Drop Shipping Amazon in 2024: How to Get Started
- Freedom Pass
- Feb 9, 2024
- 11 min read
In today’s fast-paced world, starting a drop shipping Amazon business can be a game-changer for entrepreneurs looking to create a profitable online business or store. With a vast marketplace and low overhead costs, it’s no wonder that more and more sellers are exploring this top online retailer and business model. In this comprehensive guide, we’ll dive into the world of dropshipping on Amazon and share valuable insights on how to set up, manage, and scale your own online store or business for success.
Key Takeaways
Amazon Dropshipping is a low-risk, high-reward business model for eCommerce stores including your own website.
Setting up an Amazon seller account and finding profitable products are essential steps in launching your dropshipping business.
Optimizing product listings with keyword research, creating quality images & descriptions, managing customer service & returns, as well as utilizing advertising and marketing strategies will help ensure success in Amazon dropshipping.
Understanding Drop Shipping Amazon
Dropshipping on Amazon, also known as drop shipping, is a unique ecommerce model where sellers list products without having to store inventory or maintain an inventory management side, while suppliers take care of shipping and customer service. This low-risk, high-reward ecommerce business model allows you to tap into the huge marketplace that Amazon offers, making it possible for many to find Amazon dropshipping profitable. By choosing to dropship on Amazon, you can leverage the platform’s vast customer base and established reputation to grow your own ecommerce business.
Participants in Amazon dropshipping include sellers who run an ecommerce store or an online store. As a seller, you’ll list products without holding inventory and partner with a dropship wholesaler or distributor to ship products directly to consumers. The supplier takes responsibility for shipping and customer service on your behalf, ensuring a seamless experience for the customer.
The process for ordering a product in Amazon dropshipping is straightforward. Here are the steps:
The customer places an order and makes a payment.
The seller receives the order and payment.
The seller places an order with the supplier for the product.
The seller pays the supplier for the product.
The customer’s shipping address is provided to the supplier.
The supplier handles packaging your products, including packing slips and shipping the product directly to the customer.
The supplier provides the seller with tracking information.
Grasping the roles and responsibilities of each participant in the supply chain, the Amazon dropshipping business model paves the way for your success. By working closely with reliable suppliers, you can create a thriving online store and capitalize on the ever-growing e-commerce market.
Setting Up Your Amazon Seller Account
To start dropshipping on Amazon, the first step is to establish an Amazon account. For sellers your Amazon account is known as a 'Seller Central' account. Amazon offers two options for seller accounts: Individual and a Professional seller account. The Individual plan charges $0.99 per unit sold, while the Professional plan has a flat fee of $39.99 per month, regardless of the number of products sold. These fees are paid to Amazon, not the third-party supplier, and may include processing customer returns.
Certain product categories, such as collectibles, music, and watches, require approval before you can ship orders or establish an Amazon store. Ensuring that you have approval for these categories can help make your Amazon dropshipping business profitable. To locate information regarding approval requirements for specific products, you can search the Amazon catalogue by going to 'add a product' from your seller central account and select the “Show Limitations” option on the products you are looking to sell in your Amazon account.
For sellers who anticipate selling more than 40 units per month on Amazon Seller Central, the Professional plan is recommended. This plan offers additional benefits such as access to advanced selling tools and the ability to list an unlimited number of products.
Selecting the right Amazon seller account type for your business needs lays the groundwork for a prosperous Amazon dropshipping venture. Remember, the right plan can help you scale your business and maximize profits in the long run.
Finding Profitable Products for Amazon Dropshipping
Recognizing profitable products for Amazon dropshipping and establishing a competitive advantage is a pivotal step in establishing a thriving online store. To achieve this, it’s essential to research high-demand, low-competition niches and utilize tools such as Helium 10, Jungle Scout or SellerApp.
Helium 10 is a comprehensive tool that provides users with a searchable database of all products sold on Amazon, making it an invaluable resource for those interested in dropshipping products. This tool can be utilized to evaluate demand, competition, and profitability of a product before listing it on Amazon.
Another useful tool is Helium 10’s Product Research tool called 'black box' which can be used to identify top products based on:
Product Niches
Estimated sales
Ratings
FBA fees
Other relevant criteria
Once you input the desired category and keywords, Helium 10's product research tool 'black box' will generate a list of potential products for your Amazon drop shipping business.
In addition to using market research and tools, consider “casting a wide net” by listing multiple products simultaneously on your Amazon store. This strategy allows you to test the market and determine which products resonate best with your target audience.
Selecting Reliable Dropshipping Suppliers
Opting for trustworthy dropshipping suppliers is an integral part of your dropshipping Amazon business. Factors to consider when selecting a dropship supplier may include product quality, shipping times, and communication. It’s advisable to avoid wholesalers who impose monthly fees or pre-order fees and those who offer their products to the general public.
