How to start Amazon Dropshipping business?

Have you ever wondered if there is a way to lead an e-commerce business model without a hustle with private labeling, huge expenses on manufacturing, and long, annoying conversations with potential product suppliers? Well, you should've, because it actually exists, and we are here to tell you about it. Ever heard of Amazon dropshipping? Get ready to know it better.

What is Amazon dropshipping?

Amazon drop shipping (or dropshipping) is the process of selling a product of a third-party manufacturer in your Amazon store without the responsibility of carrying inventory or shipping the items. It sounds a lot like the distribution, but easier for you as the seller. Technically, you only handle customer support and a few logistics by placing your customers' orders on the manufacturer's page with the correct address. The rest - products manufacturing, inventory managing, and shipment - lays on the supplier's shoulders. 

What Is Amazon Dropshipping?

Related: New Dropshipping Strategy That Complies With Amazon's Policy

Amazon FBA vs Dropshipping: which model to choose for a successful business

Is dropshipping allowed on Amazon?

As many sellers are interested in dropshipping, the world's biggest and ever-growing online market couldn't ignore it. So the answer to the most crucial question is positive: Amazon dropshipping business is legal. Although, there are some strict rules you should follow. Before starting, please make sure that you understand Amazon’s guidelines on dropshipping:

All invoices, packing slips, external packaging, and any other information included with the product must only indicate you as the seller. The mentioning of your supplier or manufacturer is strictly prohibited. 

You must fulfill the customers' service, like accepting and processing returns.

You must comply with all terms of your seller agreement and Amazon policies.

In other words, your account can be suspended if you:

• Ship your customers the goods purchased from another online retailer with the name of this retailer on the package.
• Have packing slips, invoices, or other information indicating a manufacturer's name or contact information instead of your own.

In both cases, your customer will be very confused, and you don't want this to happen because the kickback will be disastrous. Take it as a rule: Amazon always cares about the buyer more than about a seller, so you have to do everything you can to make your customer happy and comfortable. 

Related: Amazon Seller Compliance Documents

Do You Need a Business License to Sell on Amazon?

How to dropship on Amazon?

New sellers usually have an avalanche of questions about the first point of Amazon's drop shipping policy. Many Amazon dropshipping guides advise using Fulfilled by Amazon (FBA) program for this matter. With FBA, you have to send the preordered products directly to Amazon’s warehouses, where it is stored and then shipped directly to the customer (often through 2-day Prime shipping). This method works nicely for experienced sellers with a large number of goods and stable income, although for new sellers as well as for those who don't want to pay Amazon more than they really have to, there is another way. 

You can ask your manufacturer to mark you as the one and only seller on the packaging information and use the Fulfillment by Merchant (FBM) program. This is the simplest way to get into dropshipping without extra expenses, as the manufacturers usually agree to provide this service rather for free or for an insignificant price. 

Friendly advice: in both ways, order a sample before starting the sales to make sure that everything looks exactly as you need. 

Difference between online arbitrage and dropshipping

How much money do you need to start dropshipping on Amazon?

First of all, you have to sign up as an Amazon seller. There are two seller plans: Individual and Professional. The Individual plan costs $0.99 per unit sold and the Professional - $39.99, regardless of how many goods you sell. And don't forget about Amazon fees. They vary by product type, but statistics show that they typically are in the 10 - 15% range in dropshipping, so you need to include it in your expenses list to avoid problems in the future. If your profit margins are relatively small, they may strike you, so better prepare yourself.

Speaking of which, profit margins must interest you first place if you wonder how to make money dropshipping on Amazon. The average seller sets a price higher on 10 - 30%, depending on experience and niche interest in the product. The platform takes up to 15% off the top revenue, but the fee feels less damaging to the business with a higher margin. So it is in your interest to dive deeper into the process instead of agreeing with a medium income.

Nevertheless, keep in mind that the usual Amazon business costs a lot more to start. Yes, if it's successful, it brings more income, but to start selling even one product as a Private Label, you have to invest more than $20 000. So dropshipping is the easiest way.

