Table of Contents
- 1 Dropshipping: What does it mean?
- 2 Dropshipping vs. Retail Arbitrage vs. Private Labeling
- 3 What is Amazon Dropshipping?
- 4 Amazon Dropshipping Policy
- 5 Amazon Dropshipping: The Pros and Con
- 6 Dropshipping on Amazon
- 7 Best Software to Dropship on Amazon
- 8 Conclusion
Dropshipping is as old as retail, but it’s making a comeback thanks to a pandemic. Many new entrepreneurs are now selling online using this business model.
This article will discuss dropshipping store on Amazon. It’s advantages and disadvantages. We’ll also show you how to do it correctly.
Dropshipping: What does it mean?
Dropshipping store allows an ecommerce seller to sell products without keeping inventory. Dropshippers forward orders to third-party suppliers when they make a sale and have that supplier ship the product directly.
Dropshippers make money by dividing the wholesale price you pay for the goods from your supplier with your retail price.
Dropshipping is all about product research and marketing.
Dropshippers are basically playing the role of middleman. This means that dropshippers can be viewed as legitimate entrepreneurs or snake oil salesmen. There is money to be made on Amazon and there is a way to do it right. EcomCrew has some dropshippers.
Dropshipping vs. Retail Arbitrage vs. Private Labeling
Let’s not get too deep into the meat and potatoes. Instead, let us compare dropshipping with two other popular ecommerce models: private labeling and retail arbitrage.
Retail arbitrage, or Amazon arbitrage if your product is sold on Amazon, refers to buying products at a discount from retailers and then flipping them for profit. This model allows you to actually own inventory, which you usually acquire during large clearance sales and seasonal promotions at big stores.
Private labeling involves purchasing off-the-shelf products from suppliers (mostly from China) and then selling them under your brand.
What is Amazon Dropshipping?
Dropshipping on Amazon is the same model as traditional dropshipping, but you sell the products through Amazon’s marketplace instead of a standalone ecommerce shop.
Dropshippers love Amazon for its huge market share and built-in eyeballs. Amazon can be integrated with your Shopify or self-hosted ecommerce store to make it a sales channel.
Dropshipping store on Shopify and eBay is relatively simple, but it’s a little more difficult to do on Amazon.
Amazon Dropshipping Policy
Dropshipping is a policy that Amazon has had for many years (and it was recently updated).
Amazon allows dropshipping
Dropshipping as an Amazon seller is possible, but you should always:
- Be the seller of record for your products
- All packaging slips, invoices, and any other information relating to your products must clearly identify you as the seller.
- Before shipping an order, remove any packing slips or invoices.
- Accept and process customer returns on your products.
- Respect all terms and conditions of your seller agreement, as well as any applicable Amazon policies.
Amazon offers a few examples of dropshipping store, which is prohibited.
- If you purchase products from an online retailer and have that retailer ship directly, the shipment must not identify you as the seller-of-record or if any other person (including you) appears on packaging slips or invoices.
- Shipments orders should include packing slips and invoices.
Dropshipping products from online retailers such as AliExpress, eBay, or Walmart is against Amazon’s policies.
Amazon allows you to dropship your products on its platform, provided that there is no indication to the customer that they are…dropshipped.
Dropshipping is only allowed if you are selling products from a legitimate dropship provider. While some may break Amazon’s rules, it’s not enough to cause account suspension.
Can I Dropship and FBA on Amazon?
The short answer to that question is “no”. Dropshipping and Amazon FBA are nearly mutually exclusive. However, that hasn’t stopped many sellers from “dropshipping through Amazon FBA”.
Dropshipping store is by definition, where you don’t actually own inventory. You can ship your product and store it in Amazon’s huge warehouses.
FBA, on the other hand, means that you pay for the product and actually own it, regardless of whether they are delivered directly to your FBA warehouses.
You can find a middle ground in the form of having your third-party supplier ship their inventory to FBA under your name.
It sounds like there are a lot of cans of worms just waiting to be opened. Here are some potential problems that may arise:
- Uncertain delivery dates or product quantities
- Inability to guarantee the quality of your inventory
- It is difficult to know if your suppliers are available every time you order a shipment
- You run the risk of your account being suspended and you not being able withdraw your earnings
If you are looking to dropship Amazon and withdraw the money that you make, merchant fulfilled is:
- Dropship products from third-party wholesale suppliers by working with them (we’ll have a section about finding the right suppliers down this article);
- Partner with third-party suppliers, sell their products through your Shopify or ecommerce store, and integrate Amazon as a selling channel.
Amazon Dropshipping: The Pros and Con
Dropshipping is just like other business models on Amazon.
Amazon is the most obvious advantage. Amazon’s 40% market share makes it easy to tap into its built-in traffic.
Cutthroat competition is the biggest problem. Dropshipping store is easy and you can bet there will be many other sellers selling the same products. Dropshippers that succeed will be those that sell the most products for the lowest price. However, this could quickly turn into a race to bottom.
