How to Dropship on Amazon

Dropshipping has become a popular business model for ecommerce entrepreneurs looking to sell products without the need to manage inventory, storage, or shipping. Amazon, as the world’s largest online marketplace, offers a powerful platform for drop shippers to reach millions of customers. However, dropshipping on Amazon comes with strict guidelines and processes that sellers need to follow to ensure compliance with Amazon’s policies. In this comprehensive guide, we’ll walk you through the steps to start dropshipping on Amazon, the pros and cons of the business model, and how to navigate Amazon’s dropshipping policies for long-term success.

1. What is Dropshipping on Amazon?

Dropshipping on Amazon is when you list a product for sale on the platform, and once a customer makes a purchase, you buy the product from a third-party supplier who ships it directly to the customer. As the seller, you never handle the product physically. Instead, your role is to act as the intermediary between the customer and the supplier, managing the listing, customer service, and order details.

Key players in dropshipping:

• Seller (You): You create and manage the Amazon listing and handle customer inquiries and returns.

• Supplier/Manufacturer: The party that holds the inventory and ships the product directly to the customer.

This model allows you to avoid upfront inventory costs, but it requires careful management to ensure timely delivery, product quality, and customer satisfaction.

2. Setting Up Your Amazon Seller Account for Drop Shipping

To start dropshipping on Amazon, you’ll need to create an Amazon seller account. It’s recommended to choose the Professional Selling Plan for dropshipping, as it offers access to advanced tools, bulk listings, and unlimited product sales.

Steps to Create Your Seller Account:

1. Go to Amazon Seller Central and click on "Register now".

2. Choose the Professional Selling Plan. The plan costs £25 (plus VAT) per month and is ideal for dropshippers selling high volumes.

3. Provide all required information, including business name, address, VAT registration (if applicable), bank account details, and identity verification.

4. Once your account is approved, you’ll gain access to Amazon’s Seller Central dashboard, where you can list products, track orders, and manage customer service.

3. Finding and Working with Suppliers

Choosing the right suppliers is critical to the success of your dropshipping business on Amazon. Since you won’t be handling or shipping the products yourself, you need reliable suppliers who can deliver quality products in a timely manner.

Here are some steps to find trustworthy suppliers for your dropshipping business:

A. Use Dropshipping Platforms

• AliExpress: A popular platform for finding low-cost products to dropship. Suppliers on AliExpress offer a wide range of products, and many are familiar with dropshipping needs.

• SaleHoo: A wholesale directory that connects you with pre-vetted suppliers who work with dropshippers. It provides a level of quality assurance, as the suppliers listed are carefully screened.

• Oberlo: A Shopify app that allows you to import products from suppliers (mainly from AliExpress) directly into your store. Though primarily used with Shopify, you can find similar suppliers for Amazon dropshipping.

• Doba: An integrated platform that helps you source products and connect with suppliers while also streamlining the order process for dropshipping.

B. Direct Manufacturer Partnerships

You can also reach out directly to manufacturers or distributors that allow dropshipping. This method gives you more control over product quality and pricing, but you may need to negotiate terms and minimum order quantities.

C. What to Look for in a Supplier

• Reliability: Ensure the supplier has a history of delivering products on time. Delays can lead to negative reviews and account suspensions on Amazon.

• Product Quality: Ask for product samples to assess the quality. Selling poor-quality products can lead to high return rates and bad reviews.

• Shipping Times: Ensure the supplier can meet Amazon’s shipping deadlines, especially if you’re selling to Prime members or advertising fast shipping options.

• Customer Service: A good supplier should provide timely and clear communication, especially when handling issues like returns or product defects.

4. Listing Products on Amazon for Dropshipping

Once you’ve set up your seller account and found a reliable supplier, the next step is to create product listings on Amazon. Your listings must be optimized to attract buyers, rank well in search results, and comply with Amazon’s policies.

Steps to Create a Product Listing:

1. Log in to Seller Central and click on "Add a Product".

2. Search for the Product: If the product is already listed on Amazon, you can list under the existing ASIN (Amazon Standard Identification Number). Otherwise, you’ll need to create a new listing.

