It is quite possible that you will want to try dropshipping on Amazon. After all, according to statistics, in 2019 the company had more than 300 million active users and more than $ 280 billion in sales. These figures indicate that a dropshipping store on Amazon can bring you a very good income.
But how does Amazon dropshipping work? And how can you turn it into a profitable e-commerce business?
This article will tell you if Amazon dropshipping can be profitable, how to dropship on Amazon, and the best dropshipping tools to help you start selling today.
Is it possible to dropship on Amazon?
Yes, Amazon allows dropshipping on its marketplace, but you must follow some rules:
- Always act as the official seller of the goods.
- Indicate yourself as the seller on packaging stickers, invoices and other papers related to the product.
- Remove all third party seller information before shipping the order (including invoice, outer packaging, packaging labels, etc.).
- Be responsible for receiving and processing returned goods.
- Comply with all terms of your agreement and Amazon policies, and adhere to the rules of conduct for dropshipping.
How much does it cost to dropship on Amazon?
The cost of dropshipping on Amazon varies from 10% to 15%, but it depends greatly on the type of product. If you work with a relatively small markup when dropshipping products on Amazon, then you will have to part with a significant part of your profit.
You also need to choose a paid Amazon plan for yourself. The “Individual” plan will cost you $0.99 for each item you sell, while the “Professional” plan has a flat monthly fee of $39.99, no matter how many items you sell.
You can learn more about Amazon's fees here.
How Profitable is Amazon Dropshipping?
Dropshipping on Amazon can actually be profitable. The average profit margin from dropshipping is between 10% and 30%. That's minus the 10% to 15% that Amazon takes from your earnings.
So, if your initial revenue was around 40%, then after selling the product via dropshipping on Amazon, your final revenue will be 25%. This percentage can be higher if you win the Amazon Buy Box, but this is a highly competitive market and should not be relied upon in your business plan.
The Main Advantages and Disadvantages of Dropshipping on Amazon
Benefits of Dropshipping on Amazon
The benefits of selling on Amazon are very similar to those of eBay - it's easy to get started, you have immediate access to a large audience, and you don't have to worry about marketing or SEO. Amazon can also offer you:
- Trusted Dropshipping Suppliers. Amazon buys products in bulk from mainly European suppliers. Products are stored in a warehouse until they are ready to ship. Whether you are a beginner seller or a seasoned professional, you can sell quality products in large quantities to customers all over the world.
- No inventory storage costs. Amazon also offers its own order storage and fulfillment centers, known as Fulfillment by Amazon, which allow you to supplement dropshipping items with your own products without having to pack, ship, or store them.
- Wide choice when searching for products. Amazon offers more than 30 product categories. At the same time, you can sell products in any quantity from various dropshipping niches. If you can choose the right suppliers and products for dropshipping, you will achieve faster success in the market.
Disadvantages of Dropshipping on Amazon
- Access to your sales data. One of the risks you run when using the Amazon platform is that Amazon can see all of your sales data, from the products that sell best to your overall sales volume. Amazon has been accused of using this data for its statistics. This leads to Amazon finding the most popular sales strategies and actively participating in the niche, ultimately squeezing out other sellers operating through its marketplace.
- Short-term customer relationships. It’s unlikely that you’ll be able to establish long-term relationships with your customers. Amazon is more focused on helping businesses sell products than on building a loyal audience of sellers on the platform. Expect to have little opportunity to brand your business, showcase your products, or connect with customers.
- Lack of personalization: The customization options here are very limited. Everything you do in terms of branding, UI, marketing, and everything else is under Amazon's control.
- Upfront Investment: To meet Amazon's warehousing and shipping requirements, you must have inventory from the supplier in your warehouse. This means you'll need to make an upfront investment to start dropshipping on Amazon.
6 Steps to Starting Successful Dropshipping on Amazon
1. Choosing an eCommerce Platform
Thanks to the partnership between Shopify and Amazon, you can now easily and comfortably sell products on the world's largest marketplace through Shopify. You can install an app for tracking products and orders from Amazon in your Shopify store, as well as:
- Create product listings and upload them to your Amazon store.
- Create and manage offers for products already listed on Amazon.
- Manage Amazon product listings from your Shopify dashboard.
If you don't have a Shopify store yet, sign up for a 3-day free trial + 3 first 3 months at $1/month and start your Amazon dropshipping business today.
2. Create an Amazon Seller Account
To sell on Amazon, you need to create an Amazon seller account. To create one, sign up at sellercentral.amazon.com. You'll be asked to provide details about your business, such as your address and tax information, as well as other identifying information and credit card information.
3. We receive approval for the selected product category (if necessary)
Amazon requires sellers to be approved if they plan to sell certain types of products . Fashion, grocery, music, and jewelry are popular categories, but they require approval before you can set up a store on Amazon. You can see a list of available product categories here .
4. Installing an application for integration with Amazon
In the Shopify app store, choose one of the suitable apps. When choosing, pay attention to what kind of service the app can offer. Also know that you can delete the app at any time and install another one.
5. Create a Product Listing on Amazon
After installing the Amazon integration app, your dropshipping products will not be automatically uploaded to your Amazon store. First, you need to sync the product listings from your Shopify store with the products listed in your Amazon store. After that, you can manage your Amazon products from your Shopify admin panel. Here are the options for syncing products:
- Upload a product listing from Amazon to Shopify.
