to select an appropriate platform to conduct online business. For the full directory of Amazon’s local websites, see their article on International Sites. Setting up a seller account on Amazon is simple once you’ve settled on that platform as your preferred sales venue.
To begin selling on Amazon, simply navigate to Seller Central (make sure you’re on the appropriate international site). To continue, select Sign Up and comply with the on-screen prompts.
As a general rule, you can set up a business seller account in most countries for a nominal monthly fee. With a business account, you can set your own shipping rates and terms of service, as well as enjoy a number of other added perks.
Confirmation of the Seller
Uploading documents such as identification or bank statements is part of the verification process necessary to begin selling on Amazon.
Which Amazon marketplace (UK or US) you choose to sell on will determine the specifics of the verification procedure. Please see the following Amazon seller verification documentation for further details:
Details Needed to Sell on Amazon.co.uk/Europe
Verifying Your Amazon.com, Inc. Account in the USA: A Guide
Calculating Fees & Profits
You should know how selling fees work and how to calculate your profit margins before you start creating offers or listings on Amazon.
The two types of selling fees that apply to dropshippers on Amazon are the per-item selling fee and the referral fee (also known as a closing fee). Let’s investigate each in detail.
Advice: If you want to sell a lot of items without having to pay fees for each one, create a business account. More authority and leeway in setting your own selling policies are just two of the many advantages that come with a professional seller account.
The per-item fee is a small, fixed cost fee charged on each successful sale that is exclusive to sellers who do not have a professional Amazon seller account and does not take into account the final selling price of the item sold. The fee is typically around $0.99 or £0.75 per unit sold, though it varies depending on which Amazon site you’re selling on (UK, US, etc.).
Referral / Closing Fee
The referral fee is a percentage of the item’s final selling price (including shipping costs), and it is applied to all sellers. The percentage of the sale that is paid out as a referral fee varies by industry, but is usually 15% or less. The approximate amount of the referral fee is $1.50 based on the formula: 15% of the sale price, or £1.50 if the item was sold for £10.00.
The easiest way to figure out your commission is to take 15% of the sale price. If you don’t have a professional seller account and your item is priced at £20.00, the listing fee, plus the per-item fee, will be £(15%) x (£20) = £3.00.
After a sale is made, the selling fees are deducted from the final sale price of the item, which includes shipping costs. When an item sells on Amazon, the net proceeds (sales price minus selling fee) are deposited into the seller’s Amazon account. You can expect Amazon to deposit your earnings into your bank account on a predetermined schedule, which will be elaborated upon below.
Choosing Profitable Products
To start making money on Amazon, you need a business plan, a supplier to buy products from, a memorable brand name, and a seller account. Your provider, in most cases, will offer you a wide selection of products from which to choose.
That’s why it’s so crucial to zero in on the products that will bring in the most money. Here are some things to keep in mind when picking out products to sell:
Before deciding to list an item for sale, you should do the math to see if you can meet or beat the price of competing sellers by factoring in your selling fees and profit margins.
Find out how well-liked the product is by searching for it on online marketplaces like Amazon and eBay. Consumer interest is a reliable predictor of an item’s eventual sales success.
Find out if there are problems that are causing a high rate of returns or performance issues by reading reviews written by current customers.
Creating Offers & Listings
Now that you know what products will sell well and have a list of potential suppliers, you can begin making listings in online marketplaces.
Create an offer on the product’s existing listing if you’re selling something that already appears in the Amazon catalog.
You will need to make a new Amazon listing if you are selling a product that is not already listed there, or if you are selling your own private label brand of products.
Creating Offers on Existing Listings
An Amazon offer can be made in a matter of minutes by editing the product page. Sign into your Seller Central account on Amazon, then go to Inventory > Add a Product.
You can conduct a search for the item in question on the following page by entering keywords, the product’s brand name, or the product’s UPC. Find the item you want to sell, then choose whether it’s new or used and click the Sell this Product button.
You can add your own description and product details when making an offer on an already existing listing. Yet Amazon will use the description it deems to be most appropriate.
Creating New Amazon Listings
Once you know what you’re doing, adding a new listing to the Amazon marketplace is simple. Access Inventory > Add a Product after logging into your Amazon Seller Central account.
Click the I’m adding a new product not sold on Amazon link instead of searching for an existing product using the search bar.
Proceed to the next page and look for the appropriate section there. Take your time browsing the many options available to you on Amazon, as there are hundreds of categories to select from.
Click the “Select Category” button once you’ve decided on the right one, and you’ll be taken to the listing/editing page.
Follow the prompts on the listing page to the letter and provide as much relevant information as possible. You can add images and a description of your product by navigating the tabs.
If you’re dropshipping, your supplier should be able to provide you with all the details you need; from there, it’s just a matter of cutting and pasting. However, here are some suggestions that you should keep in mind when making a new listing:
Develop a one-of-a-kind, keyword-optimized, attention-grabbing title by including as many relevant key phrases as you can.
