Guide to Dropshipping on Amazon
Are you looking to make money online? Are you trying to find the best way to do it? You should consider Amazon dropshipping. It’s convenient and low-cost, making it potentially very profitable. But before we get into the specifics of Amazon dropshipping, let’s define dropshipping first. Dropshipping is an e-commerce business model in which an online store doesn’t maintain any inventory or stock any products. Instead, a dropshipping supplier handles the logistics of storing, packing, and shipping the items to the end consumer. In other words, the online retailer never sees or handles the products.
What Is Amazon Dropshipping?
The basic steps to Amazon dropshipping are:
- You sign up as a seller on Amazon.
- You import your products to list them on Amazon.
- The customer places an order on Amazon.
- You place the order with your dropshipping supplier, such as GreenDropShip for example.
- Your dropshipping supplier then packs and ships the product to the end customer.
It’s important to remember that profit in dropshipping is based on a simple formula: retail price – (wholesale price + fees) = profit. In reality, dropshipping on Amazon is not that much different than dropshipping with your own e-commerce store on Shopify or WooCommerce. Ultimately, you’re just using Amazon’s tremendous reach and a high level of brand awareness to your advantage. You can more easily tap into Amazon’s huge customer base.
Finally, let’s use Google Trends to look at some search data. This is a free tool that tracks search interest over a given period of time, allowing us to identify wider trends:
As you can see, the search interest for Amazon dropshipping has steadily increased since 2016. This means that it’s become a more popular and viable e-commerce model over that period of time.
It’s important to note that dropshipping is not the only retail method you can use to sell on Amazon. You can also use Fulfillment by Amazon (FBA) in which your inventory is stored at Amazon fulfillment centers and Amazon staff handles packing and shipping.
Finally, if you’re using Shopify as your e-commerce platform for your dropshipping store, you can still easily sell on Amazon. That’s because Shopify allows users to add Amazon as a Sales Channel on the platform. This makes managing orders easy and convenient on both platforms by allowing you to push your Shopify product listings to your Amazon store. You’ll have to have an Amazon seller account and pay the seller fees, but it’s a great way to maximize the reach of your dropshipping store.
What Are the Benefits Of Dropshipping On Amazon?
Dropshipping on Amazon offers plenty of benefits, including:
1) Low startup and operational costs
Amazon dropshipping is not expensive for the online resellers. All you have to do is invest in an Amazon Professional Seller Account for $39.99/month and choose a dropshipping supplier. Remember, the usual expenses of running a retail operation do not apply to a dropshipping store. For example, you do not have to worry about storing, packing, or shipping inventory – your dropshipping supplier takes on those costs. Additionally, Amazon dropshipping is a low-risk business model. Because you don’t have to stock items, you’ll never end up with a surplus of unsold inventory.
2) An extensive customer base
Your store needs customers – it may seem obvious to say, but it’s important to stress that fact. The more customers, the greater potential for profits. One of the biggest benefits of Amazon dropshipping is the massive customer base. It’s a retail giant online, and it has over 300 million active users and counting. This can mean incredible profits for a dropshipping store. In fact, Amazon offers the chance to connect with customers that would not be possible if you opened your store on another platform.
3) Consumers trust Amazon
Name recognition and consumer trust are hugely important in e-commerce. Due to its enormous success, Amazon has become a retail giant in the world of online shopping. According to a 2019 study from Feedvisor, 89% of online shoppers state that they are more likely to buy products from Amazon than other e-commerce stores. This tremendous consumer trust also extends to third-party sellers and dropshippers on the platform. In other words, just having your products listed on the Amazon website gives you credibility with consumers.
4) Access to various niches
Amazon has a huge inventory of products, so it’ll be easy for you to target a niche or even multiple niches. Choosing the right niche is crucial to your success. This allows you to hone in on a target audience and focus on specific consumers. Plus, you can find a niche that has less competition from other retailers. Amazon has over 30 broad categories to choose from, with multiple niches in each. With the right supplier and a good selection of products, you can target multiple niches and enter numerous new markets. Because Amazon is the type of retail store where online shoppers go to find just about anything, they won’t bat an eye at an online store that carries various types of items. Just be sure you use these tools to find the right niche for your dropshipping business.
