Amazon Dropshipping: Everything You Need to Know

Posted 8 months ago by Max Komonov

You can do dropshipping with Amazon!

Amazon dropshipping is a business model that allows businesses and entrepreneurs to sell products with very little overhead. Businesses that use dropshipping do not pay for storage, handling, or shipping. They can often sell generic, niche products without having to pay for manufacturing, only facilitating customer orders online.

Want to learn how to start dropshipping on Amazon and whether or not it’s right for your business? This guide can help you learn more.

How to Dropship on Amazon

The most important thing in dropshipping on Amazon is to follow the Amazon’s dropshipping policy:

Here’s an overview of our dropshipping policy:

Ensure your identity as the seller is clearly indicated on invoices, packing slips, external packaging, and all items accompanying the product.
Avoid including wholesalers, suppliers, or manufacturers in product packaging materials or Amazon store product descriptions.
You are responsible for managing returns efficiently.
Adhere to Amazon’s Terms of Service in accordance with the seller agreement (login required).

Then, do some research on available dropshippers to find the best supplier for you. Once you’ve made your decision, register for dropshipping with that company.

From then on, the dropshipper will handle all fulfillment requests of customers who buy from your Amazon storefront. As you receive customer orders, you forward the order and shipping information to the dropshipper.

Your job is then done, as the dropshipper ships the item to the customer.

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Ready to start an Amazon dropshipping business? Create your Amazon account and follow the registration process.

Factors to Consider Before Amazon Dropshipping

First, if you use dropshipping, you will likely have lower profit margins than you would otherwise. There are a few reasons for this. First, dropshipping necessitates that you buy your inventory wholesale or in bulk, to sell it at a markup. This already puts a cap on your profit margins.

Second, the low barrier of entry for businesses using Amazon dropshipping means the market can be highly competitive. If other companies are selling similar products to your own using dropshipping, they may be able to sell at a lower price. On top of this, the high volume of competition means it will be harder to gain visibility.

Using dropshipping also presents problems when it comes to branding and customer service. But these factors do not immediately impact how much money you can make. As for making money using Amazon dropshipping, the above factors are the biggest concerns.

With that said, it is still entirely possible to make money with dropshipping. The best strategy to do this is to conduct careful research into what products you will sell. If you can identify a niche market or product that is not well-represented on Amazon, you can make more money.

By partnering with a third-party vendor to sell these niche items on Amazon, you will have a large market. You will be filling a hole in the Amazon marketplace that many eager customers have been waiting for.

The lower your competition, the better your prices can be as well. This leads to you taking a higher percentage of sales, and also making more money per item sold.

Amazon Dropshipping Pros and Cons

Now that you know how Amazon dropshipping works, here’s a quick breakdown of some of the pros and cons we’ve already covered.

Pros of Amazon dropshipping

No or minimal startup costs
Minimal overhead costs
Order fulfillment from anywhere
Extreme flexibility in deciding what products to sell
Low barrier to entry

Cons of Amazon dropshipping

Low-profit margins
Can be highly competitive
No control over inventory availability — if the supplier runs out, orders can’t be fulfilled.
Difficult to manage customer service complaints when you are not responsible for shipping and handling.
Difficult to build a recognizable, sustainable brand for your company when selling generic products.

How to Dropship on Amazon Without Money

Many businesses and entrepreneurs prefer to use dropshipping on Amazon because it is highly affordable. But, can you dropship on Amazon without money?

Technically, the answer is no. You will need some money to get started with your business. However, dropshipping is very easy to afford for companies just starting out or with low funding. Because you are not paying for the manufacturing, storage, or handling of products, overhead costs are significantly reduced.

The exact cost of Amazon dropshipping services will vary depending on which dropshipper and payment plan you choose. The typical price range of dropshipping services is between 10 to 15% of the product’s cost. Other payment plans might charge a flat fee per shipment, or a monthly fee for dropshipping services.

So if you are trying to learn how to dropship on Amazon without money, you may be able to get it done. By paying a fee per each item sold, you guarantee that you will be making money on every item shipped. However, for businesses that sell a high volume of products, monthly fees could provide more value.