Create your own unique descriptions by writing an introduction and a few short bullet points highlighting key features, followed by a list of technical requirements and/or directions for use.
To stand out from the crowd, use the best available image and, if at all possible, avoid using the same main image as your supplier.
Determine your exact costs of selling and your desired profit margin, and then set a price low enough to maximize exposure and sales.
A Global Trade Identification Number (GTIN), also known as a product identifier like a Universal Product Code (UPC), European Article Number (EAN), or ISBN code, is required in most categories when creating a new listing on Amazon.
Amazon uses product identifiers, essentially a barcode, to organize and keep track of its enormous inventory of goods.
The Universal Product Code (UPC) or European Article Number (EAN) is information your supplier should be able to provide. If you’re selling products that aren’t branded, though, you’ll need to get your own authentic barcodes from a company like GS1 or SpeedyBarcodes.
Please see this Amazon SEO Consultant barcode guide for more details, or look up companies that provide UPC/EAN barcodes online.
Managing Inventory & Prices
The inability to manage inventory and pricing is a major drawback of the dropshipping model. Without a reliable inventory management system, businesses are doomed to sell out of stock items at inflated prices.
Naturally, this could result in a disappointed client, a faulty product, or constructive criticism.
Having a reliable system in place to track inventory and costs is crucial. Manual stock checks are one option, as are requests for updates from suppliers and the use of automation software.
Automation software solutions are quickly becoming essential when operating an Amazon dropshipping business, as they offer an all-in-one solution for creating listings, as well as automatically managing stock, repricing, and even order fulfilment.
Fortunately, the proliferation of automation software solutions mirrors the growth in popularity of dropshipping, so there is no shortage of vendors from which to choose.
Check out our in-depth guide to learning more about our top-rated Amazon dropshipping software options. You can rest assured that there exists software that is compatible with your preferred provider.
Understanding Seller Performance
In order to ensure a level playing field for buyers and sellers, most online marketplaces implement some kind of selling standards or performance system. Amazon’s seller performance system is deliberately straightforward in order to attract and retain only the best merchants.
Sellers are responsible for achieving and maintaining Amazon-mandated KPIs, which include customer service quality, policy adherence, and timely product shipment.
If you don’t meet the goals you’ve set for yourself, you may face serious consequences, like a temporary or permanent suspension of your seller account.
Amazon reserves the right to take action against your account based on its own evaluation of your performance as a seller. As a new vendor, you might also be subject to occasional account audits.
Thus, it is essential to achieve the goals, maintain the performance criteria, and avoid breaking the policies. Let’s take a closer look at each part so you can make an informed decision.
Customer Service Performance
The customer service metric is comprised of three different metrics: negative feedback, A-Z claims, and chargeback requests.
Keeping chargebacks and negative ratings below 1 percent requires proactive measures like stellar customer service.
The best way to keep your customer service performance rating high is to stay in constant contact with your buyers and quickly resolve any issues that may arise with their orders.
To avoid getting in trouble, it’s important to adhere to Amazon’s many rules and regulations when selling items. Complaints and strikes against your seller account will result from disobeying the policies.
Copyright complaints, incorrect listings, and fake reports account for the vast majority of policy violations.
The best way to stop complaints and policy violations is to find a reliable dropshipping supplier. Make sure you have the rights to sell those brands and use those images and descriptions of their products.
Before making your Amazon listings public, double-check that they are accurate.
Both your late dispatch rate and pre-fulfillment cancellation rate contribute to your overall delivery performance. Simply marking orders as dispatched within the allotted time frame will keep your late dispatch rate below 4% and happy customers.
Maintaining a pre-fulfillment cancellation rate of 2.5% or less necessitates keeping products in stock and ready for shipment at the time of purchase.
When dropshipping, you don’t have as much say over inventory levels, so this can be difficult. However, as will be seen in more detail later on in this manual, there is a straightforward way to prevent the sale of out-of-stock items.
To succeed in e-commerce, you’ll inevitably have to deal with customer returns. This is especially true for Amazon sellers, who must comply with Amazon’s 30-day return policy for all international orders.
On Amazon, customers typically initiate returns by either contacting you directly or creating a return request. If a customer initiates a return, you can take care of it through Seller Central’s Manage Returns feature.
As soon as a customer requests a return, you should get in touch with your supplier to set up the return. Most vendors will have a return label or address you can use to ship items back to them. Please inform the client of the return procedure.
The vendor will issue a refund once they receive the returned item from the customer, and you can then issue a refund to the buyer. Some things to keep in mind when processing returns are:
Maintain a close working relationship with your vendor and handle returns promptly.
So that orders can be processed more quickly, please have customers include their order number in their payment.
If a refund is required, it should be issued immediately to avoid delays and customer dissatisfaction.
When dropshipping on Amazon, order processing time is of the essence. Your supplier will ship your order as soon as possible after you forward or place it with them. As a result, it’s crucial that you fulfill all orders on the same day, or at the very latest the following day.
