How to Start Dropshipping on Amazon: A Step-by-Step Guide

Introduction

If you’ve ever considered dropshipping on Amazon but wondered if it’s possible to do so without any upfront investment, then you’re in the right place. In this article, we’ll discuss how you can get started with Amazon dropshipping with minimal funds and grow your business over time. While it may not be entirely free, the investment required is relatively low, allowing you to kickstart your entrepreneurial journey.

How to Dropship on Amazon Without Money: TL;DR

Here’s a quick overview of the steps involved in starting your Amazon dropshipping business without using any actual cash:

1. Sign up for an Individual Seller Account on Amazon: This account is free, but keep in mind that each sale will cost $0.99.
2. Manually research niches and items: Find the most profitable and popular products by conducting thorough research.
3. Find a quality supplier and list products: Connect with reliable suppliers such as AliExpress to source your products for dropshipping.
4. Promote your Amazon listing: Utilize social media or influencer marketing to generate awareness and drive traffic to your Amazon listing.
5. Purchase products using a credit card: To fulfill customer orders quickly, use a credit card to buy the products on behalf of your customers.
6. Pay off your credit card when funds are released from Amazon: Once you receive the funds from Amazon, use them to pay off your credit card bill.

Please note that this method may result in slow business growth. In the following sections, we’ll explore both free and paid methods to help you choose the best approach for your Amazon dropshipping business.

What is a Dropshipping Business?

Dropshipping is an eCommerce business model that involves accepting customer orders on behalf of a distributor, supplier, or manufacturer. When a customer purchases a product from your online store, the supplier takes responsibility for fulfilling the order by shipping the product directly to the customer. As a dropshipper, you essentially act as a middleman, reselling the products without the customers knowing the true source of shipment. Apart from Amazon dropshipping, you can also explore dropshipping options on platforms like Shopify and eBay.

Amazon Dropshipping Rules

Before diving into dropshipping on Amazon, it’s crucial to familiarize yourself with the platform’s rules to avoid any potential account suspensions. Here are a few key points to remember:

• Clear identification as the seller: On any external packaging, packing slips, invoices, or other product information, ensure that only your identity as the seller is displayed. The manufacturer or supplier should not be mentioned.
• Return handling: Handling returns and processing them is your responsibility as the dropshipper.
• Compliance with Amazon’s Terms of Service: Adhere to Amazon’s seller agreement and comply with their Terms of Service.
• Avoid branding conflicts: If you source products from other online stores or platforms, make sure they do not ship with their branding or identifiers. Failure to do so may result in account suspension.

Potential Costs to Start Dropshipping on Amazon

Amazon Seller Account

To begin dropshipping on Amazon, you’ll need an Amazon seller account. Amazon offers two types of accounts:

• Individual Seller Account: This account is free to sign up for, but Amazon charges $0.99 for each sale. With this account, you can sell up to 40 items per month.
• Professional Seller Account: The Professional Seller Account comes with a monthly subscription fee of $39.99. This account allows you to sell more than 40 items per month without the $0.99 per sale fee. Additionally, it provides access to advanced features and tools, such as inventory reports, bulk listings, and advertising services.

If you plan on selling fewer than 40 items per month, the Individual Seller Account is a more cost-effective choice. However, if you’re aiming for higher sales volumes and want to leverage advanced features, the Professional Seller Account is the way to go.

Products

Listing products on Amazon’s online store for your dropshipping business doesn’t incur any upfront costs. However, once a customer purchases a product, you’ll need to pay your supplier for shipping the product to the customer. It’s essential to note that waiting for Amazon to release the funds before paying the supplier can significantly delay order fulfillment. To avoid this, you’ll need to purchase the products using either cash or a credit card.

Using a credit card allows you some extra time to receive payment from Amazon before repaying your credit card bill. However, keep in mind the potential risks involved, such as Amazon account suspension or working with untrustworthy suppliers.

Now, let’s explore the steps to start dropshipping on Amazon:

How to Start Dropshipping on Amazon

Step 1: Choose Your Niche

Selecting a profitable niche is a crucial step in starting your dropshipping business on Amazon. Take the time to research and find niches with high demand and low competition. To identify lucrative products, consider factors such as search popularity, demand, bestseller rank, pricing, and customer reviews.

While manual research is possible, using tools such as Jungle Scout Opportunity Finder can streamline the process. Look for products that meet the following criteria:

• Sales per month: Aim for 100 to 300 units sold per month.
• Competition: Opt for niches with very low or low competition, indicated by lower review numbers.
• Average product price: Target products priced between $20 and $35.
• Niche score: Look for niche scores of 7+ to identify popular and potentially profitable products.

