The trend of Amazon dropshipping is on the rise as it offers a low-cost option for entrepreneurs to start their own businesses. By having a third-party supplier fulfill orders, Amazon sellers can expand their product offerings without the need for a large inventory or high overhead costs.
One legal way to dropship on Amazon is to partner with dropshipping suppliers who can source and ship products directly to customers, eliminating the need for inventory management. This is an ideal starting point for those new to dropshipping as it removes the need for physical product storage.
Amazon Dropshipping Policy
Before starting to sell on Amazon, it’s important for sellers to be aware of the platform’s dropshipping policy. By following the guidelines, sellers can avoid the risk of account suspension or termination.
Amazon’s dropshipping policy states that sellers must be the seller of record for all products they sell on the platform. This means sellers must purchase products from a supplier and then sell them directly to customers, without involving a third-party seller.
Additionally, sellers are responsible for ensuring that the products they sell meet Amazon’s policies and guidelines, including authenticity and quality standards.
How to Dropship on Amazon Step-by-Step
Amazon dropshipping involves various tasks such as product research, supplier sourcing, and product marketing. To simplify the process, we have divided it into four main steps, each comprising several sub-steps.
Step 1. Market Research
- First, select a niche for dropshipping by conducting research to determine what is currently popular and in high demand. Consider exploring products that you have a personal interest in, trending items that are frequently shared on social media, as well as those that have the potential to generate sales and profits.
- Conduct research on dropshipping suppliers by using Google to search for suppliers of your chosen product. Choose a dropshipping company that has a positive reputation and provides high-quality products. Many dropshipping suppliers offer products that can be sold on Amazon, so carefully read their customer reviews and thoroughly examine their terms and conditions.
- Take a look at the supplier’s assortment of goods. Establish your standards for the product you want and select the most appropriate one. For instance, you may want to search for items priced between $10 and $70.
Step 2. Product Analysis
To evaluate the performance of a product on Amazon, select a product and search for it on the platform. Confirm that it is already selling successfully and generating a profit.
- Research the demand: Start by researching the demand for the product you want to sell. Since Amazon does not provide sales data, you will need to use research tools like AMZScout that can estimate sales based on the BSR rank. Look for products that have a consistent demand throughout the year and avoid seasonal products.
- Analyze the Competition: Look at the competition for the product you want to sell. Check the number of reviews, pricing, and product features. If the competition is too high, it may be difficult to make a profit.
- Check Profit Margins: Calculate the profit margins for the product by subtracting the cost of goods sold (COGS) from the selling price. Consider all expenses, including shipping, Amazon fees, and marketing costs. If the profit margin is too low, it may not be worth selling the product.
Step 3. Getting Ready
- After selecting a product, it’s important to assess its quality before investing in it. To do this, it’s recommended that you order a sample. This will allow you to evaluate the product’s quality firsthand and determine whether it meets your standards. Additionally, you can use this opportunity to evaluate the supplier’s packaging and shipping speed to ensure that they meet your requirements.
- To get started selling on Amazon, you’ll need to create an account as an individual or professional seller. Luckily, the process is straightforward and easy to follow. Just head to the Amazon website and follow the instructions provided.
Step 4. Selling on the Marketplace
- To add your product to Amazon’s existing listings, simply click the “Sell on Amazon” button located on the product page. As your product is likely already being sold on the platform, joining the listing is a straightforward process.
- Utilize Amazon’s advertising tools such as Sponsored Products and Sponsored Brands to boost your product visibility and promotion. Keep a close eye on your product performance and adjust your marketing strategy accordingly. Offering promotions and discounts is a great way to attract customers and increase sales.
- As an Amazon seller who is utilizing dropshipping, it is important to manage orders effectively. Once a customer places an order on Amazon, the dropshipping supplier will handle the shipping process and send the product directly to the customer. It is common for the supplier to charge a small fee for this service, which should be factored into the product’s price on Amazon. Ensuring that orders are efficiently managed will help to maintain customer satisfaction and the success of your dropshipping business.
By following this guide, you’ll be able to kickstart your dropshipping business the smart way and steer clear of any potential setbacks.
In conclusion, dropshipping on Amazon can be a profitable business model if done correctly. By following Amazon’s policies and guidelines, conducting thorough market and product research, and implementing effective marketing strategies, sellers can succeed in the competitive Amazon marketplace.