How to Source Products to Dropship on Amazon?

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It is simple to find products for Amazon once you are familiar with your sourcing options as an Amazon seller. Most small businesses and startups think of wholesale products and made to order manufactured goods first. These are only two of six different ways to find Amazon products.

Knowing how to identify profitable sales opportunities is equally important for your success in finding products to dropship on Amazon. It all starts with product research, and Amazon has plenty of resources and tools to assist you in that.

Below, we’ll show how to find the best products to dropship with Amazon’s data. But first, let us get to know your top six product sourcing options. This will enable you to create your own ecommerce store and be fully informed about all the ways you can sell products on Amazon.

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While some Amazon dropshippers only use one method of sourcing, such as private labeling or retail arbitrage, many others combine several sourcing methods to grow their business. Don’t let the fact that one method is better than another convince you to pick one.

You can explore them all to find the one that best suits your online dropshipping goals.

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shopify dropshipping store set up

Amazon products can be sourced using retail arbitrage

Retail arbitrage is when you buy retail products at a deep discount and then resell them on Amazon. Although it sounds easy, making sure you do it correctly and profitably is not an easy task. When it comes to finding clearance and discounted items in local shops and matching them up with Amazon bestsellers, retail arbitrage sellers can be a real pro.

Knowing what is dropshipping on Amazon at any given time and for how much is the key to success. It is also important to understand the cost of selling this item on Amazon. Amazon seller fees are approximately 15% of the selling price. Shipping orders can also take a significant chunk out of your profits, if not carefully managed.

There are tools that can help you find profitable bargains. Amazon pricing apps are the secret weapon of retail arbitrage sellers. These apps allow you to scan UPC codes from your smartphone and match them with current listings on Amazon.

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These apps provide a wealth information that will help you price your products, including your average selling price, buyer demand, shipping and Fulfillment by Amazon costs and potential profit.

This information will help you decide whether to buy a product or not based on current demand and profit potential.

FBA fulfillment allows you to see the shipping and storage costs. FBA fulfillment has its costs, but if managed well it can be much cheaper and more time-consuming than handling fulfillment by yourself.

Retail arbitrage: The pros and cons

Retail arbitrage, on the plus side, is an economical way for new sellers get started dropshipping on Amazon. The only investment you make is in the price of purchasing discounted products. You can use the Amazon pricing app to get a good idea of your profit potential and make smart purchases.

It’s difficult to build a business that is consistent because you are always looking for discounted products at different stores. You also need to understand consumer demand cycles so that you don’t buy too many goods at the decline, such as backpacks for kids when the back-to school rush ends.

Your items may also vary in size and weight. This will impact your shipping costs as well as FBA fees. These cost variables can cause you to lose profits.

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Amazon allows you to dropship custom printed-on-demand items

Dropship products that can be printed on-demand (POD), are custom-made items that customers order. All of the details are taken care of by POD suppliers, including sourcing and storing available products as well as printing and shipping the items once they’re received.

This is a more recent way to find quality products for Amazon. It also offers an opportunity to create your own Amazon brand, even if you have a small budget. POD sellers create unique designs, funny sayings, and beautiful artwork, then market them through Amazon-approved POS vendors.

Two things are required for POD Amazon product source. The first is artwork that can be printed on tee-shirts, mugs and other products available through POD vendors. The second is an Amazon-approved POD vendor account.

Amazon does not approve every POD vendor. Amazon has strict requirements for POD vendors. Gearbubble and Printful are great options for finding products that you can dropship on Amazon.

You can create your own artwork using online tools such as Inkscape, Adobe Creative Suite or any other graphics program if you are creative. You can also hire a freelancer through Fiverr and Upwork to create brand-specific artwork for your market.

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shopify dropshipping store set up

Many POD vendors offer online tools to help you create products with your own slogans and clipart-based designs. To create POD products that sell, you don’t need to be artistic.

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Amazon print-on-demand: pros and cons

The pros are that you will have minimal to no initial cost, aside from your Amazon Seller account which will cost $39.95 per month. Many POD vendors offer free accounts. You only pay for the goods when they are shipped to you.

Amazon-approved POD vendors offer pricing tools to help you understand your costs. However, it is not the most lucrative way to sell on Amazon. This is the main drawback to this sourcing option. You must reduce your dropshipping price in order to remain competitive and capture sales. This is usually done until you have established a brand that has demand.

Amazon allows you to dropship handmade products

Are you an artisan or craftsperson dropshipping handmade products? Are you interested in exploring this option for product sourcing? If “yes” to both questions, Amazon Handmade might be the right product category for your needs.