- Link products from Amazon to products from your Shopify store.
- Create a new product listing in your Shopify store to upload to your Amazon store.
If you're completely new to this, be sure to install the DSers app, which lets you source high-demand, low-competition products from AliExpress . You can import dropshipping products directly from DSers into Shopify, then upload those listings to Amazon.
Note : If you are just starting out with Amazon dropshipping, you may not be able to list all of your products on the storefront right away. Amazon limits the number of new products a seller can list until their sales on the platform start to grow.
6. Syncing inventory with Amazon's sales channel
Shopify can automatically update your Amazon product listings based on your inventory information displayed on the product card in your Shopify store. So you only need to monitor your inventory in your Shopify store, and it will be updated automatically in your Amazon store.
Dropshipping from Amazon to eBay
This is a very old model of dropshipping that still exists - dropshipping cheap products from Amazon FBA to eBay buyers. While legal, it is generally frowned upon by the platforms and even buyers, and you get a very small percentage of the profit.
Look at it from the buyer's perspective: You buy a new dog grooming brush on eBay for $20. You look forward to it for a week. Then, when the delivery service knocks on the door, your toothbrush turns out to be in a box from Amazon.
Then, out of curiosity, you go to Amazon and find the item for a few dollars less than you paid on eBay. How would you feel about the seller you bought the item from? Obviously, you wouldn't order from that seller again.
This model makes money for the dropshipper, but no one else benefits. eBay also does not support the Amazon-to-eBay-arbitrage business model, which is why hundreds of Israeli companies were blocked in 2017.
In other words, if you want to build a fair and transparent dropshipping business, avoid dropshipping from Amazon to eBay.
More information on the topic: The Complete Guide to Dropshipping
Amazon Dropshipping Services and Programs
Merchant Words
You can use Merchant Words to get information about what products are in demand and how often they are searched for, as well as get data on key user queries. Paid plans start at $29.99 per month.
Sellery
Sellery's Amazon Dynamic Price Changer will help you create price change strategies to win the Buy Box and automatically increase sales and profits. You can use the trial version for free. Then you need to upgrade to a paid plan, which costs 1% of your revenue. The minimum cost of the plan is $50 per month.
FeedCheck
FeedCheck helps you track and respond to customer reviews. It’s a great way to connect with customers across all your sales channels. You can quickly access Amazon reviews and improve your customer service. You can also track reviews and questions about competitors’ products, which will help you analyze and improve your own products.
Seller.Tools
Seller.Tools helps you automate your Amazon dropshipping store. It gives you access to a robust keyword manager, PPC management tool, product statistics, and marketing automation tools that include ManyChat. You can download Messenger marketing workflows for discount distribution, promotion counters, automated review collection, and more to quickly grow your Amazon business.
Starting a Dropshipping Business with Your Own Online Store
An alternative to dropshipping products through third-party sites like Amazon and eBay is to set up your own online store to sell your products. This is the method that most people interested in starting a successful dropshipping business are drawn to.
Pros
- More control. With your own online store, you have the opportunity to create a favorable trading environment that promotes the sale of your products and, most importantly, increases the interest of the audience. You can customize the appearance of your store, as well as create customized pages optimized to best inform your customers about the properties of the products.
- Easy to customize design. It’s very easy to create your own eCommerce store, especially on platforms like Shopify. You just need to choose a suitable store theme (Shopify offers over a hundred different themes), customize it, then add your products, connect a payment gateway, and you’re ready to go. Depending on the type of online store you want to create, you can do all this in a day.
- Ease of store management. Some online store platforms, such as Shopify, allow you to manage your business from your mobile device. This is very important for those dropshipping business owners who prefer to manage their business on the go or even on the beach.
- No extra fees. You won’t have to pay 10% to 15% on every sale on eBay or Amazon, which will significantly increase your profits. Overall, you will make more money by starting your dropshipping business with an online store.
- Large selection of dropshipping suppliers. When you run a dropshipping business on your own, you can establish relationships with various wholesale suppliers through sites like AliExpress, AliBaba, and DSers. If you are concerned about long shipping times, you can find suppliers that use ePacket shipping to speed up the shipping process.
- Own real business. You will be able to build a long-term business with a distinctive feature, unique experience and regular customers. Most importantly, you will build a business with your own capital. Moreover, a business that is built on the basis of an independent website is much easier to sell if you decide to change the field of activity.
Cons
- Less free traffic. With your own website, you will need to find traffic, which can be obtained through marketing, social media, SEO, and paid advertising. This requires a lot of investment, both in money and time. So you must be prepared to invest in a long-term campaign to promote your new store.
Additional information on the topic
- A Dropshipping Business Owner's Guide to Finding Products on AliExpress.
- How to Search Products on Alibaba.
Grow your online business with Shopify now!
Dropshipping on Amazon can be a great way for your business to increase sales, whether you are a beginner or a professional. If you decide to incorporate this type of dropshipping into your Shopify store, you will get all the dropshipping tools you need for sourcing, pricing, and marketing. Also, check out our top dropshipping tips.