Dropshipping is an efficient and simple method of setting up a business for 2022. This business model allows you to sell goods without needing to purchase packaging, deliver, or transport items to consumers. Instead, as drop shippers, you send the order to a manufacturer, supplier, or distributor that can complete the order on your behalf.
This article will talk about the Amazon dropshipping process , its advantages and drawbacks, and also how to successfully get started with it in 2022.
Table of Content
- 1 What Is Amazon Dropshipping?
- 2 Is amazon dropshipping legal
- 3 How amazon dropshipping works
- 4 How to Start Dropshipping on Amazon
- 5 The Costs of Dropshipping on Amazon
- 6 Amazon dropshipping policy
- 7 The advantages to dropshipping Amazon
- 8 The disadvantages of dropshipping on Amazon
- 9 These Software can help you in amazon dropshipping business
- 10 Other Dropshipping Options
- 11 Conclusion
What Is Amazon Dropshipping?
How do you begin dropshipping through Amazon? Dropshipping is possible via Amazon via Amazon’s Fulfilled by Amazon program.
Through this system, you send your merchandise to Amazon, where they store the stock and will ship it directly to your customers.
The advantage of this program is that Amazon offers some of the fastest delivery times available, which means that your customers can receive their items faster. If there’s one thing we’ve discovered from our 21st-century experience, consumers are amazed by speedy delivery times.
Is amazon dropshipping legal
Amazon permits dropshipping by merchants from their site as long as they adhere to certain guidelines.
It is essential to always:
- As the seller of your items.
- You must identify yourself as the person selling your products on the packing slips and any other information provided on them.
- You are responsible for accepting and processing customers’ returns for your merchandise.
- Be sure to comply with the other conditions of your seller agreement and any applicable Amazon policies.
Dropshipping examples that aren’t permitted include:
- Purchase products from a different online retailer and have the retailer deliver directly to customers.
- Shipping orders include invoices, packing slips, or any other information that indicates the seller’s name or contact details other than your personal.
How amazon dropshipping works
Amazon dropshipping is achieved through joining forces with a dropship wholesaler or distributor willing to send products directly to customers on your behalf.
As a partner, you and the third-party provider determine the wholesale price for the online items you plan to sell.
After an agreement with the supplier you’re using, here’s how Amazon dropshipping functions.
- The customer places an order through Amazon to purchase your product.
- The Amazon shipping information straight to your dropship vendor, and pay the agreed wholesale price for the product.
- Your drop ship supplier packs and then ships your order directly to the customer.
- You will keep any difference between the price you sell and the wholesale price, less the Amazon selling costs.
If you dropship with Amazon, You must adhere to Amazon’s code of ethics. You are subject to suspension if you continuously break any of the regulations. These rules are:
- Order Defect Rates Must Be less than 1 % – The total amount of items shipped with defects must not exceed percent. The item is considered defective when it is subject to negative feedback through a chargeback or an A-Z claim. You will likely be suspended when the ODR (order defects rate) exceeds the threshold of 1%, and your account is suspended.
- The cancellation Rate Should Be less than 2.5%. If an order is canceled by the purchaser or you before a shipping confirmation is issued, it is against your cancellation rates. If the rate of cancellations goes over 2.5 %, you are at risk of being suspended. This can happen when you have a lot of sales, and your vendor has run out of stocks.
- Late Shipment Rates Must be less than 4.4%. When your dropship provider regularly ships out products at a late time, you may risk having the suspension of your Amazon account suspended.
How to Start Dropshipping on Amazon
Whether you’re just starting or a seasoned veteran, Amazon dropshipping can be an ideal way to increase your company’s online sales. This is how you can begin your dropshipping business with Amazon.
Plan your online business
While setting up dropshipping businesses is simple and fast, however, having a well-planned strategy is still essential. It is essential for your growth as a business owner. Apart from the basic things like your logo and name, It is important to consider the products you plan to offer and your partners as well as your ideal customer and any marketing strategies you may have in the future.
Make your own Amazon seller account.
If you are planning to sell multiple products, it is recommended to sign up for a professional account. The reason is that the individual selling plan is $0.99 per sale and could take a huge portion of your margin.
Professional seller accounts are monthly fees and additional charges. To register, go to sellercentral.amazon.com. Input the required information, such as your name, email address, and password. In addition, you’ll be asked to give your business information, including the address of your business and tax information.
Get approval for your product category.
The kind of product you wish to sell may require approval before you can launch an Amazon store. Jewellery, fashion, and food are just some examples of categories of products needing approval. However, for products that are niches, such as video games, electronics, or books, you can start an online store and not wait until Amazon’s acceptance.
Note that Amazon is a restricted marketplace for certain products. Check out this list and ensure that you’re not selling items that fall under any categories, including alcohol, nutritional supplements, and laser-related products.
Connect Amazon directly to the Shopify account
If you’re already using Shopify, it is possible to be able to connect the platform to an Amazon account. This will allow you to manage your orders on both platforms with ease. A name or company associated with your Amazon account could encourage repeated purchases.
Once you have received approval, connect after approval, connect your Amazon Account to the Shopify store. To begin, log in to Your Shopify account. Find your Sales Channel on the left panel, then click the + button on the left sidebar. It will display an inventory of items, including Amazon. Click “Add channel” to link to both platforms. Click “Connect to Amazon” to confirm.
Create a listing of your product
Dropshipping products will not appear automatically within the Amazon account. To begin dropshipping, click your Amazon sale channel. Next, find “Create Listing” and click the “Create Listing” button, then click “Select Product.”
You have two choices. The first is for companies that manufacture their items. This will ensure that they receive Universal Product Codes (UPCs).