The requirements to sell on Amazon’s Handmade Section are more stringent than Etsy. Many Amazon Handmade sellers are Etsy sellers who want to increase their reach and tap into Amazon’s large audience.

You can list up to 40 products per month if you are approved by Handmade. If you sell more than 40 items per month, you will have to pay $39.95 Amazon Pro Seller account fees.

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You will still need to pay per-sale Amazon seller charges, which average around 15% of the selling price. You also need to factor in fulfillment and shipping costs.

The products you create will determine how well you can craft and source the raw materials. Therefore, the tools required to source this option for sourcing may vary greatly.

FBA is available for Amazon Handmade sellers to store, pack, and ship stock. This is a great tool to help you focus on making high-quality handmade products.

Amazon Handmade: The pros and cons

Amazon’s handmade category is gaining popularity and is proving to be a positive. It’s difficult to get approval so competition in many sub-categories can be lower than Etsy.

Amazon’s seller fees are more expensive than Etsy, and Amazon is known to alter its rules and fees quite frequently.

Amazon has a wide range of wholesale products that you can sell.

Wholesale sourcing is simply reselling products made by other companies. This is a common way to find low-cost products to dropship on Amazon, particularly for startups who want to explore the profit potential in different product categories.

You can easily source products online from wholesale suppliers via wholesale marketplaces such as Thomasnet and Alibaba. To find wholesale vendors, you can visit buyers’ markets and trade shows in your industry.

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A simple internet search can be a great way to get started with wholesale sourcing and set up an efficient ecommerce store. Search for the item name you want to sell, then add “wholesale”.

Wholesale suppliers allow you to purchase bulk goods, sometimes in “case packs”, store your inventory and ship the products as soon as they are ordered. Either you can do product storage, packing and shipping yourself, or FBA to handle these fulfillment tasks.

You need an inventory management and purchasing system to keep track of your inventory levels and ensure that you have enough products to fulfill orders. Many inventory management software integrates with Amazon seller accounts and FBA accounts.

InventoryLab.com and JungleScout.com and AMZScout.net are highly-rated and economical options. Many also offer sales estimators and product-scouting tools that will help you make informed wholesale buying decisions.

The pros and cons of dropshipping wholesale items on Amazon

Wholesale vendors are a great way to discover new products for Amazon. Wholesale suppliers can supply almost any product you could need. You can order low minimum quantities to test various products so you don’t have to commit to large factory orders.

The con is that you will make less profit on larger orders than in the factory. The average resale markup falls below 100%, or twice as much as your wholesale cost. After accounting for Amazon seller fees, shipping costs, or FBA fees, this may not be enough to make a profit.

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Direct sourcing can help you make more money if your wholesale product is selling well.

Amazon allows you to dropship direct-source products

The most profitable way to source products for Amazon is through direct sourcing. Direct sourcing allows you to purchase products directly from the manufacturer. Direct-sourcing stock products can be purchased at lower per-unit prices than wholesale. For unique and distinctive items that are different from the rest, you can order custom goods.

Direct-source factories can be found using the same strategies as in the wholesaling section. Many wholesale suppliers have their own factories.

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shopify dropshipping store set up

If you are interested in a wholesaler’s product and services, it is possible to work with the same vendor. To get a lower per-unit price, you can order more or work with them on your custom-made products.

Direct sourcing is similar to wholesale product sourcing. You need to be careful about product costs, inventory levels and reorder quantities. You’ll also need stock storage and order packing and shipping, which can be done by you or outsourced to FBA.

FBA fulfillment can be costly so you will need to have a warehouse or fulfillment center to store your bulk inventory. FBA storage costs are quite high so direct-source sellers often send small quantities of stock to Amazon’s warehouse network when they are needed.

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Direct-source sellers need inventory management software that can integrate with their Amazon Seller and FBA accounts. This allows you to track stock and determine when it should be replenished so orders can ship on time.

Amazon selling direct-source products: pros and cons

Direct-source suppliers are a great way to make more money and create unique products. This is how Amazon sellers are able to sustain their long-term success in this highly competitive marketplace.

There are two main cons to this model: higher upfront costs due to large orders and potential losses if products do not sell. For Amazon dropshippers, product research is crucial, but it’s even more important for direct-source buyers.

Amazon offers private label products that you can dropship

Private labeling is a subset of direct-sourcing. It’s a great way for you to find products that you can dropship on Amazon under your brand. Private label suppliers make goods and then package, label, or tag them under your brand.

Private label products can be found in almost any product category. These include personal care products and cosmetics, kitchen tools, pet supplies and gourmet foods.

Finding private label products for Amazon is similar to searching wholesale or direct-source suppliers. Many manufacturers offer private label options on their stock products.

