Amazon Dropshipping Guide – Find Out How To Dropship On Amazon Without Breaking The Bank

Ever since Amazon increased its channels with Shopify, those who sell through Shopify can sell on Amazon now just as easily.

Being an Amazon seller has a lot of benefits. The first main benefit is that Amazon is far and away the biggest online market in the US. As of September of 2019, more than 150 million Americans were already using the Amazon mobile app. Its popularity has been built through its years of customer-friendliness. Using Amazon as your selling platform means using a platform that everyone trusts.

If you’ve never heard of dropshipping but want to sell on Amazon, this Amazon dropshipping guide is perfect for you. Here we’ll get you started on dropshipping and how to be successful in it using Amazon’s tools.

Defining Dropshipping

When you’re a dropship seller, you essentially sell goods without handling shipping or inventory. These responsibilities instead remain with the manufacturer. As a dropshipper, you can also set product prices on your own.

Dropshipping Benefits

No Inventory

For most business models and owners, the inventory can be a bothersome responsibility. But as a dropshipper, the inventory is not of your concern. This greatly reduces the amount of work and cost involved, since you won’t be paying for warehouse space either.

Few Skills Involved

Dropshipping requires fewer skills than a non-dropship business. The main skills required of a dropshipper are administrative, customer service, and marketing. Administrative skills are needed for expenses, taxes, and order processing. Customer service skills are useful for creating a network of trusting customers. And marketing skills will be the first to help you sell your dropship items.

Easy Product Testing

As a dropshipper, it’s much easier to test which products will sell and which don’t. Since you haven’t purchased any inventory or stock, there’s no risk in figuring out which products are more popular. You can simply advertise the products and gauge their popularity immediately. Those that are less popular can be removed from your store without any extra cost or loss.

Low-Cost Business

Dropshipping involves significantly less cost than a regular business. You don’t need to pay for warehouse inventory space. There are no employees required to help with packaging or shipping. And best of all, you only purchase items once your customers have ordered. Your only costs are mainly advertising and the goods when purchased.

No Warehouse Needed

Dropshippers who sell through Amazon usually use the label “Fulfilled by Amazon” or FBA for short. This way, they can send the products to Amazon which then handles shipping to the customer.

man on a sofa with a laptop amazon dropshipping

Amazon Handling

Amazon handles suppliers and products from all around Europe. The supply is bought in bulk and then stored in warehouses. It’s from here that Amazon takes care of shipping, returns, and service. Since Amazon is such a wide platform, the small businesses and suppliers gain a much larger reach. Account managers also help suppliers in their relationship with Amazon.

Larger reach

Amazon has a wide user base of around 300 million. Using Amazon for your sales is sure to have good returns. If you find the right price to sell a popular product, you’ll have a wide customer base in no time. There is also a chance to bring in customers that aren’t from Amazon.

Lower Advertising Cost

Although Amazon can help you run and boost ads, there’s a lot to be gained from organic growth. If you design your page right to fit your target audience, you will be able to grow an organic and faithful customer base. If you want to run ads through Amazon, how much you spend is still totally up to you.

Dropshipping Drawbacks

Although Amazon makes dropshipping possible, it does limit the capabilities such that dropshippers can only sell through the FBA program. Sellers can find this difficult to deal with at first. Using third party channels like Oberlo is not allowed with Amazon. They have restrictions against purchasing and shipping through a different retailer while using Amazon as your selling platform (including retail arbitrage).

If you have any doubts, we’ll clarify for you: dropshipping through Amazon is completely legal. Amazon simply places guidelines and restrictions on it.

First of all, sellers cannot go through a different retailer for purchasing and customer shipping. Everything must pass through Amazon.

Secondly, sellers must place their business info on the packaging used. The information cannot be from a third party. By following these conditions, you can dropship legally via Amazon.

Even though it is completely legal to dropship through Amazon, not many customers are aware of this. But as long as the policies and conditions are met by the seller, there is no problem with Amazon dropshipping.

