Considering Amazon’s dominance in the eCommerce industry, it’s not surprising that many dropshippers aspire to sell through this platform. Amazon is trusted by many sellers and buyers, particularly because of its strict policies and standards that uphold, among other things, safe buying and a positive selling experience.
However, these same strict policies cause many aspiring entrepreneurs to grapple with this question: Is dropshipping allowed on Amazon? Well, the quick answer is yes. But unlike other platforms where you can simply give your suppliers full control over the product fulfillment process, dropshipping on Amazon is a little trickier.
Don’t worry. In this guide, you’ll learn how dropshipping on Amazon works, how you can set up an Amazon store, and what best practices you can implement to protect your account, publish your listings, and start earning.
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How Amazon Dropshipping Works
As mentioned earlier, dropshipping on Amazon is allowed but is a little bit more complicated than the traditional dropshipping model. If you need a refresher on how a dropshipping business works, take a look at the diagram below.
Given this model, what most suppliers do is ship out items without the retailer’s brand name, allowing them to work with as many dropshippers as possible without incurring customization costs. Not only that, but suppliers also include their warehouse address on packing slips so that couriers and buyers know where to return the package in case issues arise.
These practices are generally acceptable, but not when it comes to Amazon. Here are some Amazon dropshipping policies you should know:
As you can see, Amazon wants dropshippers to manage their store as if they’re a brand selling their own products. They don’t want the details of your third-party suppliers sent to your customers, and not complying could result in suspension or termination of your seller account.
So how can you dropship on Amazon? There are two ways. But before we discuss that, you should know that there are Amazon dropshippers out there, particularly sellers who source their products from Walmart, who try to trick the system.
They list goods on Amazon, order from Walmart using their buyer’s details, and then have the order shipped from Walmart straight to their customer—yes, with Walmart’s details on the packaging. This is a policy violation, but these sellers hide their practice through several ways, including taking advantage of Amazon’s Feedback Removal request to delete customer reviews that mention Walmart packaging.
We don’t recommend imitating this practice as it will eventually lead to account termination. Instead, you can follow the rules, do one of the two suggestions below, and set up your Amazon store for long-term business.
Dropship with Custom or Private Label Packaging
This works the same way as the traditional dropshipping model, with the addition of finding suppliers or a third-party logistics (3PL) partner who can customize packing slips.
It will be easier if you opt for suppliers experienced in Amazon dropshipping. This way, you will have little to no problems in branding packages and handling possible post-shipment concerns, such as order tracking and returns.
Note that private label packaging may incur additional costs, especially if you haven’t built a strong partnership with your suppliers or your chosen 3PL company. With that, be sure to consider the total fulfillment cost before pricing your products on Amazon.
Dropship via FBA
The Fulfillment by Amazon (FBA) program is one of the least cumbersome means of fulfilling orders while ensuring full compliance with Amazon’s policies.
Once you get accepted to the program, you can order inventory from your supplier, have the goods shipped to the nearest or most strategic Amazon fulfillment center, and then let Amazon handle the storage, packing, delivery, and return of products.
Take note that FBA isn’t free and could defeat the advantages of dropshipping (namely, low startup and overhead costs) if you pursue it without sufficient preparation. With that, it’s best if you start with a less expensive fulfillment method (like dropshipping with private label packaging), learn more about FBA and its fees, and decide later on if enrolling in the program would be profitable for your dropship store.
Benefits of Dropshipping with Amazon
Being the world’s largest eCommerce company, Amazon offers advantages that you won’t find on other platforms.
Creating an Amazon seller account gives you access to plenty of niches to sell in. Plus, you can take advantage of the fact that millions of shoppers visit this site every month.
If you want swift shipments, Amazon’s fulfillment centers can help you out. These and more can help you reach the right shoppers, sell more, and eventually scale your dropship store.
Amazon gets around 200 million visitors every month—sometimes even reaching over 2 billion. This huge amount of traffic gives your store the potential to reach a large audience. Some Amazon SEO strategies here and there, coupled with alluring products at the right prices, and you have a high chance of converting visits into profitable purchases.
As of this writing, Amazon has 36 product categories where you can select one or multiple niches. These include electronics, household products, baby products, toys, and pet supplies, to name a few.
You can sell products that fall under as many niches as you prefer. Just take note of Amazon’s selling guidelines as certain categories and products may require you to secure the platform’s pre-approval before you can sell.
Amazon has more than 185 fulfillment centers in different parts of the world, 110 of which are in the United States. This enables the platform not only to provide plenty of warehouse space to FBA sellers but also to ensure faster and hassle-free deliveries.
Integration Software Compatibility
If you have an existing eCommerce website or shop outside of Amazon, you may have the option of connecting or integrating it into your Amazon store. This is doable if you have the right tools, like eBay-Amazon integration software and Shopify-Amazon integration.