These are some of the other benefits and disadvantages to dropshipping store on Amazon.
Dropshipping on Amazon
How do you start Amazon dropshipping? These are the basic steps:
Create an Amazon Account
It is easy to sign up for an Amazon Seller Central Account. This guide will help you learn everything you need in order to sell on Amazon.
When signing up for an Amazon Seller account, be sure to have all of your personal and billing information as well as tax information.
It is important to remember that an Individual Account is free and charges $0.99 per item sold. A Professional Account is $39.99/month.
Do your product research
Next, identify the category or product that you wish to sell. We’ll be discussing tools that help you find profitable products with Amazon data.
These are some basic principles that will help you get started.
- Look for niche products that are always in demand
- Ideal products are those that are either obscure or very useful, or both.
- Dropshipping store is a better option for high-maintenance products, which would otherwise require storage.
- You can market eye-catching products on social media.
- Avoid Prime – Products shipped through Prime are already being sold to an FBA-registered seller. This makes it nearly impossible for Prime products to be competitive.
Locate your supplier
These are some proven ways to connect dropshipping suppliers:
- Google search. Although it is difficult to find suppliers online, you can often reach them through their websites. You are not searching for tools or sourcing agencies that can connect you with a supplier. Instead, you want to find a dropship supplier. You can usually sign up to become a dropship seller through their forms. They also provide contact information. This is a red flag if there aren’t any contact details.
- Attending trade shows personally. Although it is more difficult than looking on the internet for suppliers, meeting face-to-face with potential suppliers can be a great way to get started in dropshipping shop. Trade shows allow you to personally inspect multiple suppliers at once, which is a great advantage.
- Dropship directories. Another option is to pay for a list of verified suppliers who are available to work with dropshippers or retailers.
Always vet your suppliers. While face-to-face meetings with wholesale suppliers are the best, it is possible to do some research online. Ask questions to find out about their fulfillment process, inventory management, and payment terms.
A dropshipping shop agreement should also be signed with your supplier. This is useful in case Amazon asks you for a letter from the wholesaler confirming that you are authorized to dropship their products.
Sell your products
Create an Amazon listing to start selling your product. Integrate Amazon to your Shopify or standalone ecommerce site to market the product.
Customers are your priority and you should have a great listing.
You can also think about building your brand along the way. Once you have mastered Amazon’s ropes, it will be easier to move to more sustainable business models such as private labeling.
Best Software to Dropship on Amazon
The best way to make your business run smoothly is to choose the right software to automate your tasks. There are three key areas that require automation: order creation and tracking; inventory management; and repricing.
These tools are available online in a variety of formats. These are the top software options for dropshipping shop on Amazon.
Helium 10, one of the most widely used all-in-one Amazon products, features product and keyword research, listing optimization and business analysis.
Plan Discounts if you choose to be billed annually
- Try it Free of Charge
- Starter Package ($37/month; Core Tools and Expert Training)
- Platinum (97$/month; Most-respected single-user plan)
- Diamond ($197/month; Multiuser plan with expanded limits
- Elite: $397/month; The highest-tier plan with live training from an expert.
This tool is almost a must-have Amazon seller tool. It helps you find, launch, and sell products on Amazon. You can also use it as a supplement tool like the Supplier Database Tool.
Plan Discounts if you choose to be billed annually
- Basic ($49/month, with full access to Jungle Scout browser extension).
- Suite (from $69 per month with review automation and access advanced seller features)
- Professional ($129/month; Great for experience sellers. Includes priority onboarding and 6 users
Oberlo was created to help dropshippers find products, get in touch with suppliers and establish a niche.
- Explorer (Free)
- Grad ($7.90/month including coaching, courses and trends reports
- Bosss (29.90/month, with advanced selling tools)
Automated repricing software allows you to set shipping costs and price limits. This will increase your chances of winning the Buy Box.
- Try it Free of Charge
- A minimum $50/month charge and maximum $2000/month fee.
Dropshipping is easy with Shopfiy. Shopify allows you to integrate Amazon as a sales channel. This allows you to track inventory, keep track of sales and monitor fulfillment.
- 14-day free trial
- Basic Shopify ($29/month newbies)
- Shopify ($79/month to grow your business with at least one retail store)
- Advanced Shopify ($299/month if you have 2 or more retail shops)
This machine-learning-powered tool is ideal for dropshipping on the US and European markets.
- No cost
- Starter ($24/month, 25 products and email support)
- Pro ($49/month, with chat support and branded invoice)
- Premium (99$/month, 10,000 exclusive products and premium products)
Dropshipping store on Amazon is a tricky business and you need to follow a few rules.
This can be useful to complement your private label product portfolio. This is a great way to get started in ecommerce, and to transition to a more sustainable business model.
Dropshipping is Amazon’s future? Is it here to stay? Please leave a comment below.