Related: Online Arbitrage vs Dropshipping: Which Business Model Is Best For You?

Best Product Ideas for Amazon FBA in 2024

What are the pros and cons of dropshipping?

If you are still wondering, 'Can I dropship on Amazon'? - here are some Pros and Cons, according to several active sellers.

Pros and Cons of Dropshipping

Related: What Are the Funding Options for Amazon Sellers?

How to become an Amazon Top Rated Seller?

Pros:

Low startup cost and fast setup: unlike wholesaling and private labeling, you don't have to set the manufacturing process yourself and own the inventory - the third-party supplier already does it.

Automated business: there are many useful apps, like Seller Assistant App, to connect to your Amazon account to simplify the working process.

Dropshipping is legal: Amazon allows drop shipping sales according to their dropshipping policy.

Limitless product types: you can dropship almost everything you can imagine as long as people buy it and the product is compliant with amazon guidelines.

Related: How To Sell On Amazon Without Inventory?

What Is Amazon Seller ID? How to Find Seller ID on Amazon

Cons:

Competition: as with every business model, many people are digging gold in dropshipping, so you will have to stand for your product and income.

Slow delivery time: if you're not part of the FBA program, your shipping can take from week to month or even months in several cases. 

Lack of quality control: even with a sample order, you can't check the quality of all sent goods, and there is nothing you can do about it. 

The bottom line is that the risk always exists, but it's lower than with other Amazon business models, and you should consider giving it a chance. With due care and zeal, nothing can stop you from reaching new heights.

Related: 13 Rules of OA Product Research Tested by Pain and Gain of Amazon Seller

Amazon Online Arbitrage: How to Make Money

Is there anything that can help dropshippers with the business?

Even if starting a dropshipping business can seem hard and a little confusing, there is always a way to simplify the process. With Seller Assistant App, your journey in dropshipping can be smooth and way less stressful. Here are some benefits that the plugin can offer.

Product restrictions: 

New and experienced sellers must understand what product would be easy and hard to sell. The Seller Assistant App marks each product with a particular sign to indicate its availability. A green lock means that you can start selling the item right away. The red lock indicates the restricted products that need ten invoices to be sent to Amazon to unlock the selling ability.

Seller Assistant App

Competitors:

Due to shipping time differences, the FBA sellers sometimes are hard to compete. The app shows how many FBA and FBM sellers are working with the product.

Get Competition Insights with the Offers Feature

Analysis:

The plugin shows a Quick View of a product on a search page and allows you to understand if the product is worth looking at or not.

Get Product Insights on Product and Search Pages with Quick View

Calculations:

Seller Assistant App can calculate your potential income and future business development, considering the number of competitors.

Calculate ROI and Profit with FBA/FBM calculator

Planning:

The app downloads all important data to Google Tabs in one click.

Seller Assistant App has the possibility to download all critical data to Google Sheets in one click

Insider information:

You can quickly get precise information of products' disadvantages. The IP Alerts show every complaint that the seller has ever gotten.

Avoid IP Complains with Advanced IP-Alert

The Seller Assistant App has many other functions for a successful Amazon business that you can discover by downloading the plugin. Don't worry, it is very simple and even if you get confused with anything - you can always rely on the customers' service. These people will be glad to help you with anything you may need.

Stay Informed about Product Restrictions

Related: 5 Strategies To Increase Amazon FBA Sales

7 Amazon Product Research Tactics You Need in 2024

Conclusion

Dropshipping is the easiest way to start building income on Amazon. It is the process of selling a third-party manufacturer's product without the need to carry inventory or ship the products to the buyer. Dropshipping doesn't need extreme investments and costs less than wholesales and private labels. It has its pros and cons, but it is less complicated and risky than any other Amazon business model. 

We hope this article was helpful, and we lit a sparkle of interest in dropshipping in you. If there is something we forgot to mention, feel free to leave a comment - it is always appreciated! 

Originally published at https://www.sellerassistant.app/blog/how-to-start-amazon-dropshipping-business