Some brands and manufacturers use Amazon simply as an additional sales channel for their eCommerce business. And integration software compatibility makes it easy for them to expand their reach without setting up new stores from scratch.
How to Start Dropshipping on Amazon
Now that you know the benefits of Amazon dropshipping, let’s talk about the steps to create your own eCommerce store on the platform. These include registering for a seller account, finding products to dropship, getting them approved, posting products for sale, and finally, promoting your store.
Setting up your Amazon Seller account
To set up an account, go to Amazon Seller Central and enter your name, email address, and desired password. Once that’s done, the site will ask you to provide your business details, including your business address and tax information.
You’ll be given two account options: the individual seller plan and the professional seller plan. The former is best for small-scale businesses and people who simply want to get personal items off of their hands. It’s recommended for anyone who expects to sell only up to 40 units of their product every month.
Meanwhile, the latter is best suited for entrepreneurs who want to sell well and earn a regular income from Amazon. Sellers who opt for this account may sell as many units as they are able, and they also become eligible for Amazon’s Buy Box or Featured Offer as well as the FBA program.
Both plans also have corresponding fees. Individual sellers have to pay a fee per item sold, while professional sellers need to pay a fixed monthly subscription fee. For you to better understand the difference between the two plans, take a look at the selling plan comparison chart below.
Aside from the fixed fees, you must also be mindful of additional charges your store may incur, such as the referral fees that apply to certain categories, refund administration fees, and closing fees. Check out the Amazon Fee Schedule for more details.
Finding products for dropshipping
You will need to find products to sell on your eCommerce store. Ideally, the product should be in-demand but not sold by many stores. This way, you’ll ensure that the competition is low or that the market isn’t already oversaturated by sellers of the same items.
You may use online tools to scout high-demand but low competition products. Just beware of the fees they may charge.
Additionally, you’d want to sell products whose suppliers are experienced or at least familiar with Amazon dropshipping. Don’t just choose good products—choose suppliers who can fulfill orders per Amazon’s standards.
Getting your products approved
As mentioned earlier, some products and categories require Amazon’s pre-approval before you can post or sell them in your shop. Examples include jewelry, music, videos, grocery, gourmet food, and watches.
Also, be mindful of Amazon’s restricted products, as listing them on your store can immediately lead to the suspension or termination of your seller privileges. In some cases, Amazon may also take legal actions against sellers found to be offering restricted goods.
Posting your Amazon Listings
Once you’ve secured your ideal supplier, products, and approval from Amazon (if your chosen category or goods require it), you can now create a listing for each of your products.
On your Seller Central account, go to the Add a Product page under the Inventory tab. Click on Create a new product listing so you can start filling out details like the product category, information, and price.
Promoting your Amazon store
Now that you’ve populated your dropshipping store with products, you can now promote it using customer acquisition strategies. You can start with Amazon’s own advertising system, Amazon Pay-Per-Click, which allows you to bid for keywords so your ads can show up on relevant Amazon search results.
Amazon PPC is not only a quicker way to start promoting your store; it also helps your product listings stand out from the approximately 120 million items for sale on the platform. Executing this properly will help you sell faster while increasing your organic ranking against competitor dropshippers.
Tools for Amazon Dropshipping
There are various Amazon seller tools you can use, regardless of whether you’ve opted for an Individual or Professional Seller plan. These tools may be free or paid, and they could help you optimize your store, set competitive prices, and manage customer reviews, among others.
Keyword Research Tools
Keyword research tools, like Google Trends and Helium10, can find the latest trending searches related to your products. This feature can help you optimize your listings so they’re more likely to pop up on search results.
Additionally, finding and targeting the right keywords can also help you create marketing campaigns that drive qualified traffic to your store.
Many Amazon repricing tools, including RepricerExpress or Sellery, are available on the market to help you with competitive pricing. Using such tools, you can track your competitors’ pricing, observe price changes, and come up with pricing strategies to make your items more appealing to customers.
Helpdesk tools like eDesk consolidate all customer concerns into a single inbox so you or your customer support team can monitor and resolve them quickly. These tools usually enable you to view the location a message was sent from, how long you have left to reply, and the sender’s order details. Some tools also provide response templates you can use or customize.
Review Management Software
Review software like FeedCheck organizes all reviews about your store in one place. This lets you view your customers’ feedback more efficiently, collect insights, and plan out how you can address the gaps in your products and service. For sellers who intend to list multiple products on their store, this will surely be a timesaver.
With the right strategies and tools, Amazon dropshipping can be a very profitable business. This platform has plenty of benefits for sellers, and you can take advantage of them by setting up a seller account, finding suppliers, selecting high-demand, low competition products, and getting your products out for the world to see.
When you’re ready to scale, it’s also a good idea to invest in reliable software to optimize your store and provide stellar customer support. Remember: tools can only work wonders if used well, so be sure to use—not just read and then forget—what you’ve learned from this guide.