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  • How To Dropship On Amazon? Amazon Dropshipping Complete Guide

by Mike Vestil 

How To Dropship On Amazon? Amazon Dropshipping Complete Guide

Dropshipping is a model through which eCommerce entrepreneurs sell products without having any inventory in stock. This has many advantages over other business types, which is why the trend of launching eCommerce businesses following this model has become so popular in recent years.

Leverage the popularity of eCommerce giants Amazon, you can set up your dropshipping business in a few different ways that can all lead to profitability. In this article, I'll discuss why you should dropship on Amazon and how to get started.

By the end of it, you'll know everything you need to launch your own successful dropshipping business on Amazon.

Let's get right into it.

How Does Dropshipping Work?

The dropshipping concept is pretty straightforward. When a store owner receives an order from a customer, they contact the supplier, who will ship the products directly to the customer's doorsteps. This business model has become increasingly popular in recent years due to its many advantages when learning how to make money without a job.

As a side note, while Amazon is one of the biggest online marketplaces in the world, it's not the only option available for entrepreneurs looking to start a dropshipping business. For example, dropshipping on Shopify is also an option.

How Do You Make Money Dropshipping On Amazon?

To make money dropshipping on Amazon, you must find suppliers willing to offer you their products at a lower rate than you can sell them. You can then list these products on Amazon and charge a higher price. Then, when someone buys the product from your listing, the supplier comes into the picture and has the product shipped directly to the customer. The difference between the price you charged and the price you paid for the product is your profit.

How Do You Make Money Dropshipping On Amazon?

Does Amazon Allow Dropshipping? Amazon Dropshipping Policy

Amazon has strict policies when it comes to dropshipping. The main rule is that you need to be the seller of record when delivering sold items. Anything other than that would be going against Amazon's terms of service.

In practical terms, this means that when you sell items, the buyer must receive the package as if it's coming from you; when it comes to anything from invoices, external packaging, or packing slips, this rule applies. You're not allowed to use the dropshipper's branding on any of the mentioned items.

This is done to ensure that the customer knows who to contact for help if there are any problems with the product, delivery, or anything else related to the purchase. Failure to observe this policy can result in your account no longer being able to use Amazon's Merchant Fulfilled Network (MFN) to sell products.

This means that you need to find a supplier willing to ship products directly to your customers on your behalf while also branding the packaging with your company name and logo.

Is Dropshipping On Amazon Worth It And Profitable?

Yes, amazon dropshipping can be profitable if done correctly. One of the main reasons is the ease of getting started. You don't need much money to start a dropshipping business on Amazon. You only need a laptop, an internet connection, and a few hours each day.

Another reason Amazon dropshipping can be profitable is that there are millions of people already shopping on Amazon. This gives you a ready-created audience of potential customers to market to.

However, to be successful with dropshipping on Amazon, you need to find high-quality products at low prices so you can offer them at competitive prices on Amazon. You also need to create listings that convert well and drive traffic to your listings. If you can do these things, then you can be successful with dropshipping on Amazon.

How To Start Dropshipping On Amazon

Want to learn how to start dropshipping for free on Amazon?

Depending on your industry, the products you sell, and other factors, you could start your own dropshipping business for very little money or even for free.

Here are the steps you need to take when considering how to start dropshipping on Amazon.

Find The Right Niche/Market Sub Section

The first step is to find a niche or market to sell to. A niche is simply a group of people with shared interests or needs. You'll need to research and find a suitable niche for your Amazon dropshipping business. There are various ways (and industry-based tools) to do niche research, but using Google Trends is an excellent place to start.

Here you can type in various niche ideas and see how popular they are. For example, if I type in "pet supplies", we can see that it's a somewhat popular niche with an interest that is quite seasonal.

Find The Right Niche/Market Sub Section

On the other hand, if I look at the term 'cloud computing', the interest in the topic is pretty high and consistent.

Find The Right Niche/Market Sub Section

For those that sell eCommerce products and services related to this niche, Google Trends results indicate there is still money to be made.

You can also look at areas where you have expertise or knowledge. Emerging trends can help you get in on a niche before it becomes too competitive.

Source Products To Sell

Once you've decided on a market, sourcing products to sell in that niche is the next step. To do this, you'll need to find a supplier that can produce products that would be appealing to your target market. There are various ways to find suppliers, but using Google Search is always a good start.

You can also try using AliExpress. This marketplace allows you to find Chinese suppliers for various products. The prices on AliExpress are often very low, which can help you offer competitive prices on Amazon. When determining your final price, be sure to factor in the shipping cost.

In the next section, I'll get into more detail about finding the right supplier.

Create Listings For Your Products On Amazon

Once you've found a supplier and sourced products to sell, the next step is to create listings for your products on Amazon. To do this, you'll need to sign up for an Amazon seller account.