Jungle Scout is a recommended tool for niche research, but alternatives like AMZscout can also provide similar insights.

Step 2: Find a Dropship Supplier

Once you’ve identified your niche or product category, it’s time to find reliable suppliers for dropshipping. Many Amazon sellers turn to platforms like AliExpress to source products from Chinese manufacturers. However, keep in mind that shipping times can be lengthy when sourcing products from overseas suppliers. If faster shipping is a priority, consider local dropship suppliers like ThomasNet, although prices may be higher.

While AliExpress is a popular option, you can also explore other supplier sites such as Made In China and Global Sources. It’s essential to establish relationships with trustworthy suppliers to ensure smooth order fulfillment and customer satisfaction.

Step 3: Sign Up for an Amazon Account

To begin selling products through Amazon dropshipping, you’ll need to create an Amazon Seller Account. Head over to Amazon Seller Central and choose between an Individual or Professional account. It’s advisable to opt for a Professional Account from the start as it provides access to advanced data and features, including Amazon PPC ads for product promotion.

Step 4: List Products

Once you have an Amazon seller account, you can start listing your products. Navigate to “Inventory” and select “Add a product.” Choose the option to create a new product listing and provide all the necessary information, including product descriptions, pricing, and fulfillment details. Be sure to factor in Amazon’s fees, typically ranging from 8% to 15% in referral fees based on the product category.

With an Individual Amazon seller account, you’ll also need to consider the additional $0.99 per sale fee. However, if you opt for a Professional Seller Account, you won’t have to pay this per-item fee.

Step 5: Promote Products

To drive traffic and boost sales, it’s essential to promote your Amazon listings effectively. One quick and effective method is to utilize Amazon PPC ads or Pay-Per-Click ads. These ads ensure higher visibility in Amazon search results for specific keywords, improving the chances of conversions. However, keep in mind that PPC ads come at a cost.

If you prefer to promote products without spending money, you can explore alternative marketing methods such as email marketing, blogging, social media, or podcasting. However, building a substantial and engaged following is necessary to generate interest and boost sales.

Step 6: Process Sales

When a customer makes a purchase on your Amazon dropshipping store, you’ll need to forward the buyer’s information to your dropship supplier. The supplier will then ship the product directly to the customer. Although various tools can automate this process, it’s recommended to handle it manually initially. As your business grows and sales increase, you can explore automation tools to streamline the order fulfillment process.

Ensure that you have a reliable supplier who can handle returns in case they occur. Customer satisfaction is key to building a successful dropshipping business on Amazon.

Pros and Cons of Dropshipping on Amazon

Pros of Dropshipping on Amazon

• Low startup costs: Dropshipping eliminates the need for inventory purchases, warehouse costs, and storage fees.
• Quick and easy setup: Unlike other business models, dropshipping allows for faster implementation as you don’t have to wait for products to be manufactured and shipped to Amazon fulfillment centers.
• Automation possibilities: Numerous apps and plugins are available to help automate various aspects of dropshipping on Amazon.
• Access to research tools: There are tools like Jungle Scout and AMZscout that aid in finding highly profitable niches and products.

Cons of Dropshipping on Amazon

• High competition: The low entry barriers in dropshipping result in high competition. Competing with other sellers for the buy box can be challenging.
• Long delivery times: Products often come from overseas suppliers, leading to longer shipping times and potentially unsatisfied customers.
• Lack of quality control: As a dropshipper, you have limited control over the product quality since the suppliers handle shipping directly.

Tips to Be Successful in Amazon Dropshipping

1. Promote Your Products: To drive traffic and boost sales, actively promote your products. Utilize Amazon PPC ads, create an Amazon store, and explore various marketing channels.
2. Provide Excellent Customer Service: Since you don’t have to worry about inventory, focus on delivering exceptional customer service. Positive reviews and customer satisfaction will contribute to your success.
3. Get Samples: Before listing products for Amazon dropshipping, consider purchasing at least one unit of each product to evaluate its quality, condition, and shipping time. This ensures you deliver a positive customer experience.
4. Add Multiple Products: Aim to list as many products as possible. Some will succeed, while others may not. Continuously evaluate and remove underperforming products while expanding your successful offerings.

Conclusion

Dropshipping on Amazon is an excellent business model for those with limited capital and time. While it may not be entirely free, the investment required is relatively low compared to other Amazon sales channels like private labeling or wholesale. By following the steps outlined in this guide and leveraging tools such as Jungle Scout, you can start your Amazon dropshipping journey and potentially build a profitable business.

Remember, success in dropshipping requires continuous learning, adaptation, and staying updated with market trends. So, take the leap and explore the endless opportunities that dropshipping on Amazon can provide.