Dropshipping on Amazon - How It All Works

Amazon has turned into one of the largest online buying and selling platforms. Its popularity comes from its customer friendliness and even seller convenience. Brands and retailers can use Amazon as a sales platform once they’ve been approved for the seller account.

How Do You Start?

The easiest way to get started is to check out the Fulfilled By Amazon (FBA) information. This FBA program is what allows Amazon to carry your inventory and take care of shipping. Shipping with Amazon is really fast and easy too, ensuring customer satisfaction.

Amazon Dropshipping Strategies

A bulk of sales on Amazon are done through the buy box. Dropshippers can win that buy box as a way to increase traffic and sales.

You also want to maintain a high rating as a seller. A trustworthy rating is 95%.

You should also ship your products quickly so that customers can rate you well.

And another significant way to be successful is to keep your cost low. This is so that you can maintain a competitive price.

Also, try keeping your refund rate low and response time fast. These will help you build trust with your customer base. These will also get you that buy box.

Have Other Sales Channels

Amazon shouldn’t be your only online platform. If you’re serious about your business, you should have your store or website too. This way, customers can find you elsewhere while still buying through your Amazon dropshipping.

Keep Your Rating High

A high seller rating would be 95%. A rating that high will help you get the buy box. It will also make you more suggested and searchable for organic traffic. It shows that your customers trust you and can give you an edge over other sellers.

Search Engine Optimization

Learn how to optimize Amazon’s search engines. Taking advantage of keywords and such will bring new customers to your page. There are online tools such as Merchant Words that can help you find keywords. Even when you run ads, you still have to make use of keywords to bring traffic to your page and help you find your target audience.

Product Pricing

The main thing that will set you apart from other sellers would be your pricing. While you want your prices to be lower and competitive, you still have to consider your costs.

The first to think about would be Amazon fees. Your prices have to generate enough profit to take care of your monthly Amazon and associated fees.

Aside from taking care of fees, you still want to create profit for yourself. Other channels, like Oberlo, will allow you lower fees for shipping and such. These will increase your profit margin.

Make Better Offers

Another way to draw customers is through Amazon coupons. These are discounts that will encourage sales and purchases from your customers.

Once you have coupons available, these can also be promoted to bring in more traffic. Just keep in mind that although you’re offering a discount, you still want to be able to gain profit from it.

The Do’s and Don’t’s of Dropshipping Through Amazon

To simplify things, here is a comprehensive list of what to do and not do as an Amazon Dropshipper.

Do’s

Meet the terms and conditions of the agreement of the FBA program.
Handle the processing of customer purchases, payments, and especially returns
Sell and be known as the seller of the products you are offering
Place your business information on all packaging and documents involved with your products, especially with shipping

Don’t’s

Include other seller’s or retailer’s business information on your packaging information, slips, or invoices.
Involve a third party retailer or shipper with your Amazon channels. You do have to make sure your products pass through Amazon to reach your customers.

The don’t’s of dropshipping with Amazon are quite simple and straightforward. As long as you keep these in mind, you’ll be allowed to dropship on Amazon.

Tools for Amazon Dropshipping

Here are some apps and tools that many dropshippers have found useful on their dropshipping business journey.

Merchant Words

Merchant Words is a great tool for helping your search engine optimization. This will show you keywords along with how often they are used and more relevant data. If you want all of its functions, you can pay for the pro plan at $30 per month.

Shopify

Shopify is a handy extension that quickly adds Amazon to your store so that it shows up as a sales channel. Shopify will also give you alerts regarding inventory and Amazon sales.

If you want to find out more about Shopify, check out our newest guide

FeedCheck

If you need an app to keep track of product reviews, FeedCheck does this for you. This is especially useful if you have a wide arsenal of products available on your Amazon store. Since FeedCheck allows you to see all your site reviews at once, you can easily peruse them to figure out how to improve your service. FeedCheck has the added advantage of letting you see products of your competitors. You can use this app for as low as $19 per month.

