Dropshipping a popular business model refers to allowing businesses to sell products without requiring inventory as opposed to the traditional method of investing in inventory. In dropshipping , the main stakeholders are sellers, third-party suppliers , and customers. It comes with potential benefits and some complexities.
Dropshipping has become the top model for businesses in 2024, as dropshipper products are supplied to the respective entities. In recent years, the number has increased from 1.79 billion to 2.14 billion. Considering the popularity of model marketplaces like Amazon with billions of clients in their base they have entered the potential dropshipping market.
In this blog, you will discover various aspects of Amazon Dropshipping. Key steps, advantages, and learnings on how to start an online Amazon Dropshipping business and more.
Table of Contents
What is Amazon Dropshipping?
The name itself suggests Amazon Dropshipping is a strict business model where you can list products on Amazon and sell them without inventory. So, technically you are an exclusive member of Amazon, but without any huge investments and shares.
Many dropshippers have taken their interest in Amazon Dropshipping because of its name and huge market share. However, with Amazon, you must comply with their policies and be approved as a verified Amazon seller account. Amazon is the platform of choice because of its services like fast shipping, returns, and smooth shopping experience.
According to research,
The number of users has doubled since 2017 has doubled and every day,
3,728 sellers
are added every day.
Dropshipping Factual Analysis
Often this question is heard, Is dropshipping dead? To answer it in other words, no, no! Statistics and factual data can prove dropshipping is a potential e-commerce business model. Even though the industry is saturated, 2023 holds higher expectations for dropshipping and the market is expected to take tremendous reach by 2025.
Sometimes discussions say dropshipping is a saturated market, but statistics show that around, 27% of online retailers use the dropshipping method. So, it is not true that dropshipping is dead but it is constantly changing and updating.
Second, in e-commerce sending products to customers is always a problematic process for producers, especially shipping to distant countries . Most businesses complain that they have to market the store and market the product, and fulfill it when the order is placed, so the business incurs extra expenses on marketing and fulfillment.
Considering such a scenario, dropshipping becomes a better option and better results are achieved. Dropshippers will take the orders and route the orders to them and this helps in doing the work at a lower cost.
Third, the marketing burden is taken on and looked after by dropshippers. They also take orders and fulfill them. So, it helps businesses to earn higher profits by spending less on marketing and stocking. Lastly, higher profits are earned through dropshipping.
Coming to Amazon, good profits can be earned with higher margins. It is said that Amazon Dropshipping facilitates margins of around 10%, but it is important to keep in mind the costs. So, in 2023 dropshipping has become more profitable and is a great option for people who want to work in e-commerce.
Amazon Dropshipping is showing incredible growth overall, and has seen its ups and downs but so far is growing at a good rate.
How Does Amazon Dropshipping Work?
Usually, there is a long process in starting an Amazon Dropshipping business and how the logistics are arranged. Following is the dropshipping model followed by Amazon.
- Signed agreement with the dropshipper.
- Customers order online
- The seller takes the order.
- Order confirmed.
- The seller forwards the order to the dropshipper and it is sent
- Product received.
View Amazon’s Dropshipping Policy
Here are some must-haves that must be adhered to when using the Amazon Dropshipping model. They are,
- Always name yourself as the seller on packing slips, invoices and other important slips and external packaging.
- No third part should be mentioned on packing slips, invoices and other products before shipping.
- You shall be responsible for accepting or processing product returns by customers.
- All policies must be followed by other provisions of the seller agreement.
Central Figures Involved in the Dropshipping Model
There are several key players involved, here are some of the integral figures in the dropshipping business.
Seller
Seller notes are individual sales products. They set product prices, records, and purchases as revenue and also have responsibility for sales taxes and all other important things.
Producer
Goods are purchased from wholesalers or manufacturers , goods can be purchased in large quantities.
Wholesaler
Wholesalers can purchase products from manufacturers and sell them to retailers and function as intermediaries. They can also provide dropshipping services to retailers.
Dropshipping Business Benefits
Before you learn about the steps to start the Amazon Dropshipping model, here are some benefits you need to learn about. Amazon Dropshipping platform comes with some amazing benefits that attract more entrepreneurs.
It doesn’t cost much
Unlike traditional retail methods, dropshipping is an economical method. You don’t need to stick to the wholesale method, purchasing merchandise, handling products, packaging or selecting, and shipping them to consumers.
