The Ultimate Amazon Dropshipping Guide: How to Dropship on Amazon

If you were to decide that you want to open a store on Amazon, how many many hours do you think it’ll take for you to get your store up and running?

A month?

Two weeks?

How about one day?

As unbelievable as it sounds, you can get your Amazon store set up, and be ready to accept orders in 24 hours.

(Just so we’re clear, I’m talking about 24 hours of work put in on your end. You’ll encounter some downtime when you’re waiting for Amazon to approve your account, but that aside, the actual time you spend setting up your Amazon store shouldn’t take more than 24 hours!)

But what’s the hurry? Shouldn’t you take your time to do things properly?

Well, I’m glad you asked.

First things first:

Consumers are spending $88,000 on Amazon every single minute.

Forget delaying the opening of your store by a day - even if you delay it by a single minute, you’re missing out on tons of revenue.

Secondly:

You can set up an Amazon store in a short period of time, without it being a shoddy job.

The secret is to think about how to outsource certain processes, and simplify your responsibilities.

That’s where dropshipping comes in!

How dropshipping on Amazon works?

Before we discuss dropshipping on Amazon, let’s take a quick look at how you would dropship if you own your own eCommerce store.

If you’re using a dropshipping model, you’ll be listing your products on your website without holding any physical inventory.

When you get an order, you’ll notify your dropshipping supplier, who will then take care of fulfilment on your behalf.

Sounds like a dream come true, doesn’t it?

If you want to dropship on Amazon, though, things can get a little tricky.

Amazon explicitly states in their dropshipping policy that purchasing products from an online retailer and having that retailer ship directly to customers is not allowed.

What you can do, however, is purchase items from retailer A, and have fulfillment center B ship out the orders on your behalf.

(Just so you know, this doesn’t fit into the traditional definition of dropshipping, but there you have it.)

Even though Amazon technically doesn’t allow traditional dropshipping, there are plenty of sellers who still do it anyway…

Such as this guy, who used SaleHoo Dropship to import products from Aliexpress, which he then resold on his Shopify store.

He made a profit of $200 within his first month of operations - not too shabby!

Plus, if you look through the product listings on Amazon, it’s pretty obvious that a lot of sellers are simply dropshipping their items.

I searched for “yoga leggings”, and here’s a product that popped up:

Then I checked out Aliexpress, and lo and behold, it’s the same product:

Of course, there’s the possibility that the seller is importing items from Aliexpress, storing it in a facility in the US, and then shipping it out when he/she gets an order.

But if you check the shipping time, and it’s upwards of a week or two?

It’s pretty likely that the seller isn’t holding any inventory, and simply getting his/her supplier to dropship the items.

But there’s another way - Amazon FBA.

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What is Amazon FBA?

So if you can’t technically dropship on Amazon, but you don’t want to have to deal with fulfilling orders, what do you do?

You can always turned to Amazon FBA, which will pick, pack, and ship your orders for you.

FBA refers to Fulfilment By Amazon, and this is how it works:

Firstly, set up your FBA account. You can either do this by adding FBA to your existing seller  account, or create a new seller account altogether.

Next, create your product listings, and prepare your products.

Your final step is to ship your items to Amazon; from here on out, Amazon will take care of everything.

This includes:

• Picking, packing, and shipping your items.
• Providing tracking information for customers.
• And even providing customer service via contact center on your orders (if there are any returns, Amazon will process it, but they might forward highly specific product enquiries to you from time to time).

Of course, there’s no such thing as a free lunch, so you’ll have to factor Amazon’s fulfilment fees into your budget if you’re using their FBA service.

How much are we talking here?

The rates differ depending on the size of the item and the time of year; generally speaking, you can expect to pay $3+ for lightweight items such as T-shirts, and more for heavier and bulkier items.

If you’re using FBA, this information will be listed on your product page:

This helps increase the legitimacy of your brand (especially if you’re new to Amazon).

Why?

If customers purchase from a small, relatively unknown brand which handles shipping by itself, there’s always the off-chance that they’ll bungle up the delivery.

If customers purchase from a brand which outsources shipping to Amazon, though, they can have the peace of mind that their item will arrive unharmed and on time.

(Or, if not, they’ll be able to get in touch with customer service and have the problem solved quickly).

In addition to this, by using FBA, you’ll also be eligible to offer Prime shipping to your consumers.