Once you've done this, creating a listing on Amazon is pretty straightforward. You'll start by entering the product title, description, price, and other relevant information. You'll also need to upload product photos and choose a category for your listing.

After your listing is live, you'll need to monitor it closely to ensure there are no errors or problems. This is especially important in the early stages when you don't have many sales yet.

Optimize Your Product Listings For Maximum Visibility

To succeed with Amazon dropshipping, you need to optimize your product listings for maximum visibility. There are various ways to do this, but one of the most important is to choose the right keywords.

Choosing the right keywords will help ensure that your listing appears in relevant search results. You can use a tool like Google Adwords Keyword Planner to find the right keywords that people are advertising for. While these are not directly correlated to Amazon, they can be a great starting point when determining what keywords to use in your product listings. 

You can also use a tool like Merchant Words to see what people are searching for on various eCommerce platforms. This can also give you insight into what keywords you should target.

Work With Your Drop Shipper To Manage Your Inventory Levels

There's no point in having customers order products from you if you (i.e., your supplier) don't have the inventory to fulfill their orders. That's why it's essential to work with your drop shipper to manage your inventory levels.

Your drop shipper should be able to provide you with regular updates on the status of your inventory. They should also be able to give you a heads-up when stock is running low so that you can make adjustments to your listings accordingly.

Of course, it's ultimately up to you to decide how much inventory you want to keep. But, as a general rule of thumb, it's always better to err on the side of caution and keep more inventory on hand than you think you'll need. This will help ensure you never run into a situation where you can't fulfill an order.

Process Orders And Ship Products To Customers

Once you start receiving orders, it's time to process them and ship the products to your customers. You'll need to log in to your Amazon seller account and select the "Orders" tab. From there, you'll be able to see all of the orders that have come in.

Provide Customer Service And Handle Returns

Providing good customer service is essential for any business, but it's critical to the world of Amazon dropshipping. This is because customers can leave reviews for your listings. 

Responding to all customer inquiries promptly and courteously is essential. You should also have a process in place for handling returns and refunds. According to Amazon's policies, you have two business days to issue a refund for any returnable items.

Track Your Business Performance Metrics

If you want to be successful with Amazon dropshipping, you need to track your business performance metrics. This will help you identify areas where your business is doing well and areas where there's room for improvement.

Track Your Business Performance Metrics

Image credit: https://www.ntaskmanager.com/blog/business-metrics/

Some of the most critical performance metrics to track include:

  • Sales volume
  • Order Value
  • Average order processing time
  • Customer satisfaction rating
  • Number of customer complaints

There are various tools you can use to track these metrics. For example, Amazon provides a Seller Central Dashboards tool, which gives you an overview of your business performance. Additionally, there are various third-party tools like Feedback Genius, which can also help stay in control of different Amazon selling operations.

Scale Your Business By Adding More Products And Expanding To Other Sales Channels

As your Amazon dropshipping business grows, you'll need to start scaling it to keep up with the demand. There are a few different ways you can do this:

  • Add more products: One way to scale your business is by adding more products to your catalog. This will give customers more choices and help you boost sales.
  • Expand to other sales channels: Another way to scale your business is by expanding to other sales channels like eBay or your very own eCommerce store. This will help you reach a wider audience and boost sales even further.
  • Hire additional staff: As your business grows, you may need extra staff to help with tasks like customer service, order processing, and shipping.

Amazon Dropshipping Guide For Finding Suppliers For Amazon

Finding the right supplier is critical to your success when dropshipping on Amazon. A good supplier will have specific elements that can help you build a working relationship quickly. Here are some elements to look out for in your search for a great supplier.

Location

The location of your supplier matters for two reasons. First, it affects shipping times. If you're dropshipping on Amazon, customers expect fast shipping, so you'll want to work with a supplier who can ship quickly. Second, location affects costs. Shipping from China, for example, is often cheaper than shipping from the United States.

Pricing

Pricing is, of course, a significant factor to consider when dropshipping on Amazon. It would help if you found a supplier whose prices fit your business model. Remember, you'll be marking up the prices of the products you sell, so you must ensure there's room for profit.

Minimum Order Quantity (MOQ)

The minimum order quantity (MOQ) is the smallest amount of product you can order from a supplier. Some suppliers have high MOQs, which can be a problem if you're starting and don't need many products. Make sure you find a supplier with a realistic MOQ for your business.

Product Quality

The quality of the products you sell is important for two reasons. First, it affects customer satisfaction. Customers unhappy with the products they receive will likely leave negative reviews, damaging your reputation. Second, poor-quality products are more likely to be returned, which can eat into your profits. Thus, finding a supplier whose products meet your standards is critical.

