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Dropshipping on Amazon: How to Start Your New Business in 2023?

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Amazon is today a leading online marketplace worldwide, without any doubt. It ships around 1.6 million orders per day. That makes 66,000 orders per hour.

But do you know third-party manufacturers deliver many Amazon items?

Yes, dropshipping on Amazon is a popular digital business model nowadays. Many Amazon sellers partner with third-party vendors to pack, dispatch and deliver their products.

Furthermore, Amazon has its own program known as Fulfillment by Amazon. It allows sellers to sell their products to the vast Amazon audience without dealing with packaging, shipping, or warehousing hassles.

That means you can sell your or someone else’s products on Amazon to make extra income without much investment.

Sounds interesting?

 Then, let’s walk through this entire dropshipping Amazon tutorial to learn how to start this business in 2023.

Is Dropshipping on Amazon Allowed?

Yes, dropshipping on Amazon is allowed. But, there are certain rules that you have to follow to dropship on Amazon.

Foremost, I advise you to check Amazon’s FBA policy to ensure you meet the criteria to become a dropshipper on Amazon.

Once that’s done, these are some basic dropshipping rules for Amazon:

  • Your brand name should be on all invoices, packaging slips, and other product-related documents. There must be no information about the supplier of the product you deliver to the end customer.
  • You must hold legal rights to sell the product.
  • You must abide by Amazon’s Terms of Service. Otherwise, Amazon can cancel your seller license without any previous warning.
  • It is your responsibility to manage order cancellations and returns.

Pro Tip: Never purchase products from another online retail seller to sell under your name on Amazon. It is a big-time violation of Amazon sellers policy—your license can be suspended for that.

How Does Dropshipping on Amazon Work?

Dropshipping is a popular e-commerce business model. In dropshipping, sellers take responsibility for selling products to buyers on behalf of vendors, suppliers, or manufacturers.

Once the order is placed, sellers use their suppliers’ resources to deliver the product.

 In this process, buyers never know where their product is coming from. Instead, they think that the seller is the manufacturer of that product.

Here, online marketplaces like Amazon or eBay offer dropshipping programs to global sellers. It allows people to sell their products worldwide without worrying about shipping or warehousing.

 It also allows digital influencers to make money by selling third-party products to their followers.

Is it a complicated process?

Then, let me break down how dropshipping on Amazon work for you:

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  • First, you list an item on Amazon and then, the customer places an order for that item.
  • After that, you can use customer order details and purchase money to place the item order on the manufacturer’s website.
  • Now, the manufacturer will deliver the product to your buyer.

In this process, a drop shipper’s responsibility is to ensure more and more people place an order for their products, as they will earn a commission in return from the vendor.

Is it Profitable to Dropship on Amazon?

It depends. Depending on your marketing strategies and margin rate, dropshipping on Amazon can be profitable.

For example, Amazon will take away 15% of your top-line revenue.

Suppose you purchase an item for $200 from the manufacturer and sell it with a 30% margin on Amazon for $230.

In that case, you will pay $200 to the manufacturer to buy the product, and then Amazon will take $15 on your purchase.

That leaves you with a $15 profit per purchase, which is okay if you sell a thousand items monthly.

So, at the bottom, your Amazon dropshipping profit depends upon how many products you sell and at what rate.

Thus, you must focus on marketing tactics to encourage more buyers to purchase your products.

Why Is Dropshipping on Amazon a Good Business Model?

Apart from Amazon, many other e-commerce platforms support the dropshipping business model. But dropshipping on Amazon is the best because:

  • No warehousing cost. The Amazon FBA program lets you dropship products without worrying about warehousing expenses. Amazon can take care of warehousing facilities at zero cost.
  • Vast suppliers. Amazon purchases products in bulk from the European market and stores them in its warehouses. It gives them a backup to provide instant deliveries to their customers. It helps you deliver quality products on time.
  • Technical assistance. Amazon account managers can help suppliers create dynamic strategies to sell more products. Amazon can also handle returns and cancellations for you, making it easier to run your dropshipping business.
  • Sell multiple products. To maximize your profit, you can sell commodities in different categories on Amazon. It has over 30 product categories that you can target at a time.
  • Large audience base. Amazon has over 3.1 million global customers. So you can sell quickly and build an international brand with Amazon dropshipping.

Things to Consider Before Dropshipping on Amazon

Here are a couple of things that you must consider before starting your dropshipping business on Amazon:

  • Do your research. You must know the basics of dropshipping before diving into this industry. You should run research on other vendors doing dropshipping on Amazon. It can help you understand what product sells best on Amazon and which category is more profitable.
  • Find the best suppliers. Suppliers are crucial for the success of your dropshipping business. You need to find suppliers who provide quality products at affordable rates to maximize your revenue. Some of the best suppliers for dropshippers are AliExpress, SalesHoo, Obrelo, etc.
  • Build your community. You must build your online community before selling on Amazon. It can help you target the right audience with your products and boost your sales. To do so, you can use various digital marketing strategies such as email marketing, social media marketing, and more.
  • Work on your selling strategy. You must customize your selling strategy based on the product you are dropshipping. Experiment with different selling strategies to attract more customers, like offering special discount deals to your regular customers.