The allure of Prime is self-explanatory:

Let’s say you want to buy the kitchen knives in the screenshot above. One seller will ship them to you within 5 days, and another seller (which uses FBA) offers 2-day Prime shipping at no extra cost.

Doesn’t take a genius to figure out which option you’ll go for!

Last but not least, using Amazon FBA also increases your chances of winning the Buy Box.

If you’re not 100% clear on what the Buy Box is (or what it does!), here’s an example.

Let’s say you’re selling this Harry Potter and the Prisoner of Azkaban DVD on Amazon. It’s not a unique product, so there will be many other sellers who are offering the exact same thing.

The Buy Box is located on the top right corner of the product page, and only one seller will emerge victorious in their quest to nab this highly coveted spot…

Okay, I’ll dispense with the theatrics.

But the Buy Box is a big deal, because 82% of all Amazon sales happen through the Buy Box.

Holy cow. That’s a pretty intimidating number, isn’t it?

It makes sense, though. If you’re not in the Buy Box, this is where you’ll end up:

All the way there, below the fold.

Even if visitors do scroll down that far, there are so many competing elements on the page that they probably won’t notice a tiny box displaying the other sellers.

But enough digressing! The point is:

The Buy Box is insanely important, and using Amazon FBA increases your chances of winning the Buy Box.

Here’s what Amazon states on its website:

There you go, straight from the horse’s mouth.

I’ll give you more tips on how to win the Buy Box in a bit, but for now, let’s compare the pros and cons of using Amazon FBA vs dropshipping.

Amazon FBA vs. Dropshipping

Regardless of whether you use Amazon FBA or dropshipping, there’s potential to make money right off the bat.

(Earlier in the article, I shared a link to a case study where someone made $200 in profits in his first month through Amazon dropshipping - there’s also this guy who made $1,477 in profit in his first three months of selling through Amazon FBA).

So how do you decide between using Amazon FBA, or dropshipping on Amazon?

First, let’s look at the cost.

Dropshipping wise, many dropshipping suppliers build the cost of dropshipping into their prices - so you don’t need to fork out any extra fees.

Of course, you can always negotiate for a better price, or for better payment terms.

Bearing in mind that there are tons of suppliers offering the same (or similar!) products on platforms such as AliExpress, I’d say that you hold a decent amount of power during the negotiation process.

When it comes to Amazon FBA fees, on the other hand, there are several things to take into consideration...

First up, you’ll have to pay for Amazon FBA’s fulfilment fees, which we talked about briefly earlier on.

In addition to this, you’ll also incur monthly storage fees. These were increased recently (in March 2017, to be precise!):

That’s not all.

If your items remain in Amazon’s inventory for a prolonged period of time, you’ll also be liable for long-term storage fees.

Mark these two dates on your calendar: February 15th and August 15th.

Every year, Amazon does an inventory clean-up on these two dates.

If your item is found to have been lying around for 6 to 12 months, you’ll be slapped with a long-term storage fee of $11.25 per cubic foot.

If your item has been stored for more than 12 months, this fee increases to $22.50 per cubic foot.

What this means is Amazon FBA might not be the best option for merchants selling slow-moving products.

Another factor that will influence your decision as to whether you want to dropship on Amazon, or use Amazon FBA?

The type of products you’re selling.

There are certain categories of products which are “FBA prohibited”, and these include:

• Alcoholic beverages
• Vehicle tires
• Sky lanterns or floating lanterns
• Perishables
• Products requiring refrigeration

...and more.

Oddly enough, you can sell products which are subject to melting (such as chocolates) on Amazon FBA during October 1 and April 30 of each year.

In any case, if you’re thinking of selling any of the items listed above, you’ll probably have to go with dropshipping instead of Amazon FBA.

In addition to this, if you want to supplement your products with marketing collateral, you’ll be better off using dropshipping as well.

Amazon has a strict no marketing materials policy for their FBA products, so you won’t be able to include pre-priced labels, pamphlets, or any non-Amazon labels on your items.

With Amazon FBA, you’ll also have to adhere to other (very specific!) packaging requirements.

For example, if your product is encased in a poly bag with an opening which is 5 inches wide or larger, it’ll need to come with a suffocation warning.

In addition, your poly bag will also have to be transparent, and have a barcode or label which is scannable.

To take a look at Amazon’s complete list of requirements where FBA packaging is concerned, check out this guide.

But that’s not to say that Amazon FBA is a complete no-go.