What Is Amazon Dropshipping Policy?
If you want to start dropshipping on Amazon, you have to be sure that you follow their dropshipping policy. In summary, you have to:
- Be the seller on record for listed products. This means that all packing slips, invoices, and package information must identify you as the seller (so that online shoppers know that you’re a third-party seller).
- Remove any information from packing slips, invoices, and package information that identifies a third-party dropshipping supplier.
- Handle all product returns (or your dropshipping supplier must handle them).
- Comply with all the terms of the seller agreement and not sell any forbidden items. The sale of illegal, unsafe, or other restricted products, including products available only by prescription, is strictly prohibited.
- Not use any apps that may have been banned by Amazon for violating their terms and policies (like Spreadr, for example).
Anyone of these may result in having your Amazon’s seller account being suspended or even banned. It’s important to note that you must be the seller on record for any items. For example, Amazon does not allow you to buy products from other online retailers and then have them shipped directly to the customer.
How To Dropship On Amazon
Learning how to dropship on Amazon is a smart move and a potentially huge boost to your profits. And here’s better news: you can learn how to sell on Amazon for free. It’s easy. Let’s start here with a step by step guide on what you need to do to start making money online.
1) Create an account
The first thing you’ll want to do is create a seller’s account on Amazon. You can open an individual seller’s account or a professional account. However, with the individual account, you’re going to be charged $0.99 per item sold. But with the professional account, you pay a subscription fee of $39.99 each month and are exempt from the $0.99 per item sold.
For a dropshipping store, the professional account is definitely the way to go. The $0.99 per item fees can eat away at your profit margins. Plus, most dropshippers have the goal to sell in high volume anyway. So it’s just a better investment to sign up with a professional account.
Registering an account with Amazon is easy. Just go to Amazon Seller’s Central and follow the prompts that will tell you what information to input.
2) Find an Amazon dropshipping supplier
The next thing to do is find an Amazon dropshipping supplier that can store and ship the products to your customers. There are also many tools you can use to find a dropshipping supplier. You’ll want to choose one that has the right inventory for your dropshipping store as well as a competitive membership price. Remember that the formula for making a profit includes whatever fees you have to pay to the e-commerce platform (Amazon, in this case) and your dropshipping supplier. Additionally, you have to make sure your dropshipping supplier can work with Amazon. Easy integration will make the dropshipping process easier and more convenient so you can focus on marketing to consumers. Don’t forget that Amazon dropshipping is different than Amazon FBA (Fulfilled by Amazon), so be sure you don’t confuse the two e-commerce models.
You can also use an online directory to find a dropshipping supplier. These provide lists of screened and vetted dropshipping suppliers. The most popular directories include:
It’s important to note that, with the exception of Wholesale Central, all of these require a membership cost to access the directory. If you’re trying to save every penny while launching your Amazon dropshipping store, you may not want to fork over the cash to look at these directories. In that case, it may be better to identify the type of product you want to sell first, and then just do a simple Google search to identify dropshipping suppliers.
For example, GreenDropShip is a premium dropshipping supplier that integrates easily with Amazon. Plus, we have over 20,000 natural and organic products to choose from, most of which are made in the USA. Natural and organic products have become extremely profitable, so a supplier like GreenDropShip can offer a huge inventory of goods that all fall under that broad category.
3) Pick the right products
In order to be successful as an Amazon seller, you’ll need to find the right products. Remember that Amazon has over 30 broad categories of products, with multiple niches in each one. You can explore these categories by using the general search function on the Amazon home page. This is a great starting point, and it doesn’t even require you to start a seller’s account just yet.
Additionally, there are other tools that you can use to find the right products. For instance, Jungle Scout’s Opportunity Finder can be used to find both the right niche and profitable products for Amazon dropshipping. Of course, you’ll have to make sure that the products you find overlap with the inventory that your supplier has available. The products will be easier to sell if they match these general criteria:
- The competition level is low or very low.
- Has a niche score of at least 7.
- At least 100 unit sales per month.
As we mentioned above, you can also use the free Google Trends tool. It’s helpful in identifying any potential trends on the Google search engine, including products or niches that could be profitable in your dropshipping store. For example, let’s look at search interest for essential oils over the past 8 years on Google:
As you can see, there’s been a steady increase in search interest for essential oils. That means that there’s a very good chance that this niche will have lots of profitable products for your Amazon dropshipping store.
