Everybody knows what Amazon is. It is the biggest and one of the most visited online retail stores offering a wide range of products worldwide.
Have you ever thought of becoming an Amazon seller and grow your business through this online shopping app?
What if you don’t have enough capital for a substantial inventory? That is where dropshipping comes in.
We will show you how to dropship on Amazon, check its pros and cons, and understand if it is worth your time and effort.
What Is Dropshipping?
If you are not too familiar with this digital trade, let us first discuss dropshipping in brief.
Dropshipping is an online business model where you sell items that you don’t have in stock.
As a drop shipper, you have to look for trusted suppliers of products you want to sell in your online store, increasing the price as you post them.
Once a customer buys one of the posted items on your page, you forward the order details and the buyer’s information to your supplier.
You also pay the supplier with the item’s discounted price as you get your share of the profit from the marked-up price paid for by your customer.
At this point, packing and shipping the item to the customer lies with the supplier.
However, your buyer will still be contacting you for follow-up or if there’s a problem with the product.
That’s the essence of dropshipping. You can start selling online even without large capital and earn by only posting items online.
Nevertheless, you are responsible for maintaining your digital store.
You have to ensure that you take care of all your customer’s concerns related to his purchase.
Are You Allowed to Dropship on Amazon?
Does Amazon allow dropshipping? It’s one of the most frequently asked questions, especially from those new to e-commerce.
The simple answer is yes. Amazon allows dropshippers provided that they follow the platform rules, such as:
- You are the seller of all the products in your online store.
- Your information must appear on the product’s invoice and packing slip.
- The third-party supplier information must not show on any part of the order.
- You must handle all customers’ concerns about the product.
- You must abide by all the terms found in the seller agreement of the Amazon policies.
Amazon became one of the major e-commerce platforms because they provide opportunities for vendors, big or small, to use the website and market their products.
Does Amazon allow dropshipping? We have proven that they do. Aside from the guidelines stated above, below are additional rules to take note of to prevent account suspension:
- Your store’s order defect rate must not go beyond one percent of your overall shipped orders. A delivered item with negative feedback, an A-Z claim, or a chargeback is considered defective.
- Your cancellation rate must not exceed two and a half percent. These are canceled orders, either by you or the customer, before shipment confirmation.
- The late shipment rate is another factor to consider. You must not surpass four percent to avoid account suspension.
Image Source: Wikimedia Commons
Is Dropshipping on Amazon Profitable?
You may be wondering how to make money dropshipping on Amazon.
Is it profitable to venture into this business model?
Getting into Amazon dropshipping can be lucrative, with its average limit of ten to 30 percent margin.
Amazon typically takes 15 percent off your profit; thus, if you reach the 30 percent margin, you will get the remaining percentage after the sales.
Dropshipping on Amazon is one of the most economical ways to start an online store since you don’t need considerable upfront money.
You also have the opportunity to reach a larger market compared to selling your products on your website.
How Do I Become a Dropshipper for Amazon?
Now that we have confirmed that Amazon allows dropshipping, naturally, your next query is how to start a dropshipping business on Amazon.
Here is a step-by-step guide on how to start a dropshipping business on Amazon:
1. Create an Amazon Seller Account
To create an Amazon seller account, you need to go to sellercentral.amazon.com.
From there, you need to choose whether you are making an individual or a professional seller account.
An individual Amazon seller account is for vendors who can sell 40 items or less every month.
In contrast, a professional Amazon seller account is for vendors who can market more than 40 products monthly.
2. Find the Right Products to Sell
Look for a high-demand product that does not have a lot of competition.
Be wary of Amazon’s requirements and restrictions when it comes to product choices.
There are plenty of product categories to choose from that do not need approval.
You can sell books, computers, electronics, office products, and video games, to name a few.
Beauty, fashion, and jewelry are some niches that need approval from Amazon; hence, you need to review the requirements for these product categories.
If you are a beginner, it is better to sell low-maintenance items first, such as housewares, home and garden products, or sports and outdoor items.
3. Find a Supplier
Once you decide on a product category, it’s now time to find a trusted supplier.
You can get your items directly from the manufacturer, a wholesaler, or a fulfillment center.
On the other hand, you can also check other online retail websites catering to small businesses searching for sellers who can market their products.
4. Create an Amazon Product Listing
If you have found a supplier for your chosen product, you can now make an Amazon product listing.
On your Amazon Seller Central account, go to inventory and choose the add a product option.
A screen pop-up will appear, then click on “Create a new product listing.”
Choose the product category and fill out the details about your listing. Remember Amazon fees when pricing your items.
Professional sellers have to pay a specific percentage based on their product category.
In comparison, individual sellers must pay Amazon a dollar for every completed sale.
After completing the details about your product, you can now click on publish so customers can see it on Amazon pages.
What Are the Benefits of Amazon Dropshipping?