Some popular dropshipping supplier options include AliExpress, AliBaba, local wholesalers, retail stores, online retailers, online marketplaces, or supplier directories. Keep in mind that it’s common for dropship suppliers to charge a fee per order. Another great method to get your foot in the door is online/retail arbitrage which is where you go around retail stores and search online for deals in order to then sell them for a profit, although this isn't technically dropshipping it can be a great way to earn some initial capital to fund your dropshipping venture.
Before committing to a supplier for product inventory, it’s essential to obtain samples of their products to predict customer reception. As you can analyze the product in real life and compare the quality and features of the samples to the product reviews from your competitors to ensure your supply is up to standard before proceeding. Additionally, make sure to correlate Amazon ASINs and UPCs with the products sold by the supplier to guarantee that the product listing is congruent with the product shipped. As it is against Amazon seller policies to sell products that do not directly match the product images and description on the Amazon listing. Especially if you plan to sell on existing ASIN's with multiple sellers as in this scenario you will most likely not have the ability to change the information on the ASIN, so you must ensure your product matches the information on the listing exactly.
Maintaining a good relationship with your supplier and ensuring they adhere to Amazon’s policies is crucial for long-term successful ecommerce business models. Choosing dependable suppliers allows you to mitigate potential issues and enhance customer experience, as maintaining high levels of customer satisfaction will gear you up for long term success.
Creating Effective Product Listings
An effective product listing is the first element potential customers observe when they visit your page on Amazon. It should be imaginative, inventive, and captivating while containing all the main keywords of your product.
This section delves into three essential components of creating compelling product listings: Keyword Research and Optimization, High-Quality Images and Descriptions, and Pricing Strategy. By focusing on these three elements, you’ll be able to craft product listings that not only attract potential customers but also provide them with the necessary information to make an informed purchase decision.
Keyword Research and Optimization
Keyword research is a crucial aspect of Amazon dropshipping as it helps you understand the language of Amazon consumers and focus on top rivals through tools such as Helium 10's reverse ASIN tool 'Cerebro'. This tool allows you to identify the most relevant keywords for your product listings which enables you to improve your visibility on Amazon and attract more potential customers.
Tools like reverse ASIN lookup and keyword research tools can be employed to identify keywords for product listings by revealing which keywords your competitors are getting their sales from. For effective keyword optimization, it is advisable to incorporate these keywords into your product listing in order to rank for the keywords that have already been proven to be effective, which you can see by the fact your competition is performing from these keywords. You can also spot potential keywords they may be missing out on if the keyword is still relevant to the product but they are not ranking for that keyword, this can give you an additional advantage over your competitors and potentially allow you to overtake them. Also remember to take advantage of long-tail keywords (keyword phrases with 4 or more words) as these can be 'low hanging fruit' in some cases as they are highly targeted keywords and often can be less competitive due to this, and avoid overloading keywords.
Streamlining your product listings with relevant keywords boosts visibility on Amazon, gives you a competitive edge, and aids in the prosperity of your Amazon dropshipping and other business models.
High-Quality Images and Descriptions
Utilizing high-quality images and engaging descriptions is essential for showcasing your products and attracting potential customers. When crafting high-quality images, be sure to use professional-looking photos that are clear and well-illuminated. Utilize a pure white background and abstain from using stock images.
When crafting captivating descriptions, ensure to include highly relevant and optimized keywords which you will gain from Helium 10's Cerebro and then use these keywords in 'Scribbles' in order to ensure all the relevant keywords are included throughout your descriptions whilst still being compelling to the customer. Scribbles creates a checklist in search volume order to help streamline the process of including all the relevant keywords you gained from Cerebro, by crossing them out and keeping a tally of how many times you have used each keyword phrase in your descriptions to ensure nothing has been missed.
Employ a conversational tone to engage the consumer and include comprehensive information about the product. Additionally, optimize images and descriptions for SEO by including relevant keywords in the title, bullet points, description, as well as in the back end search terms, and also including 'image keywords' on the back end of your A+ Content.
Investing time in crafting top-notch images and compelling descriptions to sell products on your own Amazon listing, along with focusing on external packaging, enables you to display your products effectively and establish trust and credibility with your customers.
Pricing Strategy
Formulating a pricing strategy forms an essential part of your dropshipping Amazon business. It’s important to consider Amazon fees, supplier costs and competitor pricing to maximize profit margins. By monitoring pricing changes from your competitors on a regular basis and adapting your pricing strategy accordingly, you can maintain a healthy balance between sales volume and margins. Sometimes you may need to drop your price lower than you would like to on a temporary basis in order to maintain a good position in the market, but bare in mind this may lead to price wars if your competition does the same, so it is important to re evaluate your strategies on a regular basis.
When determining supplier costs bare in mind that some dropship suppliers may require a deposit for future product orders in advance, but this can often be negotiated over time. By understanding the various costs associated with your products and the competitive landscape, you can develop a pricing strategy that maximizes your profit margins and contributes to the success of purchasing products for your dropshipping Amazon business.