If you’re a dropshipper, then you’ll have to choose the second option. This is for people who sell products manufactured by different brands. If you select this option, you’ll be able to begin searching for items that you can sell. Simply click “select” if you find an item you’d like to offer. When ready, click “Publish” to conclude the process.
Sync your inventory
Synchronizing the Shopify stock with the Amazon sales channel will stop customers from purchasing items even if they’re out of inventory. Shopify will update your listings on Amazon to reflect the inventory levels. This will allow you to avoid negative reviews and possible issues with customer service.
Advertise your Amazon store
Amazon is a crowded marketplace. You must invest in marketing efforts such as paid advertising to distinguish yourself from your competitors. Advertise on Amazon to bring in new customers. You can also promote your ads on social media platforms to boost sales.
The Costs of Dropshipping on Amazon
Dropshipping is a fantastic method to begin an Amazon store without breaking the bank. But, of course, the first major cost would be the price of your Amazon seller plan.
- The plan you choose to use is completely free to set up. After that, Amazon will collect $0.99 per item you sell.
- The Pro plan doesn’t charge charges for unit costs. You only pay a $39.99 monthly fee to cover all of your selling rights.
Today, Amazon dropshipping fees range between 10%- 15% depending on the item category. Regarding profitability, percentage margins vary between 10% and 30 percent.
Be aware that Amazon will take 15% of top-line revenues. Therefore, if your margins are 30 percent, the marketplace will take 15% of the proceeds of every sale. The remainder of the profit is credited directly to the account you have.
With Amazon’s massive customer base, the dropshipping revenues are not any way to go.
Amazon dropshipping policy
Amazon firmly believes in permitting a third party to complete the order on your behalf. However, before that can happen, you must meet specific requirements, including:
- Your company must also be the sole seller of your goods in the official record.
- You must identify yourself as your seller in all invoices, packaging slips, invoices, and other seller details, along with the product.
- Your responsibility is to handle and accept refunds, returns, and exchanges.
- You must eliminate any information that could identify your supplier as a third party who fulfilled your order.
- You can’t purchase items from a different online retailer and then let him or her deliver the item directly to the purchaser.
- Finally, you must abide by the terms of Your Seller Agreement and adhere to Amazon’s selling policy.
The advantages to dropshipping Amazon
The advantages of selling your products on Amazon are comparable to the advantages of eBay. It’s easy to start; you have immediate access to a huge market and don’t have to think about SEO or marketing.
Amazon also has fulfillment centers of its own, referred to under the name Fulfillment By Amazon, which allows you to add delivered items with goods from your own without the hassle of packaging, shipping, or warehouse.
The disadvantages of dropshipping on Amazon
Listing charges. As with eBay, you pay to gain access to this vast network of buyers by paying commissions. Amazon’s commissions differ based on the product type; however, they are generally in the 10-15 % range. Again, this is a huge part of your profit if you’re dealing with low dropshipping margins.
Data about sales are exposed. One risk you are taking when you use the Amazon platform is Amazon has access to all your sales data, including the products that are most popular to the much you’re selling in general. Amazon was previously accused of using the data to pinpoint great selling opportunities and strengthen its market presence, eventually making other sellers redundant on its platform.
A lack of long-term relationships with your customers. It’s unlikely that you’ll be able to build an ongoing relationship with your clients. Amazon is in business to help itself, so they have the best interest to concentrate on the items and not the sellers. As a result, you should be prepared for being limited in the ways you identify your company, present your products, and engage your clients.
No option for customization. You’re going to be severely limited in terms of customizing. Everything you do regarding branding and UI, marketing, and all other aspects is under Amazon’s control.
These Software can help you in amazon dropshipping business
There is a variety of these on the internet. Here are a few of the most used software’s for amazon dropshipping business
The most adored multi-functional Amazon application available, Helium 10 features tools to conduct keyword and product analysis, optimization of listings, and business analytics.
Oberlo is specifically designed to assist dropshippers in finding items, connecting with suppliers, and establishing the right niche.
A repricing program that automates the process of calculating prices. It lets you set price limitations, including shipping. It also increases the chance of winning Buy Box.
Shopify is where you can find dropshipping. It allows you to connect Amazon as a channel for sales to your Shopify website, and it allows you to keep track of the inventory of your store and monitor the sales that need to be processed.
A machine-learning-powered tool that aids in the discovery of products and sourcing. It’s ideal for companies who want to dropship their products on US and European markets.
Other Dropshipping Options
If you’re not looking to dropship exclusively via Amazon, you can consider having your own online shop or even eBay.
eBay allows dropshipping on its website, but you have to ensure that customers will receive their items within 30 days of the listing expiring. eBay mentions, “you aren’t obliged to state in your listings that an item is coming directly from the supplier.”
However, recently, they have begun to take measures to limit the practice, namely by limiting seller accounts that they believe are dropping shipping to Amazon and eBay. This could be due to it being a technique that assists in promoting Amazon (through its branding on its packaging) and also gives eBay customers eBay customer the impression that Amazon offers lower prices.
Dropshipping your own e-commerce store is more direct; however, it allows you to have more control. While you don’t need to pay fees to third parties, you won’t get the massive quantities of marketing that is free and traffic. But, you’ll be in control of the appearance of your website and will be able to establish your brand.
Amazon drop shipping is an excellent option as long as your supplier is reliable, trustworthy, and understands what is required to do. For your part, you must take charge of managing the process on Amazon creating listings and marketing, collecting reviews, and increasing the visibility of your product. If you feel that you’re quite experienced in these areas, but do not have the money needed to purchase stock, then dropshipping could be the best option for you.