Amazon Dropshipping: A Step-by-Step Guide
Ever thought about selling online without having to worry about shipments or large stocks of products. A company with over 200 million users and more than $250 billion in sales, little wonder every entrepreneur wants to try dropshipping on Amazon. You can never go wrong using Amazon dropshipping as a sales channel for your e-commerce business.
But there are two significant questions on the minds of most entrepreneurs, how does Amazon dropshipping work? And how I can turn it into a profitable venture for my e-commerce business.
This article is designed for beginners. It covers helpful hints on how you can launch and run a successful dropshipping business as a beginner. It also covers strategies and top tools that will help increase your conversion rate and the effectiveness of your marketing strategies when you start your dropshipping business.
So whether you want to set up your dropshipping business or want to move your local business online, as you read through, you will learn ways to find the niche that will be most suitable for your dropshipping business.
Although Amazon dropshipping is highly competitive. But that should never discourage you because Dropshipping on Amazon has always proven to be a lucrative thing to engage in.
Table of Contents
- 1 How does Dropshipping on amazon Work?
- 2 How to Dropship on Amazon: A step-by-step guide
How does Dropshipping on amazon Work?
The way Amazon dropshipping works is relatively easy compared to some other platforms.
First, you list a product on Amazon, then a buyer orders the product you have listed. The moment the transaction is fulfilled and you receive payment, you can buy the product from the supplier.
Lastly, with the customer’s details, the supplier ships the product directly to the customer.
Does Amazon permit Dropshipping?
If that is the question on your mind, well, the answer is Yes. Amazon allows dropshipping on its platform provided you play by the following rules:
- Always identify yourself as the seller on invoices, packing slips, and other information linked to products
- Be the original seller of record for products
- Be responsible for how you accept and process returns
- Do away with all information that discloses the third party even before the order and other procedure takes place
- You have to abide by Amazon and its dropshipping policies and the terms of the agreement.
Pros and Cons of Amazon Dropshipping
Before you start your dropshipping business on Amazon, you need to examine the advantages and disadvantages that come with it carefully.
Here are some of the numerous benefits of Amazon dropshipping:
- Saves time: one advantage of dropshipping with Amazon is that it saves you the time you would have spent creating, packaging, and shipping your products. With just a few clicks, you can integrate the Amazon sales channel into your online store. Therefore giving you time to focus more on other essential aspects of your dropshipping business.
- Amazon dropshipping suppliers: often, Amazon purchases products in large quantities from European suppliers. After which, it holds these supplies in its warehouse until the products are ready to be shipped to customers. Amazon also takes care of returns and customer service in so many languages for all of its suppliers. Suppliers have a great opportunity of multiplying and operate on a global scale. More so, account managers assist Amazon suppliers to help them achieve long-term profits.
- A large audience at your disposal: with over 300 million users on Amazon, you can meet new buyers daily, and your business can continually yield tremendous returns. You can target and expand your target market.
- No warehouse cost involved: one of the reasons most persons prefer dropshipping on Amazon is that they have to pay a dime for the cost of warehousing. Amazon has its fulfillment centers called FBA (Fulfilled by Amazon). With this, you can make up your dropshipping Amazon products with your items without contacting the packing, shipping, and warehousing. In other words, all you do is ship your products to Amazon, and Amazon sends the products out for you.
- ● Multiple opportunities to explore: Amazons offers a significant number of categories for you to choose from. The more exciting thing is that you can venture into as many dropshipping niches as you want.
- No customization option available: if you decide to dropship on Amazon, you will not have the privilege to customize certain things. Everything you do in terms of marketing, user interface, and branding is highly under the control of Amazon.
- You cannot connect with customers on a long term basis
On Amazon, the chances of growing a long-term relationship with customers are very thin. There is some level of limitation regarding how you relate with customers, display products, and brand your business.
How to Dropship on Amazon: A step-by-step guide
The following steps will help you kick-start your dropshipping business on Amazon:
- Set up an Amazon seller account
Setting up your account is the first thing you need to do to sell on Amazon. You can quickly get one by visiting sellercentral.amazon.com. Amazon has two different types of accounts, individuals, and professionals. Upon signing up, you will choose one of these two.
- Select an e-commerce platform
Shopify recently got into a partnership with Amazon. This means that you can now sell on one of the world’s biggest marketplace using Shopify. Shopify allows users of all levels, both beginners and professionals, to add Amazon as a sales medium. With this, you can do the following:
- Create listings for new products on Amazon
- Effectively manage orders
- Link both Amazon and drop shipping listings to your Shopify admin account
- Get approved in your product category
For you to start selling specific products in some niches, you will need the approval of Amazon. Popular Niches like Fashion, Jewelry, grocery, beauty, Watches, Gift Cards, and music require Amazon permission before you can even set up your Amazon dropshipping store.
- Link your Amazon account to Shopify
Once your account is created and approved by Amazon, the next you should do is connect your Amazon account to your Shopify store. At the left-hand panel of your Shopify account, locate the “sales channel,” click the plus (+) button next to it. You will get a pop-up, click on “Add Channel.”