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Private label sourcing is very similar to purchasing from direct-source or wholesale suppliers. You must purchase in small quantities and then stock and ship the products to your customers. This can be done either through your Amazon fulfillment platform, FBA, or both.

You also need to be able to track your inventory, product costs, and forecast your future reorders. You can use the same inventory tracking tools for direct-source and wholesale purchasing to organize private label product sales on Amazon.

If you are interested in private labeling, give InventoryLab.com, Sellics.com and Shopkeeper.com another try.

The pros and cons of private label sourcing

Selling private label products on Amazon has a major advantage: you can establish your brand through Amazon with minimal upfront costs and minimums. Handmade products and direct-source items are the only options for sourcing comparable branding power. These require more time and money.

The con is that you will still need to order products under your own brand in a set quantity, which means there will be upfront costs. Labeling and customization can add costs so it may not be as lucrative as other methods of product sourcing.

Private label products are a preferred source for small-scale sellers and startups looking to establish a brand.

How to select the best products to dropship on Amazon

It is important to choose the product or product category you want to sell before you can understand how to find Amazon products.

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These are the things you should keep in mind when you decide what product to dropship on Amazon.

  • Cost: What is the average price of the product? It is important to find something affordable to buy, but not too cheap to make a profit.
  • Shipping: Is it easy to ship these products? Shipping costs can play a significant role in your business. The easier the item to ship, the better.
  • You need to balance competition. While you don’t want your product to be in too many competitors, you shouldn’t sell it to anyone.
  • Customers: Who are the ideal customers for the product that you want to sell? Are you able to enter a niche market and reach highly engaged customers? Is there a market that is missing a product or service? These possibilities can help you choose the right products to market.

There are many research methods that you can use to determine the type of product you want to dropship on Amazon, including tools provided by Amazon. These are the three strategies that you can use.

Google, or another keyword research tool similar to it, is a good option.

Keyword research is a great way to sort through products and decide which ones you want to sell on Amazon. To find out the search volume for various terms, products and categories, you can either use SEMRush or a Google search.

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Let’s say, for example, that you are interested in selling customized winter hats. To see how many people are searching for customized winter hats, and other variations thereof, you can do a Google search.

This process can also give you insight into how to find the product that you want to sell on Amazon. Wholesale or direct suppliers might appear in your search.

Check out the “best sellers” pages for your possible categories.

You can also search Amazon for the category you are interested in and add “best-sellers” to your search terms. This is what we found when searching for novelty scarves that are “best sellers”:

The “Best Sellers page” lists the 100 best sellers in each category. You can click on different items to scroll down and gauge their popularity.

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shopify dropshipping store set up

Amazon’s product descriptions tell the story about its popularity. This item, for example, is quite popular according to:

  • It has an Amazon Best Seller Rank of (BSR), 5,836 in the large Clothing, Shoes and Jewelry category. A BSR below 10,000 in a major category is considered to be of respectable sales velocity.
  • The item’s 145 customer reviews show it has a track record for sales.

Review count increases over time. Each review also shows the date. This allows you to use reviews to determine how many items were sold within a certain time period. Amazon Seller Central says that only 10% to 20% of customers leave feedback. Thus, 145 reviews could equal 700-1,000 sales.

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Although it’s not an exact market analysis, it can help you decide if there is enough demand for the item to be worthwhile. This also allows you to see the market and discover ways to improve your products.

Look out for the “movers and Shakers” within your target groups.

You can also repeat the process with another set top-seller page that Amazon calls “Movers and shakers.” This is where Amazon tracks the products that are rapidly moving up the popularity charts like the top-trending items in Clothing and Shoes.

You can drill down into sub-categories or items using the above process to find out what’s hot with shoppers right now. This information is invaluable if you want to spot a trend or product opportunity.

These are just some of the many ways that Amazon’s data (and those of your competitors) can be used to guide you in choosing and selling the best products on Amazon.

The bottom line

There are many ways to find products that you can dropship on Amazon. Only a few of them require financial commitment upfront.

Startups in a shoestring budget can use retail arbitrage or print-on-demand to find products that they can sell on Amazon. This is a great option for those with limited funds. Amazon’s Handmade section is a place for artisans who make unique, handmade products.

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Wholesale, direct and private label sourcing allows you to test the waters, resell products, create a brand line on a tight budget, or provide truly unique goods.

Research is key to your success. You can find valuable information on what’s currently dropshipping at Amazon by looking at the Best Sellers and Movers and Shakers pages. Research allows you to take advantage of each sourcing method and avoid the cons as you seek out profitable products that are in high demand for Amazon.

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