As mentioned earlier, the key advantages of Amazon FBA is that is adds to the legitimacy of your brand and makes your product more attractive due to its eligibility for Prime shipping.

Ultimately, you’ll have to look at the specific items you’re selling, and compare the costs and benefits of selling using Amazon FBA, or dropshipping.

Amazon Dropshipping Pros & Cons (Vs Dropshipping On Other Platforms)

Assuming that you want to work with a dropshipping model, Amazon isn’t the only platform that’s available to you.

You can also dropship on other platforms such as eBay, or dropship on your own eCommerce store.

First up, let’s look at dropshipping on eBay.

There are over 171 million buyers on eBay, so if you were drawn to Amazon because of the ready pool of buyers, eBay can offer you the exact same thing.

Where Amazon is a little iffy about dropshipping, eBay states that dropshipping is allowed on their site.

There’s just one thing to bear in mind:

Sellers have to be able to guarantee that buyers will be able to receive their item within 30 days of the end of the listing. (30 days is a very manageable timeline, in any case).

eBay even has a directory of dropshippers (they refer to them as “product sourcers”, but it’s the same thing) on their website.

On the not-so-bright side, you’ll have to pay insertion fees on eBay, which will affect your dropshipping strategy quite a bit.

How so?

If you’re dropshipping on Amazon, you can use tools which allow you to import and sync as many products from Aliexpress as you want to your Amazon store.

What many people do is to import a significant number of products (we’re talking a few hundred!), see which are the most saleable, and then cull the rest. Rinse and repeat.

Whilst you can use the same tools with your eBay store, you’ll incur hefty insertion fees by listing hundreds of new products on your store every month or so.

In addition to this, do take note that eBay offers both auction-style pricing and fixed pricing.

If you’re going with auction-style pricing, you’ll have to monitor your listing. In the event that your item doesn’t sell, it’ll go to an “unsold item” folder, and you’ll have to either re-list it or discard it.

Fixed price listings, on the other hand, are more straightforward.

With these, shoppers have the option to “Buy It Now”.

You can also have your fixed price listings be Good Til Canceled (GTC), meaning they’ll renew automatically every 30 days.

If you’re thinking of dropshipping on eBay, check out this article which you walk you through common eBay dropshipping pitfalls to avoid.

If eBay doesn’t sound like a good fit for you, there’s also a third option:

Dropship from your own eCommerce store.

If you go down this path, you’ll have to be more hands-on in many aspects, including marketing and driving traffic to your store.

After all, you won’t be able to rely on the free traffic that you’ll gain from “piggybacking” on the shoulder of a more established platform.

Having said that, there are several advantages that come with running your own eCommerce store.

For one thing, you won’t incur any third-party fees.

Also, you’ll be able to have full control over the look and feel of your website.

(This isn’t just about the aesthetics. You can design your store using User Experience (UX) tips to create a more conducive shopping experience - and this will help you increase your conversion rates.)

Last but not least, you can also build your brand.

If you’re selling on Amazon, your customers will think of their purchase as a purchase made on Amazon. Without an independently owned website, it’s hard to build brand awareness or get people to develop any sort of loyalty to you.

(Also worth mentioning: selling on Amazon or eBay means you’re at the mercy of their terms and conditions. If you’ve flouted one of their regulations (regardless of whether you did it knowingly or not), you might just find your seller account being suspended).

How To Get Started With Dropshipping On Amazon

At the start of the article, I talked about how you can set up your Amazon store and have it ready to accept orders with less than 24 hours of effort.

In this section, I’ll tell you exactly how to go about doing this!

Before you get started, you should do some research and figure out which dropshipping supplier you want to work with.

You can do this by looking at dropshipping marketplaces (like SaleHoo) or searching a site like AliExpress (although this comes with communication barriers and other issues).

Once you’ve got this sorted out, it’s time to set up your Amazon store.

Go ahead and create your Amazon seller account.

You can choose between signing up as a professional seller or individual seller. Learn more about creating your account and choosing a plan with this guide.

Next, if you’re selling items in certain categories (including clothing and accessories, beauty, and jewelry), you’ll have to get your product category approved.

Now it’s time to start listing your items!