Managing Customer Service and Returns
If you plan to dropship on Amazon you are accountable for handling customer service inquiries and returns. Ensuring a positive customer experience is crucial for building trust, maintaining customer satisfaction, and securing repeat business.
To manage customer service effectively, promptly address complex customer service inquiries and work closely with your supplier to resolve any issues that may arise. Potential issues may include incorrect product or quantity shipments, as well as supplier errors such as damaged products. These issues can arise from the fact that you do not physically handle the product prior to the customer receiving it.
Be prepared for potential drawbacks associated with dropshipping in regards to customer service, such as delays in resolution times and a more complex communication process. By effectively managing customer service and returns, you can maintain a positive relationship with your customers and suppliers and foster long-term success in your dropshipping Amazon business.
Promoting Your Amazon Dropshipping Business
Marketing your dropshipping Amazon business is key to enhancing visibility and boosting sales. In this section, we’ll explore two key methods of promoting your business: Amazon Advertising and Sponsored Products campaigns, Social Media and Email Marketing.
Implementing these promotional strategies can broaden your reach, engage your target audience and drive increased traffic to your Amazon store or sales channel, leading to boosted sales and revenue.
Amazon Advertising and Sponsored Products
Amazon Advertising and Sponsored Products campaigns are powerful tools for improving your product listings’ visibility and reaching potential customers. Amazon’s advertising program operates on a cost-per-click (CPC) model, which provides higher visibility for your products in search results.
Amazon Advertising, formerly known as Amazon Marketing Services (AMS), is a platform that enables businesses, including Amazon sellers, to advertise their products and services on Amazon. By targeting potential customers with ads based on their search queries and browsing history, Amazon Advertising can significantly improve the visibility of your products and help you reach a broader audience. It also enables you to target specific keywords and specific ASIN's to enable your listing to show up in front of the right audiences to give you the best possible chances of succeeding.
Allocating resources to Amazon Advertising and Sponsored Products campaigns not only amplifies your product listings’ visibility but also fosters the overall growth of your Amazon dropshipping store.
Social Media and Email Marketing
Leveraging social media platforms and email marketing is another effective way to engage with your target audiences and drive traffic to your Amazon stores. Creating Instagram Reels or Facebook carousel ads can help drive visibility to Amazon listings on social media platforms.
Email marketing can be employed to send newsletters, promotional offers, and product updates to your target audience. Regular communication with your customers through email and social media helps to build trust, foster loyalty, and encourage repeat business.
By combining social media and email marketing strategies, you can effectively connect with your target audience, drive more traffic to your Amazon products, and ultimately increase sales and revenue.
Analyzing and Optimizing Your Dropshipping Performance
If you want to dropship on Amazon, consistent analysis and optimization of your dropshipping performance is essential for sustaining growth and success in your Amazon dropshipping venture. To do this, it’s important to monitor:
Sales
Inventory
Ad campaigns
Search rankings
By reviewing ad campaigns on a regular basis and taking steps to improve your product’s search ranking, you can ensure your efforts are yielding the desired results. Moreover, utilizing metrics such as:
Traffic
Conversion rate
Cost per click
Total sales
Average order value
can help you assess the effectiveness of your business strategies.
Spotting potential areas for improvement and implementing necessary actions to elevate those metrics is integral to sustaining a thriving dropshipping Amazon business. By actively monitoring and optimizing your performance, you can stay ahead of the competition and ensure the long-term success of your business.
Summary
In conclusion, Amazon's dropshipping model offers a promising business model for e-commerce entrepreneurs looking to create a profitable online store. By understanding the intricacies of the Amazon dropshipping fulfillment process well, setting up the right selling account, finding profitable products, selecting reliable wholesale suppliers, creating effective product listings, managing customer service and returns, promoting your business through Amazon Advertising and social media, and regularly analyzing and optimizing your performance, you can set the foundation for a successful and thriving Amazon dropshipping venture.
Frequently Asked Questions
Is dropshipping still allowed on Amazon?
Yes, Amazon allows dropshipping as long as sellers abide by their policy guidelines and are the seller of record. Sellers must also consider other alternative programs, such as Fulfillment by Amazon and affiliate marketing through their influencer program.
Is Amazon dropshipping free to start?
No, Amazon dropshipping is not free to start since you will need to pay a fee for your selling account and purchase inventory to start dropshipping. Additionally, shipping and related fees may be applicable.
What is a dropshipping violation in Amazon?
Dropshipping products on Amazon without being the seller of record is a violation of their terms and is not an acceptable practice.
Is Amazon FBA really profitable?
Amazon FBA can be incredibly profitable, with 15% of sellers reporting profits in less than three months and 68% other sellers seeing profits within their first year. Moreover, many sellers have seen an average of 20-25% more sales after adopting FBA.
What is the initial step for commencing dropshipping on Amazon?
The initial step for commencing dropshipping on Amazon is to establish an Amazon selling account.
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