Return Policy

A good return policy is essential for two reasons. First, it shows that the supplier is confident in the quality of their products. Second, it gives you a safety net in case something goes wrong with an order. Ensure you understand a supplier's return policy before working with them.

Supplier History

When looking for a supplier, it's essential to do your research and ensure they're reputable. An excellent way to do this is to check out their history. See how long they've been in business and their track record. This will give you a good idea of whether or not they're a reliable partner for your business.

Communication And Customer Service

Supplier communication is critical when dropshipping on Amazon. It would help if you communicated your needs clearly from the beginning and found a supplier that matched the cadence of your communication. A great way to gauge a supplier's communication skills is to send them a few test emails before you commit to working with them and test their response time

Scalability

When starting out, finding a supplier who can scale with you as your business grows is essential. You don't want to switch suppliers whenever your business hits a growth spurt.

Amazon Compatibility

If you're planning on Dropshipping on Amazon, finding a supplier compatible with their platform is essential. That means they need to be able to provide you with the necessary product information, ship quickly and meet Amazon's other requirements.

Amazon Dropshipping Tools For Automation

Succeeding with the dropshipping model on Amazon requires a good system to manage your orders, track your inventory, and list your products. Fortunately, there are several tools available to help you with these tasks.

Email Marketing

Email marketing tools can help you automate your marketing efforts and stay in touch with your customers. They can also help you segment your customer list and send targeted messages to different groups.

Some of the things you can do with an email marketing tool include:

  • Creating and sending automated email campaigns
  • Segmenting your customer list
  • Tracking who opens and clicks on your emails
  • Setting up triggered emails (such as abandonment cart emails)

Automated Task Management

Automated task management tools can help you automate various tasks related to your dropshipping business. This can free up your time to focus on more important things, such as finding new products and suppliers.

Some of the things you can automate with a task management tool include:

  • Inventory management
  • Order tracking
  • Customer service tasks
  • Listing products on Amazon

Customer Service

Customer service is a critical part of dropshipping on Amazon. You need to be able to respond quickly to customer inquiries and complaints. A customer service tool can help you manage customer interactions and resolve issues more efficiently.

From creating a knowledge base of Frequently Asked Questions (FAQs), automating customer service tasks, and responding to customer reviews, a customer service tool can help you provide an excellent experience for your customers.

Product Management

Finding products to sell on Amazon can be a time-consuming task. A product research tool can help you automate this process and locate high-quality products in demand.

Using the right tools can help you with inventory management, which, as discussed earlier, is key to succeeding with dropshipping. 

From automatically updating your listings when inventory levels change, to setting up price alerts, and everything in between, a product management tool can help you save time and money.

Dropship On Amazon - FAQ

Is Amazon Dropshipping Legit?

Yes, amazon dropshipping is a legit business model. You can find many successful dropshippers on Amazon. The key to successfully starting dropshipping on Amazon is having a reliable list of suppliers and a sound system for managing your orders and tracking inventory.

What's The Difference Between Dropshipping And Amazon Fba?

When it comes to dropshipping vs Amazon FBA, there are a few key differences to be aware of. Dropshipping is a business model where you sell products without carrying any inventory. Amazon FBA is a fulfillment service offered by Amazon. With FBA, you send your products to Amazon, and they store and ship the products for you.

What Is Automated Amazon Dropshipping?

Automated amazon dropshipping is a business model where you use software to automate your dropshipping business on Amazon. You can automate product listing, order fulfillment, and customer service tasks.

Why Is Amazon Dropshipping Popular In 2022?

The first reason is that the COVID-19 pandemic led to a surge in online shopping. This has created an excellent opportunity for dropshippers to sell products online. Second, Amazon is one of the world's biggest and most trusted eCommerce platforms. This gives dropshippers access to a large potential customer base.

Is Amazon Dropshipping For Beginners Also Possible?

Yes, amazon dropshipping is possible for beginners. However, it is essential to note that it will take some time and effort to be successful. Earning money online through Amazon dropshipping is possible if you do the work.

Can You Do Self-Hosted Dropshipping?

Yes, you can do self-hosted dropshipping if you know how to create a dropshipping website and understand eCommerce well to succeed.

As such, it's easier to start with a platform like Amazon and build up your business from that point onward.

What Is Reverse Dropshipping?

Reverse dropshipping is a business model where you buy products from a supplier found in the United States (or any other country with the highest quality of suppliers) and have those products shipped directly to your customers in other countries.

Conclusion

Dropshipping on Amazon can be a great way to start or grow your eCommerce business. However, it's essential to choose your suppliers carefully. By keeping the above factors in mind when looking for a supplier, you can find one that's a good fit for your business.

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About the author 

Mike Vestil

Mike Vestil is an author, investor, and speaker known for building a business from zero to $1.5 million in 12 months while traveling the world.

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