We now have a better understanding of this business model and how to make money dropshipping on Amazon.
Let us also take a closer look at the benefits of this venture.
No Warehouse Cost
Dropshippers don’t have to spend extra cash for stocking products in a warehouse because Amazon does it for you.
The platform also offers FBA or Fulfilled by Amazon, where the sellers send the items to Amazon.
From there, Amazon fulfills the order by shipping it to the customer.
Amazon Suppliers
Amazon buys most of its products from European suppliers in bulk and then stocks them in their warehouse.
Amazon also takes care of everything related to the purchase, including returns and customer service, even for international customers.
Amazon account managers help all of their suppliers to grow their businesses internationally by providing strategic guides to increase their profits.
Multiple Product Categories
Amazon offers multiple product categories, providing you more options to choose your preferred niche target.
You can even select more than one niche for different customers.
Large Market
Businesses selling their products on Amazon have a bigger chance of making money because of the platform’s massive number of active users.
If a vendor knows what products to sell and offers them at an affordable price, customers will notice and increase sales.
You can take a hint from Becky Beach, who started her online boutique business in 2015 selling handbags.
Since Amazon has an established market, small-time sellers have a bigger chance of attracting and expanding their customer range.
What Are the Downsides of Amazon Dropshipping?
Of course, we cannot have the advantages without the disadvantages, and dropshipping is not exempted.
Here are some of the most common ones:
Competition
Since setting up a dropshipping business does not require substantial capital or paperwork, you will encounter lots of competition.
Although Amazon offers multiple product categories, there are still plenty of vendors selling similar items.
It’s now up to each seller to market their goods and how low they can price their products to stay in the competition.
Slow Delivery Time
Most drop-shipped goods come from suppliers and manufacturers overseas, taking longer delivery time to the customers.
Lack of Quality Control
Since the sellers don’t have the products’ inventory, and all items are shipped directly to the customers, they are not aware of their quality.
The long travel time from the supplier to the customer may also damage the product, resulting in negative feedback or complaints.
Can I Dropship From AliExpress to Amazon?
AliExpress, like Amazon, is an online retail store and dropshipping platform owned by the Alibaba Group based in China.
Since both platforms attract a huge following, more people have the chance to explore and try dropshipping from AliExpress to Amazon.
So if you are still asking if you can dropship from AliExpress to Amazon, the answer is a resounding yes.
Amazon sellers can choose a product from the AliExpress webpage and copy the product details, including the images, to their Amazon accounts.
You can mark-up the price as you publish the product to your Amazon seller account.
When a customer buys that item, AliExpress will send it directly to your customer from its warehouse.
Following the dropshipping process, Amazon only receives the order but will not have access to the product.
It’s the best business setup for newbies in the e-commerce industry.
Amazon is your seller platform, and AliExpress acts as your supplier.
How to Succeed in Amazon
If you want to know more on how to make money dropshipping on Amazon and succeed, here are additional strategies that you can follow:
Win the Buy Box
What is the Amazon Buy Box? It’s the white box found on the right side of a product detail page, allowing customers to add the item to their cart.
Only professional seller accounts selling new items and with excellent metrics have the chance to win the buy box button.
Also, sellers must have an inventory of their posted product and ship it immediately within 14 days from the order date or lose their eligibility to win the buy box button.
The overall product cost must be lower than the other sellers is also part of the metrics for the buy box eligibility.
95% Seller Rating
Having a high seller rating is crucial to your business. Most vendors aim for at least a 95% or higher rating to boost their store.
Customers are more likely to trust your Amazon store and chance upon your business as they search the Amazon platform.
Do Keyword Research
Part of your Amazon product page optimization is using the right keyword.
Do some research and look for the most used keywords by the customers.
Using the right keywords on your product detail pages helps put your online store on a higher ranking during searches.
You can use online tools to do your research, like Merchant Words and Amazon ads, to help you target the right customers for your store.
Set-Up Competitive Prices
Ensure that you price your items with high margins, so you still profit after paying off Amazon fees and other charges.
However, your pricing should still be competitive with other sellers if you want to make a sale.
Optimize Product Title
Create product titles related to customer searches to get your customer’s attention. Avoid adding too many keywords on your item headings.
Professional sellers suggest that the title’s first word must be its brand name since customers often use it during searches.
Promote Your Listings
If you want to boost your sales, you need to promote your products and your store to lure customers into your webpage.
There are plenty of ways of directing traffic to your product page by utilizing technology through social media, email marketing, blogging, and more.
How to Dropship on Amazon: The Conclusion
Learning how to dropship on Amazon is a great help, especially for new online sellers who want to venture into this business model.
Professional sellers and veteran entrepreneurs will also benefit from Amazon dropshipping, boosting their business and attracting more buyers.
If you are serious about pursuing the dropshipping business, it is better to know some legalities and other legal requirements you need.