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 Suppliers 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:

  • 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.
Examples of dropshipping that is not permitted:
  • 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.
You can read more about how to dropship with Amazon on their website here.





Mistakes To Avoid When You Start Dropshipping

Check Shipping Times BEFORE Choosing Which Countries to Sell To.


A lot of beginners see that the seller on Ali Express ships worldwide, and so list the item with worldwide shipping without further thought. This is a huge mistake. Why? Because the Ali Express supplier is dealing with businesses, not consumers. They can send items to any country, but it may take 20-40 days for an item to arrive. For businesses buying in bulk and making considerable savings, waiting may be an option, but for your customers, it is not. We strongly recommend as a beginner focusing on countries with shorter shipping times of 2-3 weeks, as this will cause less customer support issues.




Make Shipping Times VERY Clear


We recommend that you include a shipping times in the following places: 1) In product description on the product page. 2) On the checkout page. 3) In the purchase confirmation email. It is better to miss a sale than to have to deal with an unhappy customer, and lack of shipping times will hurt your sales more than long shipping times.




Set Up A Limited Company


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.




Create a Strong Refund Policy Page


Set up a refund policy page and make it clear that you only accept returns for faulty/broken products. It’s also standard in dropshipping to require customers ship the item back to you for a refund at their own expense. Include a link to this page in the footer of your store. If you don’t want to insist that customers pay to return items to you, you may want to ask for photographic or video proof of the fault.




Set Up a Follow-Up Email Sequence


Don’t just use customer’s emails for promoting products to them. Use emails to keep the customer happy while they are waiting for the items to arrive. Send 3-4 follow-up emails over this period. In the emails do the following things: 1) Remind them about the shipping times that they agreed to when they purchased. 2) Let them that if they are having any issues, they can always email you. 3) Remind them that they can track their order online and give them a link to how they can do this.




Run a Like Campaign to Your Facebook page


Before you run ads to sell products, set up a like campaign and get a few hundred likes to your store’s Facebook page to build trust.




Add a variety of Products to Your Store BEFORE Testing Products


Do not get impatient and only add a few products to your store before running ads. Too few items in your store will make your store look illegitimate and you will create mistrust between you and your potential customers as it makes your store look half-finished. Make sure you add lots of products before running ads/tests.




Have Either a Credit Card Or Money Set Aside to Purchase Items Customers Buy


When a customer buys an item from you, you will not get that money instantly. PayPal often holds money for up to 3 weeks. And Stripe pays out money weekly. So you need to make sure you have money set aside on a debit card, or have a credit card to purchase items the customer buys from you while you’re waiting for your money to clear.




Be Prepared to Spend Money to Make Money


Although dropshipping doesn’t require stock investment, that doesn’t mean that it is investment free. Facebook ads are the preferred method of advertising for most dropshippers. If you plan on running paid Facebook ads, then be prepared to test a lot of products. Don’t run a few tests and then give up if they don’t make you money immediately. Set aside a budget of a few hundred dollars and be willing to spend that while running lots of tests to find your winning products.





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