Easy to start with
Getting started with Amazon Dropshipping method follows a simple method to operate. You’ll need an Amazon account, an online store, and a social media page. This can be handled by anyone easily. Moreover, it even demands a license or any kind of professional certification.
International Amazon Supplier Clan
Amazon brings their products from suppliers from all over the world and then supplies them to warehouses. They operate in many languages to deal with their clients. So, this increases the opportunities for businesses around the world to work with Amazon and makes it easier for them to communicate.
Higher Chances of Encounter
Looking at the popularity of the platform and the traffic it generates, you can expect some amazon opportunities to be discovered. This is a huge marketplace that offers a variety of products under different niches, so you can expect some astonishing turnout.
No Warehouse Hassles
By offering exclusive warehouses, Amazon has taken it up a notch. This program allows dropshipping of products without acquiring inventory. So, they give you an edge and take care of all the hassle.
Retail e-commerce sales from 2014 to 2026
Multiple Dropshipping Options on Amazon
Amazon offers several dropshipping models, currently they offer three models.
Online Arbitration
In this method products are purchased online, resold for a profit. This is a legal process, and people buy it to maximize their profits. This is a good process as long as the product is sold on Amazon. Remember when you buy a product, you have to pay shipping and platform fees.
Private Label
In this method, the product is directly purchased from the manufacturer or production. This also gives you legal rights, if you do not own the product. You can also decide on product logos, labels, and product packaging. Even though this process takes time, it makes the business grow in the long term.
Amazon Merchandise On Demand
Amazon allows you to show your creativity and it is a great way to sell products without owning the product. In this method, a design is created and a sequence of units is printed. After placing an order, POD sends the product to the customer.
How to Start an Amazon Business: Learn Through Detailed Steps
Amazon dropshipping business is the top model to build a successful business. You will be able to start selling through direct channels to customers, one does not need to purchase the product until the order
placed. The global e-commerce market is growing rapidly, it is a potential market to enter and invest in.
Amazon is one of the largest e-commerce platforms and products from every niche are available on the store. So, the step is to find the right third-party supplier. How to do it? let’s learn the detailed steps through the process to start an Amazon dropshipping business.
Identify Your Niche
Finding a niche and setting up an online store must go through ‘find a niche’. You need to determine what products you want to sell online.
This stage is very important as you have to stand out from the market and choose a category that has the potential to work in the market. Here’s what you need to do to choose a niche.
Interesting product
You know you want to sell, but what do you want to sell? Sell products you love and can have more fun working with. This is important because it makes it easier to sell and attract customers.
Product Request
Make sure to stock products that have the potential to sell well on the market. You don’t need to sell anything that is not demanded in the market. But on the other hand, you can also sell seasonal products that attract attention for a certain period.
Low Shipping Costs
If shipping costs are higher, it acts as a barrier between the business and the customer. So, it is better to offer free shipping and affordable items as it costs the business money and helps increase sales.
Take Market Analysis
After finding a niche, the next step is to conduct a market analysis. This allows having a strong assessment of how the market works and what points should be covered. Competitive analysis is good because it allows one to focus on their market niche. After you have done your analysis, it is a good idea to choose a dropshipping store. Follow the elements below to conduct market analysis.
Market Size
The market is an integral element to start with analysis. Gather relevant information about the niche market you are interested in, and look at its size, trends, and growth. It helps about the market potential and how big the opportunity is to grow.
Target Audience
You need to look for them because they are the most important figures. So, look at gender, demographics, income, reach, hobbies and other necessary elements.
Fellow Competitors
Checking and keeping up with competitors is essential to keeping a business running. Online tools are a great way to identify them and see how they perform.
Register as a Seller Account on Amazon
To continue the selling process, you must register for a seller account on Amazon . This process requires some important information to be filled in and begins with the journey. Amazon offers two types of plans individual and professional. Individual plans come with some sales restrictions, but professional plans have no order minimums.
Find Suppliers
Finding suppliers is necessary to keep Amazon stores running. They must be honest, credible and understand the concept of dropshipping. Many suppliers will come with their conditions for starting a business. Such ideas do not fit the dropshipping model. Amazon has vetted trustworthy suppliers to work with. They provide a list of dropship suppliers, thereby speeding up the supplier search process.
Here’s what you can do to find a better supplier.
- They want to trade at a fair price.
- Provide tracking number.
- Check the packaging, and make sure they are consistent with it.
- Offers reliable and friendly dropshipping services.
- Pay attention to the time it takes suppliers to process and ship, make sure they can process returns.