3. Write a Compelling Product Title: Include relevant keywords that customers are likely to search for. The title should accurately describe the product and its main features.

4. Product Description and Bullet Points: Use concise, bullet-pointed descriptions to highlight the key benefits and features of the product. The detailed product description should be informative, clear, and persuasive.

5. Images: Use high-quality images that meet Amazon’s standards (preferably 1000x1000 pixels or larger) to show the product from different angles. Professional images are crucial for increasing conversions.

6. Price Your Product: Set a competitive price that covers your costs, including the supplier's price, shipping fees, and Amazon’s referral fees. Use Amazon’s Automated Pricing tool if necessary to stay competitive.

Make sure your listings comply with Amazon’s rules. All information must be accurate, and the products you offer must match the descriptions and images you provide.

5. Amazon’s Drop shipping Policy

While drop shipping is allowed on Amazon, the platform has strict guidelines that sellers must follow to remain compliant. Here are Amazon’s key dropshipping policies:

1. Be the Seller of Record: You must always be listed as the seller of record on Amazon and ensure that you are identified as the seller on packing slips, invoices, and any other product-related materials.

2. Supplier Restrictions: You cannot use suppliers who ship products directly to customers with their branding, logos, or invoices. The customer should never know that the product is coming from a third party.

3. Responsibility for Customer Service: As the seller, you are responsible for managing returns and customer service inquiries, even if you never physically handle the product.

Prohibited Practices:

• Shipping products from another retailer, such as ordering a product from a competitor like Walmart or eBay and having it shipped to your Amazon customer. This violates Amazon’s policies and can result in your account being suspended.

6. Managing Fulfilment and Shipping Times

Even though you’re not handling fulfilment directly, it’s essential to ensure your supplier can meet Amazon’s fulfilment expectations. Amazon customers, especially Prime members, expect fast shipping, and falling short can hurt your seller metrics.

Key Tips for Dropshipping Fulfilment:

• Monitor Supplier Performance: Regularly check that your supplier is meeting agreed-upon shipping times. Failure to deliver on time can result in negative feedback or even account suspension.

• Set Realistic Expectations: Clearly communicate shipping times on your product listings. If your supplier is shipping from overseas (e.g., China), make sure to adjust the delivery times accordingly to avoid customer dissatisfaction.

• Track Orders: Use order tracking to stay updated on the status of each shipment. You’ll need to provide customers with tracking information promptly after a purchase.

7. Handling Customer Service and Returns

Dropshipping doesn’t exempt you from managing customer service. You are responsible for handling inquiries, returns, and refunds, even though the product is coming from a third-party supplier.

Best Practices for Customer Service:

• Quick Responses: Amazon expects sellers to respond to customer messages within 24 hours. Failing to do so can hurt your account performance metrics.

• Handling Returns: Have a clear return policy in place and ensure that your supplier is willing to accept returned items. If your supplier won’t handle returns, you may need to ship the products back to yourself and then handle the return manually.

8. Pros and Cons of Dropshipping on Amazon

Pros:

• Low Start-up Costs: You don’t need to invest in inventory upfront, allowing you to start selling with minimal capital.

• No Warehousing: Since the supplier handles inventory and shipping, you don’t have to worry about warehousing costs.

• Scalability: You can scale your business quickly by listing multiple products without the logistical burden of managing stock.

Cons:

• Lower Margins: Since you’re paying a supplier and covering Amazon’s fees, the profit margins in dropshipping can be thin.

• Supplier Reliability: You’re relying on a third party to handle inventory and shipping, which means you have less control over product quality and delivery times.

• Strict Amazon Policies: Amazon has strict rules for dropshipping, and any violation could result in account suspension.

Conclusion

Dropshipping on Amazon is a great way to start an ecommerce business without the hassle of managing inventory, but it requires careful planning, reliable suppliers, and strict adherence to Amazon’s policies. By understanding the dropshipping process, creating compelling product listings, and ensuring seamless fulfilment and customer service, you can build a successful dropshipping business on Amazon’s vast marketplace.