You’ll receive an email from Amazon whenever a customer places an order. Following these steps will lead you to your order details, where you can then insert your shipping information:
Enter the Amazon Seller Central.
Choose the Orders menu option. Handling Orders
Find the order number and then press the button.
Verify the address listed in “Ship To.”
Once you have the customer’s shipping information, you can either send it on to your supplier or enter it during the checkout process.
Before finalizing an order, always verify the shipping information and associated costs.
As soon as the item has been shipped out, you should go into seller central and go to Orders > Manage Orders to mark it as shipped. Orders should be marked as shipped as soon as possible, and tracking information should be uploaded (if applicable).
Managing Customer Support
Customers are the lifeblood of any successful enterprise. The best way to prevent typical problems like poor customer feedback or reviews is to consistently deliver outstanding service.
It has been shown that providing excellent customer service helps to increase the number of returning customers. If you care about your customers, they will return for more. When interacting with clients, it’s helpful to keep in mind the following guidelines:
Address complaints and negative reviews as soon as possible after they arise with orders.
Send shipment tracking updates as soon as they become available.
Get customer input after the sale has been made.
Always maintain a level head, even when dealing with difficult customers, and ask for feedback on your products.
Quickly process returns and think about issuing refunds in advance if possible.
It is unrealistic to expect a flood of sales simply by posting a few listings or deals on Amazon. In order to gain Amazon’s confidence as a new seller and start making sales, you’ll need to put in some time and effort. Meanwhile, it’s crucial that you acquire the knowledge necessary to maximize your sales as a new seller.
The methods outlined below can be used to immediately increase sales and kick things off.
Promoting newly released products is a surefire way to increase interest in them. With just a few clicks of the mouse, Amazon merchants can set up a wide variety of sales and discounts, including BOGO deals, exclusive coupon codes, and flash sales.
To begin running promotions, visit Advertising > Promotions in your Seller Central account and consult the Amazon documentation or the following YouTube video tutorials for in-depth guidance.
Run PPC / Sponsored Ads
All vendors on the Amazon marketplace have access to Amazon PPC (pay-per-click), an internal advertising system. For new listings, PPC advertising on Amazon is the most efficient way to quickly rise to the top of search results and begin generating sales.
Amazon PPC can be a time-consuming and difficult feature to set up, so it’s crucial that you know how to maximize the success of your campaigns.
Did you know that 79% of consumers put as much stock in online ratings as they do in recommendations from friends and family? Furthermore, 73% of buyers say they are more likely to do business with a company that has received positive reviews. Reviews on Amazon are highly valued by both customers and business owners.
Furthermore, it is common knowledge that having customers leave reviews on Amazon can greatly increase your product’s visibility in Amazon’s search results and, consequently, sales.
Customers will be more likely to purchase your product if it has a high rating on Amazon. Here are some things to keep in mind when collecting testimonials:
You can either contact buyers directly after they’ve made a purchase, or you can use the Request a Review button in seller central.
Participate in the Amazon Early Reviewers program, wherein Amazon will reward reviewers with a gift card in exchange for their feedback.
Put your products out there on promotional marketplaces like JumpSend and SnagShout to get some early sales and feedback.
Amazon Dropshipping FAQs
The following FAQ addresses any and all concerns you may have about dropshipping on Amazon. Feel free to get in touch with us for answers to any questions that weren’t addressed here.
We’re available at any time and eager to assist in any way we can. Supporting business owners in their pursuit of online commerce success is our top priority.
Does Amazon permit drop shipping?
Amazon’s dropshipping policy indicates that this method of order fulfillment is generally tolerated. You must use a legitimate wholesaler, manufacturer, or trade-only dropship supplier in order to dropship on Amazon, as stated in their policy.
It is illegal to use Amazon as a wholesaler by purchasing goods to resell elsewhere. When you’re a dropshipper, you must ensure the items get to their destination safely and handle any returns that come in. For further information, please review our policy document.
Can anyone dropship on Amazon?
As a major perk of the dropshipping business model, you can sell internationally without setting up shop in each individual country. The setup cost for an Amazon seller account is nil.
That being the case, absolutely anyone can become a drop shipper on Amazon. However, before you can start selling on Amazon, you must go through a verification process (details of which are provided above).
How much money do I need to start dropshipping on Amazon?
It is possible to start a dropshipping business on Amazon with no initial investment because of the low cost of joining the marketplace and adding products to your store.
In addition, you won’t have to spend money on inventory, warehouse space, or order fulfillment. However, you will need to fund the orders in advance because Amazon does not provide instant payments to sellers.
How much do Amazon dropshippers make?
It’s hard to say how much money people make dropshipping on Amazon, but it can range from a few hundred dollars a month to a full-time living wage.
Your ability to run an effective business is crucial to your success as an Amazon dropshipper, but there are many other factors at play.