- They must be able to fulfill what they have promised.
- They should offer flexible shipping policies and have low costs and fast delivery.
- Has fast actionable customer service and must take appropriate action to resolve questions.
Get Approval in Product Categories
Amazon demands approval under certain niches, such as beauty, fashion, and accessories before being allowed onto stores. Other products such as electronics, games and books do not require approval. Make sure not to sell anything that is prohibited on the platform.
Create an Amazon Product Listing
Amazon product listing is one of the amazing features they have introduced. They appear when customers visit the page and products are easily searchable via the search bar. It also helps in making purchasing decisions based on content, price, quality, and location. To excel, you need to include the right keywords.
Being found in Amazon product categories is to keep your business popular. It is important to keep your dropshipping business in the game and attract more customers towards you. As much as the dropshipping model is growing, you need to make your business more convincing. Creating product listings for Amazon is a complicated process, and Amazon has introduced the A9 Algorithm.
-
What is A9 Algorithm?
It is a subsidiary of Amazon and develops the company’s search engine development technology. It is a powerful methodology that takes rankings. AI-based methods help rank products and match them to customer queries.
Sync Inventory
Now moving on to having a Shopify inventory as it is a necessary tool to keep any dropshipping process under the right channels. By syncing Shopify inventory with Amazon Sales Channels, it helps to stay updated about the products available in inventory. Additionally, the system is continuously updated according to product availability and unavailability.
Market Your Dropshipping Business
After setting up the store, and making everything legal and optimized, move on to marketing the store. A good marketing campaign is always a topic of choice for businesses. Every business needs to implement marketing and acquisition strategies. Choose the following channels to maximize marketing.
Marketing Emails
You must have subscribed customers on your list. You can withdraw and deposit them in your account with various discounts and offers. Email marketing has several best practices that help keep clients as your advocates.
Social media
This is one place that never goes out of style when it comes to reaching and targeting customers. Social media platforms like Facebook, Instagram, and Twitter host billions of people, so they are effective platforms to market and generate a higher customer base.
Search Engine Optimization (SEO)
SEO is the top method for ranking websites on search engine platforms. Implementing a great SEO strategy can help in ranking a website at a higher place in SERPs.
Amazon Dropshipping: Fulfillment by Amazon (FBA)
Similar to the dropshipping method, Amazon has been introduced to utilize Fulfillment by Amazon (FBA). This program also has benefits similar to dropshipping in that it does not require a warehouse or inventory.
If you want to dropship on Amazon but don’t have the connections as an FBM seller, you have the option of Amazon FBA. This process only requires sending the product directly to the Amazon Fulfillment Center, the rest of the process is done by them.
They also store the products for you and when the order is placed, they package and ship it to the customer. But there are conditions for that cost the time of year and the products you sell. If the product lies in their inventory for more than 6 months, you will have to pay a long-term fee.
Dropshippers using the Amazon FBA method must follow the private label method and cannot be part of drop surfing or include packaging slips with other companies’ logos.
How Much Does It Cost To Start An Amazon Dropshipping Business
Amazon Dropshipping business costs vary according to the type. For this, you need to register on an official sales account. Profit margins can vary from product to product from 10% to 15%.
The individual plan costs $
0.99/per unit and the professional plan costs $39.99.
How to Choose the Best Dropshipping Products in 2024
Since you have learned details about every aspect of dropshipping, you also need to choose the perfect products to sell on your ecommerce store. Here is a well-researched list of products to sell in 2023. It was compiled by looking at insights, user behavior, patterns, and the most popular niches.
- Women’s clothes
- Toys and baby products
- Environmentally friendly product
- Pet Supplies
- Home decoration and accessories
5 Tools to Use for Amazon Dropshipping
If you have planned to start an Amazon Dropshipping Business, here are some tools that can help in learning and maintaining dropshipping.
Shopify (in English
Shopify is one of the powerful tools to expand your sales, it is an ecommerce platform that helps in setting up and running an online store. To use Shopify make sure you are not following the FBA method. It helps you connect Amazon as a sales channel to your store. It also helps in other ways by alerting and tracking inventory.
- Basic Store USD 19
- Shopify USD 49
- Advanced Shopify USD 299SD
Seller
This tool helps maximize sales, and has a Buy Box. Sellery is a customized repricing software with built-in strategies. Through the software, prices can be changed easily, and products repriced as soon as there is a change in competition. This tool offers a free 2-week trial and can do more than just auto-price.