- Select the right product
If you decide to sell your product on Amazon, you may have to deal with a few restrictions or some requirements. The only way you can bypass these restrictions is if your dropshipping store is focused on some specific stores provided by Amazon.
Currently, the Add a product feature is only made available to Amazon sellers in any of the following niches:
- Baby products
- Musical instruments
- Computer and video games
- Video and DVD
- Sporting Goods
- Tools and hardware
- Office products
- Toy games
- Pet suppliers
- Home, kitchen, and Garden
- Promote your Dropshipping Amazon store
Now that your business is fully operational, it is time for the world to know about your store. You need to figure out ways to draw traffic and generate revenue for your store. You can utilize various social media channels to promote your business. You can as well decide to use Amazon ads, Google, and Facebook Ads to boost sales.
What to sell on Amazon
The most challenging task for most Amazon sellers is picking the right product for your dropshipping business. It is okay to want to choose a product with high demand. That is a common practice among sellers who have created their products.
Here are some valuable tips for selecting products on the Amazon platform:
- You can begin with a product research tool to find products with high potentiality and profitability.
- Look out for products that sell for above $25 with a minimum of 50% profit margin. If you do otherwise, you stand a risk of losing your profits to packing, storage, and shipping cost.
- Products with high competition aren’t advisable for beginners
- Find products with the Best Amazon Rating (BSR) of at least 3,000. These ratings make it eas
How much does it cost to dropship on Amazon?
The product type dramatically determines the cost for dropshipping on Amazon. When dropshipping Amazon products, if you decide to work with a relatively small margin, this might cost you something heavy.
On Amazon, you have to select a selling plan. The individual plan costs $.99 for every unit you sell. In contrast, the Professional plan costs more. You will pay $39.99 per month.
Top Amazon Droppshiping tools
Here is some Amazon dropshipping software that will come in handy as you learn how to dropship on Amazon. They are worth exploring.
- Merchant Words: Merchant words are used to check search volume and to gather insights for keywords. You can get the best of this software by subscribing to the paid plan, which costs $29.99 per month.
- Amazon Channel App: with this app, you can manage your inventories and complete customer orders directly from your Shopify Admin. Also, with the sales and analytics section, The Amazon channel App lets you create Amazon listings on your Shopify products, monitor sales, and track inventories.
- Amazon Volume Listing Tools: there are excellent tools available on Amazon designed to help simplify your dropshipping experience on the platform. Some of these tools can be used to download spreadsheets for orders and inventory details. With other tools, you can modify pricing and quantity at any time
- FeedbackCheck: FeedChecks lets you track and respond to customer feedback in order to build a stronger connection with your customers. With this tool, it is easy for merchants to monitor competitors’ product reviews. If you utilize this tool, you stand a chance of improving your products.
- Seller: The Sellery software helps users create repricing strategies to increase sales. You can begin with a free trial and then continue with a paid plan that costs $50 a month.
- Feed Express: FeedExpress is unique software designed to help users collect more reviews from their Amazon dropshipping stores. It also helps filter out negative thoughts to maintain a high rating of your store and products. Supposing you encounter a notorious customer and leave negative reviews, you can backlist someone using this same software. The software is not entirely free, and it costs $20 per month.
Bonus Tips for succeeding on Amazon
Virtually every dropshipping platform out there is highly competitive; to really succeed, you need to put in some extra effort. As a beginner, you will need most of these strategies if you genuinely want to succeed on amazon:
- Win the Buy Box
On Amazon, there is something called the “Buy Box.” At the upper right corner of your product page, you will find a Buy Box rectangle. It enables buyers to add items to their cart. More than 70% of sales pass-through this buy box, so you need to be the seller who dominates the buy box.
The following tips will help you win the buy box more often:
- Upgrade from individual to professional account: Seller who uses the individual seller accounts are not eligible to use the Buy Box
- Set a competitive price: Pricing is a very aspect of selling products online. When placing a price for your product, you need to consider what your customers will spend shipping the product, then compare the total price with that of your competitors. Your shipping and product costs should be lower than some offers.
- Serve customers on time: Have a fast customer response time, low refund rate, and a high feedback score. It would help if you were a seller who could ship the product no later than 14 working days. All these will help you win the box. Late shipment can have a negative effect on your dropshipping business.
- Have a consistent order rate (ODR): Whether you are a beginner or a Pro seller on Amazon, you need to avoid feedback by all means. Be consistent in delivering high-level customer satisfaction.
- Utilize the Fulfillment By Amazon (FBA): The FBA is one way you can quickly meet your customers’ delivery expectations.
- Optimize your product title
As a beginner who wants to succeed on Amazon, you also need to optimize your product page to appear in searches. Your products should contain specific keywords that buyers are always searching for. Most buyers search for items based on the model, color, size, or quantity.
Some Amazon software like Merchant words can help you get insights into popular keywords.