If the item in question already exists in Amazon’s catalog (which will be the case if you’re selling, say, a Nalgene water bottle), here’s what you do:

• Search for the item that you’re selling on Amazon
• Make sure it’s the correct format and edition
• Click on the "Sell yours here" button
• Describe the condition of the item
• Set your price, shipping methods, and so on

What if you product doesn’t currently exist in Amazon’s catalog?

You’ll have to use the “Add a Product” tool to create a Product Detail Page; more on that here.

Amongst other things, your main product image must come with a white background, so make sure your supplier can provide you with images which adhere to Amazon’s specific requirements.

That’s basically it, but there’s one last (optional) step:

If you’d like to do a little marketing, you can also consider investing in Amazon’s Sponsored Product Ads at this point.

There’s a variety of formats to choose from.

If you’re advertising on desktop, your ads can appear above, alongside, or below search results, or even on product detail pages.

If you’re advertising on mobile, your placements are limited to below search results, and on product detail pages.

With Amazon’s Sponsored Product Ads, you can either specify your own keywords (in a manual campaign), or use Amazon’s suggested keywords (in an automatic campaign).

One best practice?

Run an automatic and manual campaign at the same time, and feature the exact same products in both campaigns.

Here’s the rationale behind this strategy:

In the automatic campaign, Amazon will run its algorithms and test new keywords for you.

Looking at these keywords which have been identified by Amazon, you can then assess the effectiveness of each keyword by looking at its clickthrough rate and number of clicks.

Once you’ve found your top-performing keywords, incorporate these into your manual campaign. You’ll now be able to adjust each keyword bid individually, and experiment with different bids to further optimize your campaign.

You can also do some PPC analysis on your competitors to find their top-performing keywords.

Tips and Strategies on Selling and Dropshipping on Amazon

We’ve covered all the basics, now it’s time for the expert stuff. This section will help you take your Amazon dropshipping business to the next level!

Getting reviews on Amazon

Why are Amazon reviews so important?

The first reason is pretty straightforward: the more reviews there are, the more trustworthy your product will seem.

On top of that, reviews also (indirectly!) help you to rank higher on Amazon. More (and better) reviews translate to higher sales conversion rates, and this in turn will lead to your product being featured more prominently within Amazon.

So how do you get more Amazon reviews?

One common tactic sellers used was offering free or discounted products in exchange for reviews. (Amazon has since banned this, so it’s not an option anymore).

In addition, consumers are not allowed to review (or post any sort of content) regarding their relative’s, friend’s, or employer’s products.

What you can do, though, is email your customers to get them to review your products.

To make sure you’re not spending too much time sending out these emails, go ahead and create an automated campaign or a drip campaign.

(If you don’t have an existing email platform that you’re using, try Drip.com, GetResponse.com, or BQool.com.)

With these emails, you want to follow up with your customer and to provide them with all the information that they’ll need about their purchase. At the same time, take the chance to ask them for a review.

Set up your email campaign such that the first email is triggered immediately upon purchase. It should sound something like this:

Your second email should be triggered shortly after the delivery date (don’t have it sent on the exact same day, just in case the delivery was delayed)!

This email should sound something like this:

So now you know how to reach out to your customer base and get more reviews…

...but what do you do if someone leaves a brutal review on your Amazon store?

You have three options.

Firstly, you can contact your customer, and have him/her remove or edit the review.

Secondly, you can try and get Amazon to delete the review.

Finally, you can comment publicly on the review.

Let’s talk about your first option…

Contacting your customer to get him/her to remove the review.

This requires a bit of sleuthing, especially if this person has left a review using a pseudonym. Your best bet is to look at the date of the review, and try and match it up with the dates in which your individual customers received their products.

If you do manage to contact your customer, be sure to speak with them in a friendly, professional manner (regardless of how rude and/or unreasonable your customer might be).

If your customer is facing a problem that was caused by a mistake on your part, don’t be afraid to apologize and acknowledge the mistake.

Once you do this (and rectify the mistake, of course!), you might just be able to pacify your customer enough for him/her to retract the original review.

Here are the steps for your reference:

1) Log into your account at Amazon

2) Navigate to “Your Profile” > “Reviews”

3) Select the review we contacted you about

4) Select “Edit” or “Delete” Review

Your second option?

Request for Amazon to remove the review.

You can do this easily enough:

Navigate to your product details page, select the review in question, and click “report abuse”.

Alternatively, you can also write in to Amazon via email at community-help@amazon.com. Indicate the ASIN of your product and link to the review; at the same time, also indicate how this particular reviewer is violating the review guidelines.

