The Ultimate Amazon Dropshipping Guide: How to Dropship on Amazon
What is Dropshipping & Benefits?
Dropshipping is the process of selling a product without the responsibility of carrying inventory or shipping the goods. Notably, dropshippers can set their own product prices. The product manufacturer is responsible for manufacturing the product, maintaining inventory and shipping the goods to the customer.
Benefits of Dropshipping
In this Amazon dropshipping guide section you’ll learn some of the benefits of dropshipping that’ll help you understand why and how to dropship on Amazon.
Hold no inventory
The biggest benefit of dropshipping is that the dropshipper doesn’t need to carry any inventory. This is great because it makes the business model less risky for the dropshipper. As there’s no inventory to carry, there is less work involved in the business. In addition, there’s also fewer costs as you don’t need to pay for a warehouse to hold the inventory.
Few skills needed
Few skills are needed to have a successful dropshipping business. A dropshipper needs to be great at marketing, administrative tasks and providing excellent customer service. If a dropshipper can master those three skills they can achieve great success. With great marketing skills they can attract more customers. Since they don’t carry inventory, they can intensify their marketing efforts as they don’t need to worry about inventory or the cost of labour associated with shipping products. Within the realm of administrative tasks the dropshipper will need to process orders, pay for taxes and expenses and more. Lastly, by providing excellent customer service they can maintain positive relationships with the customers who’ve purchased from them.
Test products easily
Another great benefit of dropshipping is that you can test products easily. Since you don’t carry inventory, you can run ads on products to see which products convert best. If certain items aren’t high performers you can remove them from your store easily. Since you didn’t purchase inventory, there’s no cost, aside from advertising, for a low performing product. In the event that you want to eventually purchase inventory, you’ll also know which products sell well as well as how many SKUs you can sell easily.
Low start-up cost
The dropshipping business model is low cost. First, you only purchase products when a customer places an order. Second, there’s no warehouse needed for inventory. Third, you don’t need to hire extra employees to manage the shipping of products. Next, your main expenses include cost of goods, advertising, and website.
Benefits of Amazon Dropshipping.
No warehouse cost
One of the benefits of Amazon dropshipping is that you don’t need to pay for the cost of a warehouse. Some Amazon sellers choose to make their products FBA (Fulfilled by Amazon). With FBA, sellers ship their products to Amazon and Amazon sends the products out for them.
Amazon sources suppliers within Europe who they buy products in bulk from. Amazon then holds this supply in their warehouses ready to ship to customers, handling returns and customer service in many different languages for all Amazon suppliers. With Amazon, suppliers, even small businesses, can grow quickly and operate globally. Amazon suppliers receive help from account managers to strategically guide their business to increase profits long-term.
Large audience to sell to
Notably, Amazon has 300 million active users. Thus, having Amazon as a sales channel for your business can mean huge returns. Sell the right product at the right price and you can lure in new customers. Your online store may attract different customers than Amazon. Thus, giving you an opportunity to connect with new customers who don’t fit your target demographics.
Lower ad spend
You have the option to run Amazon ads to gain sales and build a positive reputation on Amazon. However, as a marketplace, you can also benefit from organic traffic. By putting in upfront effort into optimizing your page, you can increase your odds of receiving organic traffic. Also, the cost of Amazon ads is set by you. You can control how much or how little you want to spend on Amazon ads as there’s no minimum requirements.
Amazon Dropshipping Cons
Amazon has created restrictions which can prevent dropshippers from selling on the platform. They do allow dropshippers to sell on the platform. However, they can only dropship via Amazon’s FBA program. That’s why it can be a bit tricky at first to understand how to dropship on Amazon. Using Oberlo is against their terms of service. According to their Dropshipping Policy, it states, that “Purchasing products from another online retailer and having that retailer ship directly to customers” is not permitted.
Is Amazon Dropshipping Legal?
Yes, Amazon allows their merchants to dropship on their platform with two exceptions. Merchants cannot purchase a product from another online retailer and have them ship it directly to the merchant’s customers, and merchants must ensure that their business information is on all packaging sold to their customers, not a third party. Once you honor these two rules dropshipping with Amazon is 100% legal.