4) Import Products into Amazon
Once you’ve used your tools to identify potential products and niches, then you’ll have to choose a supplier that carries these products. However, certain product categories require approval from Amazon. Fashion, beauty, and jewelry are some of the popular niches that require approval before you can start selling them. You can view the specific Amazon approval requirements for each category.
To add your supplier’s products to the Amazon catalog, you need to import them first. If you’re using an external supplier such as GreenDropShip, you just need to:
- Sign up for a dropship membership on GreenDropShip.com
- Download the product feeds and select the items you want to sell
- Upload the product feeds into your Amazon store
As you can see, GreenDropShip makes the process very convenient and easy. That’s why it’s important to choose a dropshipping supplier that fully integrates with your Amazon dropshipping store.
5) List your inventory
The next step is to create Amazon listing by adding the information specific to the products in your inventory. If you use a dropshipping supplier like GreenDropShip, then make sure you use the high-resolution images and accurate product descriptions that we include for every listing in our inventory. We created these especially to help our retailers craft informative and catchy listings that will get the attention of online shoppers. Keep in mind that Amazon has strict guidelines on product images. More information can be found on the Amazon Seller Central page.
You also need to make sure that you optimize product titles. For example, use the brand name as the first word in the title. Plus, consumers are most interested in size, color, model, and quantity, so make sure that this information can be quickly scanned by the potential customer. You can also do keyword research to find the best way to optimize product pages for search engines by using tools like Merchant Words or Google Keyword Planner.
Additionally, you need to make sure you select the shipping method. Don’t forget that you must be the seller on record, so your customers won’t know that your dropshipping supplier is the one shipping the products. As far as they’re concerned, you’ll be the one packing and shipping the items. Ultimately, that’s the benefit of using dropshipping for your Amazon store – you get to divide up the labor with your supplier while acting as the public face and identity of your e-commerce store.
6) Start Selling
After entering the product details, click “Save and Finish” and you are ready to sell your products!
Once you get sales, you’ll want to make sure Amazon is charging you correctly for shipping fees. Sometimes item descriptions like the color on an identical product can cause Amazon to charge inaccurately for shipping the item. Weight information could also be incorrect. So it’s important after selling a product to make sure shipping charges are correct.
Tips for Successful Amazon Dropshipping
Once you set up your Amazon dropshipping store, make sure you follow these simple tips to drive sales and profits:
- Make sure your prices are competitive – You can follow these simple guidelines for pricing your items in your dropshipping store. Essentially, you have to make sure that they’re higher than the wholesale price plus fees, but not so high that online shoppers go elsewhere (or to another third-party seller on Amazon). It’s a delicate balance and it might take some practice.
- Take advantage of the right tools – There are plenty of useful apps for Amazon dropshipping, including price trackers, product research, customer review programs, paid all-in-one tools, and accounting software.
- Get the Buy Box – These are the sellers who are displayed on a listing with the ADD TO CART next to their name. This is valuable real estate on the Amazon product page since most sales come from the Buy Box. To be approved, you’ll need a high seller rating of at least 95%.
- Keep your seller rating high – This is important, as it indicates to online shoppers that your store has high customer satisfaction. It also results in fewer refunds or returns. Make sure you choose a dropshipping supplier that ships quickly and effectively.
- Create an Amazon coupon – Log in to your Seller Central account and select Coupons from the Advertising menu. Then you can create a new coupon and determine how much discount you’d like to give. Everyone loves a good deal, so this can be a great way to build up a customer base.
- Use an Amazon Ads campaign – You can also use Amazon Sponsored Products ads. They have a competitive cost per click (CPC) and your products will show up at the top of an Amazon search.
If you set up your store properly and choose the right supplier that integrates with Amazon such as GreenDropShip, there is plenty of money to be made through Amazon dropshipping. This retail giant makes dropshipping easy and the sky is the limit in terms of earning potential for an online retailer. With its massive customer base and brand recognition, it’s an excellent dropshipping partner that will most definitely help you grow your online business.
Want to start dropshipping on Amazon with GreenDropShip as your supplier? Join us now and get started!