As a general rule of thumb, you might be able to get your review removed if it falls within the following categories:

• Reviews made by people with a vested interest (your competitors, for example)
• Obscene reviews containing vulgarities and other tasteless content
• Reviews containing phone numbers, email addresses, or URLs
• Multiple reviews made by a single unhappy customer about the same product

If both these methods don’t work, your last option is…

Leave a public comment on the review.

Let’s say you’re selling iPhone cables, and a customer leaves you this review…

(Your first course of action should be to try and contact the customer directly, but if that doesn’t work, then you’ll have to leave a public comment).

I’d say something along the lines of:

Three key points:

• Express your apology
• Assure your customer that you’ll be taking steps to correct the situation
• Offer a replacement and/or refund

Alright, you now know all there is to know about Amazon reviews!

Moving on to…

Nailing Your Amazon Store’s SEO.

There’s no escaping the all-important SEO (search engine optimization).

How is Amazon SEO different from regular SEO? Instead of optimizing your content so that you can land on the first page of Google, you’re now doing the same so that your listing will appear at the top of Amazon’s search results.

The first thing to get right?

Your product title.

Now, here’s not the time to be concise.

Instead of simply listing your item as White Tiger Stuffed Toy, you’ll want to go into greater detail and include as many of the following elements as possible:

• Brand
• Product line
• Material or key feature
• Product Type
• Color
• Size
• Packaging/Quantity

Your listing should now sound something like: Melissa & Doug Giant Siberian White Tiger Lifelike Stuffed Animal (Over 5 Feet Long).

With this more detailed product title (and assuming that you’ve optimized the other sections of your listing as well), you’ll get a hit if your customer searches for “giant stuffed animal”.  

Or if he/she searches for “stuffed animal 5 feet long”.

I could go on, but you get the point.

Next, make sure you include keywords in your product descriptions.

Don’t just use the same keywords you did in your title - this won’t bring you much SEO juice on Amazon.

Instead, you should be using long-tail keywords in your Amazon listing. Going with the same example of the stuffed toy, this might look something like:

• Truly lifelike hand-crafted Siberian tiger, nearly life size
• Dramatic and realistic markings
• Made from soft polyester fabric
• 20"H x 65"L x 20"W
• Suitable for ages 3 years and up
• Machine washable on tumble dry low, long lasting and durable
• Great as kids for children's’ birthdays, Christmas

Need some inspiration?

Here’s a free tool which uses Amazon's Autocomplete service to find popular long tail keywords.

Last but not least, Amazon SEO is also indirectly affected by reviews, which we’ve already covered.

The more reviews you have, the higher your conversion rate - and this makes your product listing rank higher on Amazon.

So start emailing your customers, and getting those reviews!

Alright, we’re nearly done. My last tip which will help you sell and dropship better on Amazon is to…

Win the Buy Box.

I’ve previously mentioned that using Amazon FBA increases your chances of winning the Buy Box, but there’s so much more to the Buy Box than that.

Firstly, ensure that your landed price is cheaper than that of your competitor’s.

(Your landed price refers to the price of your product + shipping.)

It can be a bit of a hassle to monitor your competitor’s prices (and adjust your own accordingly) 24/7, so check out tools such as FeedVisor and Teikametrics which will help you do this.

At the same time, also keep an eye on your Perfect Order Percentage (POP) Score.

This score helps Amazon determine whether shoppers get a good experience when purchasing from you, and it takes into account:

• Negative feedback
• A-to-Z guarantee claims
• Chargebacks
• Cancellations
• Late shipments
• Refunds
• Buyer-initiated messages

To learn more about your POP Score (and how to improve it), check out this link.

Final thoughts on dropshipping on Amazon

Cue a round of applause - you made it all the way to the end of this huge 5,000-word article!

You’re practically an expert on dropshipping on Amazon now...

• You know the difference between Amazon FBA and regular dropshipping.
• You know exactly how to get started with dropshipping.
• And you know some advanced tactics which will help you take your Amazon store to the next level.

That’s enough prep work on your part. Consider your research done!

It’s time to bookmark this article, go to Amazon, and create your first seller account NOW.

Remember: it takes just 24 hours or so to create an Amazon store (and tap into that $88,000 of revenue Amazon sellers are earning every single minute).

What are you waiting for?

If you found this article useful, please share it with your friends who are also aspiring entrepreneurs!