Feedback Express

This tool will organically increase your ratings and reviews on your store. You can also use it to hide or remove low reviews. This will bring up your average rating. It can also block customers who spam negative reviews. This tool can be used at $20 a month.

Amazon Volume Listing Tools

Amazon itself has some tools that are built to help its sellers. These tools come with spreadsheets that can organize your order information. This will also help you track inventory quantity and pricing.

Sellery

If the buy box is your goal, Sellery will help you get there. Sellery allows you to experiment with pricing such that you optimize profit while maintaining competitive prices. This tool comes with a free trial.

Selling on Amazon

To make this easier, take advantage of Shopify’s partnership with Amazon! Shopify helps sellers include Amazon as one of their sales channels.

Product Restrictions

Amazon allows a huge variety of products to be sold on their platform. They have a list of stores that show what products are eligible for selling. These would be items like electronics, video games, books, computer games, games, office supplies, etc.

Sellers hosting these products do not require approval to set up shop. However, there are also product restrictions. These include dangerous goods and hoverboards.

Making Your Store Eligible

Seller Accounts

If you’re going to be serious about selling on Amazon, you should get a professional account. If you use only an individual account, it will cost you an additional 0.99 cents for every item you sell.

This is not good news if you’re selling at high volumes since it will lower your profit in the long run. This is an unnecessary cost that can be avoided through a professional account.

The professional seller account will instead only require a monthly fee.

To register for a professional seller account, you can do so through Amazon Seller Central. Simply make an account there and provide the required information such as tax information and individual information.

Product Category Approval

We mentioned above that there are seller products that do need approval before you can run them in your shop. While most electronics and games don’t require approval, niches like beauty, fashion, and jewelry have to be approved by Amazon before selling. Amazon has a list of categories and requirements for approval.

Setting up Shopify and Amazon

At this step, you should have your professional account and approved category.

Now you can connect your Amazon seller account through Shopify. Open Shopify and find the Sales Channel option in the menu. Click the “plus” sign to add Amazon as a channel.

A pop-up should appear with Amazon showing as an option on the list. Select “Add Channel.” Proceed through clicking “Connect to Amazon.” amazon

Product Listings on Amazon

Once you navigate through the Amazon Sales Channel, go to Shopify’s panel on the left.

Here you can create your listing. From here, choose the product you will list. If it is your brand, then you should have UPCs by now.

You’ll need the codes to list your product. But if you’re a dropshipper, you can select the option that says “this product is made by another brand.”

From there, you can look for the product that you will sell and select it to go on the listing. You will just need to make sure the information is filled before you complete it with “Publish.”

Tracking Inventory on Shopify

Shopify is a handy tool that also allows you to track inventory. Inventory is important because you want to ensure that your listed products still have stock with Amazon. If any of your products are out of stock, you have to inform your customers so that they do not end up leaving negative reviews on your shop.

Drawing In Your Customers

Now the most important part: bringing in your customers. You want to be able to grow a customer base organically. This can be boosted by Amazon ads, but there are many different strategies in promoting your store even without those ads. This is where your marketing skills will come in. They will make a huge difference.

Amazon to eBay Dropshipping

There is a dropshipping model that is legal yet frowned upon among manufacturers and customers. This is the dropshipping from Amazon to eBay model. The seller can do this by buying Amazon items that are at very low prices and reselling them on eBay for higher prices. Therefore if someone buys it from eBay, they would have paid an extra which goes straight to the dropshipper.

Manufacturers do not like this practice or model because it is often done without their knowledge. Additionally, it does nothing to benefit the manufacturer and only benefits the seller. If you want to be known as a trustworthy seller, you should not practice this dropshipping model.

Dropshipping With A Brand of Your Own

If you want to dropship but not with Amazon, you still have several options. One such option is called Oberlo. Here you can be a dropship seller while choosing from a wide range of products. There are plenty of items from both male and female fashion, accessories, beauty, jewelry, home decor, and furniture. The list goes on.

What’s even better is that you can sell your products here from your brand. It only requires a few clicks and your platform is ready for commerce.