- Sellrey Costs $50 to $2000.
AutoDS
AutoDS is a complete automation tool that allows you to quickly import, monitor and discover products. This tool helps add trending products that can fit into your dropshipping store. You can look at some of the major stores, and suppliers, and compare costs, delivery times, comments, and more. To maintain balanced price checks, AutoDS has an automated monitoring process.
- Import $9.90/per month
- Starter Plan $1,790/per month
- Advanced $32.90/per month
Feed Inspection
If you have a large number of Amazon products in your store, FeedCheck allows you to review them somewhere. Viewing and reading reviews, can help you in improving the product or eliminating some practices. Moreover, it also provides access to maintain surprising competitive analysis.
- Lite $79/per month
- Plus $330/per month
Google Analytics
It is important to have insight into every move of your dropshipping store. While there are many tools that offer benefits, nothing can beat a tool like Google Analytics. This tool has a fast process after this, you don’t need to use any other type of tool. All related data, metrics and insights are displayed in the dashboard to help you measure it all. Google offers two versions of the GA platform free and GA 360 is the paid version.
5 Ideas to Help You Improve Your Online E-Commerce Store
2023 is the year of the e-commerce business and it is hoped that it will produce phenomenal performance. All online e-commerce platforms compete with each other. A report by Statista shows that Amazon is expected to become the largest retail store in sales worldwide by 2027.
So, if you have planned to run an Amazon dropshipping store, have an actionable plan to make your way in the market. There is always an opportunity to modify the strategy for running an online e-commerce store. So, if you want to increase sales on Amazon, here are some updates.
Keep Rank
Ratings and reviews play an integral role in running an online store. Make sure you follow the target to achieve a 95% satisfaction rate. Good reviews and rates make a store trustworthy and advanced in achieving organic searches.
Always Optimize Product Titles
Adding relevant keywords is a necessary step, but keyword stuffing does not add to the usefulness of the product title. Instead, focus on product title optimization that places the brand name in the title followed by the product color, weight, and model.
Point to Remember: Use of keywords updates and does not diminish their importance. It’s important to stay ahead of the game and carve out a way for keywords. Many online tools improve SEO.
Target For Buy Box
Amazon has millions of sellers, and they may be selling the same products. In this crowded market, your product may never get any views, so you have to compete with your fellow competitors by targeting the Buy Box. This is a small but very important and visible section available on the product page.
This allows customers to make instant purchases and they do not have to go through research methods. So, sellers who have a buy box will have more sales and can make a name in the market. Sellers reach the Buy Box through sales drives, and traffic is compared to other sellers.
Update Product Photography
Product images are very important, and they need to be the best to attract customers. So, it is necessary to work on product photography by following basic principles.
- Shoot during the day and make sure to do it in daylight.
- Keep a balanced camera setup, avoid flash, and set to white balance.
- Take several shots from each angle.
- Use a background that sets off the product and complements its niche.
Follow the Terms and Conditions Given by Amazon
Lastly, but the most important thing is to follow the terms and conditions provided by the platform. Amazon has a set of rules that have been created to keep the platform credible. So, follow them to run a sustainable dropshipping business.
Key Takeaways
Amazon’s dropshipping model is well-planned and produces modest risks. It does not demand a huge investment in terms or conditions.
This is a great platform to earn profits without stocking products and just finding products, having commitments and promoting dropshipping stores.
No one has to worry about inventory costs or storing products in a warehouse. The process is easy to bring to the e-commerce market.
Frequently Asked Questions
- How to start an Amazon Dropshipping business?
To be on Amazon as a seller, you need to identify yourself as a seller and be responsible for questions related to the product.
- Is dropshipping a legal method?
Yes, this is a legal compliance method used by every e-commerce marketplace around the world. Although there are some legal steps involved to verify as a dropshipping business.
- Does Amazon allow Dropshipping?
Amazon allows dropshipping, but one must adhere to rules such as identifying yourself as the seller and attaching invoices, packaging, and slips. One supplier is also responsible for customer feedback, returns, and product quality.
- What is the Amazon Buy Box?
The Amazon buy box is the small box visible on the right side of Amazon product pages. This allows users to make quick purchases without searching through the search box. The Buy Box is achieved through sales and conversion drives.
- Does Amazon Dropshipping provide benefits?
Yes, but you need to make sure your business makes enough profits. You have to achieve a decent markup to make a profit. It’s up to you how you choose to organize the product process. Often profits are made by offering products in fewer niches.
