How To Start Dropshipping On Amazon In 2024

Dropshipping is one of the easiest online business to start in 2024 and dropshipping on amazon is profitable and super-easy to get started.

In this blog post, I will show you how to get start dropshipping on amazon and share some powerful actionable tips to help you succeed dropshipping on amazon.

How Dropshipping on Amazon Works

Amazon is one of the biggest retailers in the world for a variety of products and this makes the platform a go-to for most successful dropshippers and newbies.

 The major drawbacks are fees charged by Amazon as well as the many rules that you must abide by to avoid having your seller account suspended.

Many entrepreneurs are on the lookout for more customers for their products. These entrepreneurs may be retailers, wholesalers, or manufacturers who are still building or do not have a distributor base.

Dropshippers link entrepreneurs to customers so they serve as middlemen in these transactions. Usually, the dropshipper has a website or an online store where they advertise the products to their audience.

Interested buyers may then place their orders for the product and the dropshipper informs the manufacturer or wholesaler of the order. 

During this period, the dropshipper lets the customer know the time frame it would take for her order to arrive.

Once the manufacturer sends the good, the dropshipper then ships the good to the customer. In most cases, the manufacturer or dropship supplier may include charges for shipping and send directly to the customer. 

Although, on amazon, the dropshipper tends to be responsible for this.

Profit is made from the net difference between cost and selling price. That is, the consumer buys at retail price but the drop shipper places the order at wholesale price. 

Dropshippers also need to pay about 15% of the profit made to Amazon.

This is why sellers must strategically pick their products to ensure the profit margin will result in a reasonable take home.

 Aside from the dropshipping fee, sellers are still mandated to subscribe to seller plans.

There are two plans, the individual plan, mostly for beginners and the professional plan for sellers with more experience. 

The individual plan has no fixed monthly cost, rather a deduction of about $0.99 is made per sale. For the professional plan, the seller pays a monthly fee of $39.99 whether sales are made or not.

Despite the fees and rules around being an Amazon seller, the platform witnessed a 45% boom in sellers in just 2020 alone.  

Rules For Dropshipping on Amazon 

Amazon has strict seller policies that can be a little difficult to navigate. However, this is done to protect the rights of everyone: consumers, drop shippers, manufacturers and Amazon. 

The following are rules for dropshipping on amazon and failure to abide by these rules will lead to having your account suspended by Amazon. 

• Complete Your Registration With The Correct Information 

To become a seller on amazon, you must complete the registration process by providing all information required. This may include your name, country of residence, account information and a host of other details. 

• Fulfil Service Fee Payment Requirement 

Working with Amazon will mean providing your credit card information for the facilitation of payments to Amazon and payments from Amazon. You are required to provide the correct credit card information and authorization to use the information provided. 

This is done to prevent instances of issues like chargebacks, claims, disputes and miscommunications relating to payments. All deductions and payments will only be made from and made to the account details provided. 

Sellers are also required to ensure that the laws of their country of residence support their financial interactions with Amazon. 

• Breach of Agreement

Before starting, sellers are required to sign an agreement with Amazon containing the rules that will be guiding the services provided. Any breach of the agreement made will result in the suspension of the seller account and will subsequently affect your dropshipping business. 

Hence, sellers are advised to take their time to read and understand these rules so they can avoid breaking them.

For instance, the detection of illegal or fraudulent activity by Amazon amounts to automatic account suspension. Sellers must ensure fairness and transparency in their dealings with consumers as well as their dropship suppliers. 

• Account Ratings 

Based on the guidelines set by Amazon, seller account ratings must not fall below the given range at any time. The account ratings are an accumulation of reviews by consumers, the rate of the delayed shipment as well as other factors relating to consumer satisfaction. 

• Percentage of Orders With Defects

All orders shipped to consumers must be properly screened and checked to ensure that they are not delivered with defects. When orders shipped to customers have a defect rate of more than 1%, the seller’s account may be suspended by Amazon. 

• Order Cancellation Rate

The order cancellation rate has to do with the number of orders placed by the drop shipper on behalf of the consumer that had to be cancelled. This happens when the drop shipper fails to confirm the availability of the product before taking the order. The rate of cancelled orders must be below 2.5% at all times. 

• Seller Identification 

The drop shipper must be identified as the ‘seller of record’ at all times and must be responsible for shipping. The name that appears on all invoices, packing slips, sales tax and seller information must be that of the drop shipper. 

This is to prevent confusion on the part of the consumer when a problem occurs relating to product type or product condition. The consumer can easily contact the drop shipper or Amazon if there is a problem so it can be solved. 

Pros and Cons Of Dropshipping On Amazon 

This business model, though with lots of advantages, is not without disadvantages. When making your decision, it is important to be aware of all that you may have to deal with so you have the right approach and mindset before starting your dropshipping business. 

Pros of Dropshipping on Amazon 

• No need for inventory creation as you do not need to manage storage and purchase of products before sales. 
• It is easy to grow your business as there are fewer things to worry about and the market is easy to study. Also, a good number of buyers have peculiar traits so it is easy to appeal to their needs. 
• You do not have to face the hurdles of a wholesaler or retailer so things like ordering, stocking, storing and shipping are off your plate. 
• As a result of the above, you do not have to spend so much to start your business or maintain it. 
• You get to pick from a wide range of manufacturers/dropship suppliers as well as a wide range of products. 
• Amazon serves a huge audience so you will be working with a big market. 

Cons of Dropshipping on Amazon 

• Amazon takes a 10-15% cut on all sales you make. 
• You have to subscribe to either an individual plan or a professional plan and this means extra fees. 
• Marketing and advertising are restricted to the rules laid down by Amazon. 
• You have to expend more energy in dealing with consumers/buyers and suppliers/manufacturers. 
• The buyers/customers belong to Amazon 
• There is great competition among sellers since there are lots of sellers and many are selling the same product. 
• You have little to no access to control the quality of the product delivered to the buyer. 

Step-By-Step Guide To Start Dropshipping On Amazon

You can follow the quick guide below to launch your dropshipping business on amazon. 

• Register as an Amazon seller by creating an Amazon Seller Central Account. 
• Surf the market and decide what products you will be selling. You can try either low-competition products with few sellers or high-demand products. A tool like Helium will aid your search. 
• Identify suppliers that you can work with. 
• Create your product listing from your account. Simply click on the “inventory” bar then slide down to the “add product” bar and click on it. Select the “create new product listing” bar and fill in the information in the spaces provided. Then, publish and your product will be live. 
• Create a marketing strategy to publicize your store. You can use blogs and social media to drive traffic to your store. Ensure to also optimize your product descriptions. 

Tips On How To Succeed Dropshipping On Amazon 

• Get your pricing right. Most newbie sellers get carried away by the price competition. Instead of offering the product at a very low price, try offering discounts at intervals instead. 
• Research properly. Pick products with good sales potential. Understand what your competitors are already offering and try to leverage their shortcomings. This would require a good understanding of the market. 
• Find a niche to focus on. This makes selling easier as you can maintain the same sales strategy for all your products. 
• Take advantage of seasons 

Conclusion 

Dropshipping on Amazon is a lucrative venture that demands a lot of time and effort. It can be fun and fulfilling knowing that you are easing the trouble buyers face in trying to source for their preferred product. Also, the rules created by Amazon though daunting can be followed with caution. 

A good relationship with your dropship suppliers or manufacturers will also go a long way in ensuring the success of your business.