6 Steps for Dropshipping on Amazon in No Time

Are you ready to dropship on Amazon? In that case, here are simple steps to follow for starting your new dropshipping business on Amazon:

Step 1. Choose a Profitable Product Category

The basic step to dropship on Amazon is to select a profitable product category. Selling something on Amazon with lower demand will not generate the desired profit.

Thus, you must run market research and look for the most popular product categories on Amazon.

According to Amazon, the most popular product categories are books, clothes, home products, etc.

Besides this, you must look for products with maximum profit margins. This is because it will help you generate more income in limited sales.

Here are some simple ideas to find the best product category to sell on Amazon:

  • You can explore shopping trends on e-commerce platforms like eBay, Alibaba, etc.
  • Social shopping websites like Pinterest or Tumblr can also help you understand what’s trending in the market.
  • You can check shopping social influencer profiles on Facebook, Instagram, or Twitter.
  • If you already have a decent social media fan following, you can run surveys to know what people prefer to order from Amazon.

Step 2. Acquire Products

 The next step is to manufacture or source products for dropshipping on Amazon.

If you plan to outsource products from an international supplier, ensure to set your delivery timeline accordingly. It can take time to deliver international products.

On the contrary, if you manufacture products, you must set up your manufacturing line according to the delivery date you set on Amazon.

 The number one thing that attracts online shoppers is timely delivery.

So, ensure to manufacture or source your products from suppliers that enable you to deliver fast.

Step 3. Setup Your Amazon Seller Account

Once you have acquired products to drop, creating your Amazon seller account is the next step.

Go to the Amazon Seller Central page and follow the on-screen instructions to become an Amazon seller.

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You must also provide your business details, financial information, and other things to get Amazon seller approval.

Amazon offers different selling plans based on the product category you have chosen. The basic Amazon selling plan starts at $0.99.

You can select the higher-selling plan based on your dropshipping business scale.

Step 4. List Your Product on Amazon

After getting approval from Amazon, you can start listing your items for sale.

To do so, log in to your Amazon seller central account > Inventory > Add a product > Create a new product listing.

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Listing your products on Amazon is a crucial step. You must upload high-quality images and compelling product descriptions to stand out your products on the website.

Pricing is another important factor to consider while listing your products on Amazon.

You must also research other similar products listed on Amazon and fix competitive prices accordingly.

If you are new to all this Amazon dropshipping thing, minimize your profit margin and focus on acquiring more customers. You can also run special deals to establish your brand identity on Amazon.

Step 5. Promote Your Products

Your real work starts after uploading your dropshipping product on Amazon. First, you must promote your product listings on various channels to attract more customers.

You can leverage social media pages, groups or collaborate with influencers to reach more customers.

You can also run email marketing campaigns and digital display ads.

The more you work on your marketing efforts, the better your sales and revenue will be on Amazon.

Step 6. Track, Analysis & Take Action

Tracking your Amazon sales is essential to learn from your mistakes.

Keep an eye on your customer testimonials and growth graph to improve your sales on Amazon.

You should not only track your Amazon sales. But you must also analyze your sales figures and take immediate action accordingly.

Suppose your sales are down at the moment. In that case, you can run promotional marketing campaigns to hike up your sales. You can also reach out to your existing customers with special deals.

So, tracking is essential to ensure you earn consistent income from your Amazon dropshipping business.

Other Helpful Tutorials

We have some other tutorials to help you start an easy dropshipping business on Amazon:

  • Dropshipping on AliExpress: AliExpress is a popular B2B website to procure quality products to dropship on Amazon.
  • Dropshipping on eBay: You can also dropship products on Amazon and eBay to expand your audience base. This guide can help you dropship on eBay with easy steps.
  • Dropshipping on Shopify: You can also connect your Amazon account with your Shopify store to sell your products faster. You can refer to this tutorial to understand the entire process to dropship on Shopify.

Parting Note

Dropshipping on Amazon is easy and profitable. If you plan your dropshipping business structure properly, you can earn a good income from selling products on Amazon.

I have already laid down all the essential points to dropship on Amazon, so you are ready to go.

But, on a parting note, I would like to grab your attention on two things:

Strictly follow Amazon’s selling policy because one small wrong move and Amazon will revoke your seller account.

Fix your profit margin rate after running complete market research to earn good revenue.

So, that’s it for now! But, don’t forget to follow Bloggingtips to learn more about dropshipping business models.

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