How to Dropship on Amazon from AliExpress

One of the most well-known dropshipping providers is AliExpress. AliExpress is a popular dropshipper because it has an extensive inventory of products in a variety of categories.

Dropshipping on Amazon with AliExpress is fairly straightforward.

First, you need to research AliExpress to find products you wish to sell from merchants not already on Amazon. If you choose a merchant who already sells their products on Amazon, they will always be able to offer a lower price than you.

Following that, you determine how much you would plan to sell on Amazon, and what the cost will be. Then, you simply create an Amazon listing for the product, from your business. Provide information about the product, where it’s shipping from, and how long customers should expect shipping to take.

Once all of this is done, you simply wait for customer orders to come in. When they do, you can automatically pass the order information along to AliExpress for fast dropshipping.

AliExpress dropshipping is free to use. AliExpress merchants get paid through your purchase of their products, which you then sell at a markup. This allows customers around the world to receive quick, affordable access to products, while also being a good opportunity for businesses to establish themselves online.

How to Find Products to Dropship on Amazon?

Now that you know how dropshipping works, you are likely wondering how to find products to dropship on Amazon.

This is usually the most important factor in determining whether dropshipping is worth it or not. Most products sold via dropshipping tend to be generic products that many people need or want in their daily lives. Things like clothes, toys, and kitchen appliances are commonly sold by dropshippers.

But, as we have covered, selling extremely common items with dropshipping isn’t a very efficient business model. The trick is to find products that will offer a high-profit margin.

You will need to conduct a bit of research into products to determine what to sell with Amazon dropshipping. You want to find products that are in high demand, but without much market competition on Amazon.

Once you have found products that are sufficiently popular but not competitive, start looking at dropship suppliers. In addition to dropshipping costs, you should also select your supplier based on whether or not they have your desired product available. If they do, you’re in great shape. You can get set up using all of the steps detailed above.

How Much Does it Cost to Dropship on Amazon?

Dropshipping fees can vary based on the products and supplier. Notably, there are no Amazon costs or fees dedicated to dropshipping. Amazon sellers can opt for the Individual plan at $0.99 per unit sold or the Professional plan at $39.99 per month, regardless of the number of units sold.

How much you spend on Amazon dropshipping also depends on which dropshipping company you partner with. What you sell, and how much of it you sell, also factor into the cost.

So when choosing your dropshipping partner, be sure to take these things into consideration. If you expect to sell a low volume of items, a flat monthly fee may not be the wisest option.

Instead, you might opt for a plan that charges per item sold. But if you expect to sell in high volumes, paying a flat, consistent rate each month can increase profit margins.

How Risky is Dropshipping on Amazon?

Is dropshipping on Amazon worth the risk? Experts often advise against it due to potential drawbacks that could impact your business. Let’s explore the risks:

Product quality: Dropshipping limits your control over order fulfillment, affecting product monitoring and customer satisfaction, impacting profits.
Low profit margins: Amazon dropshipping’s competitiveness can lead to minimal profits due to high seller numbers.
Counterfeit products: Dealing with fake items can harm your brand and lead to legal issues.
Misleading advice: Beware of scams and false guidance in the Amazon dropshipping realm to avoid fraud and losses.

Entrepreneurs must carefully assess these risks before starting dropshipping on Amazon. Understanding and managing risks are crucial for long-term success.

What is the Success Rate of Amazon Dropshipping?

The dropshipping success rate, especially on Amazon, piques the interest of entrepreneurs in ecommerce.

Let’s review key insights:

Dropshipping practitioners on Reddit reveal less than 1 in 100 dropshippers succeed, indicating a notably low success rate.
Experts estimate success rates between 10% and 20%, yet concrete data is lacking.
Online sources also highlight a 10-20% success rate, underlining the challenges in this field.

The success rate of Amazon dropshipping mirrors the broader dropshipping landscape, urging entrepreneurs to grasp associated challenges and risks.

About The Author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.