Are You Allowed t
Are You Allowed to Dropship on Amazon?
Yes you are allowed to dropship on Amazon, in fact many merchants do this without their customer’s knowledge. Amazon does however have rules that merchants need to follow in order to be successful on Amazon’s marketplace. These rules include ensuring that no third party packaging is received by a customer, all dropshipping returns and complaints are dealt with by you and not your supplier, and finally all seller agreements and policies are complied with.
How Amazon Works
Amazon is one of the biggest ecommerce websites. It grew in popularity because it allows retailers to sell their products on their platform. Manufacturers and brands are able to sell on Amazon as an additional sales channel for their stores. After being approved for an Amazon seller account, you’ll be able to start selling on Amazon. However, not all brands and products get approved.
How Does Amazon Dropshipping Work?
So, how exactly do you start dropshipping on Amazon? You can dropship on Amazon through their Fulfilled by Amazon program. In this program, you ship your products to Amazon where they carry the inventory and ship directly to your customers. The benefit of this program is that Amazon has some of the fastest shipping times on the market so your customers get their products even sooner.
Amazon Dropshipping Guide: Amazon Strategies
In this part of the Amazon dropshipping guide, you’ll learn a few strategies for succeeding on Amazon.
Win the Buy Box
Most of Amazon’s sales comes from the buy box. Thus, your goal as a dropshipper is to win the buy box so you too can maximize your sales. First, you’ll need to have a high seller rating. Many have found having a rating above 95% has worked well for them. Second, you need to ship products quickly, ideally within 14 days. Third, your cost (shipping and product cost total) should be lower than most of the other offers being presented. Having a low refund rate, fast customer response time and high feedback score also help you win the buy box.
Don’t rely on Amazon
Don’t be dependent on sales from Amazon alone. Have your own store too. By having Amazon as one of many sales channels, you improve your odds for sales while minimizing risk. Also, if a customer recognizes your brand they’ll be more likely to buy from you on Amazon. Be where your customers are.
Aim for a 95% seller rating
Having a 95% or higher seller rating has improved the likelihood that you’ll win the buy box. It’s also great because it makes you more likely to appear in organic searches. Also, it’s important to have a high seller rating as customers will be more likely to trust you if your rating is high. It gives your Amazon store a competitive advantage over those with lower ratings.
Do keyword research
Just as you’d optimize your store’s product pages for search engines, when you’re learning how to dropship on Amazon, you should optimize your Amazon product pages as well. You can use tools like Merchant Words to determine popular keywords. If you run Amazon ads you’ll also have access to a supply of keywords you can optimize your product pages. Doing this well will help you rank organically. If you’re running ads, it’ll help you target customers better.
Make sure you price your products accordingly
When pricing products for Amazon there are a few factors to consider. First, is the cost of Amazon fees. You want to ensure your margins are high enough that you can afford to pay Amazon’s monthly and other associated fees. Second, you want to ensure your margins are high enough to make a profit. When you dropship with Oberlo, you can often offer free or cheap shipping which allows you to stay competitive as well.
Offer a better coupon discount than competitors
By creating an Amazon coupon, you can help encourage customers to buy from you. If you promote the coupon to coupon sites you can help drive more traffic from those looking to score sweet deals. Remember that you need to price the coupon in a way that allows you to pay your expenses and remain profitable.
How to Dropship With Amazon?
Dropshipping on Amazon is generally acceptable. However, they have listed a set of dos and donts that you need to keep in mind if you are planning to use Amazon Dropshipping.
You must always:
Examples of dropshipping that is not permitted:
Be the seller of record of your products;
Identify yourself as the seller of your products on all packing slips and other information included or provided in connection with them;
Be responsible for accepting and processing customer returns of your products; andComply with all other terms of your seller agreement and applicable Amazon policies.
You can read more about how to dropship with Amazon on their website
Purchasing products from another online retailer and having that retailer ship directly to customers; or
Shipping orders with packing slips, invoices, or other information indicating a seller name or contact information other than your own.