Dropshipping a popular business model refers to allowing businesses to sell products without requiring an inventory opposite a traditional method of investing in an inventory. In dropshipping, the prominent stakeholder is the sellers, third-party suppliers, and the customer. It comes with potential advantages and some complexities.
Dropshipping has become a top model for business in 2023, as a dropshipper products are supplied to the respective entities. In the past years, the numbers escalated from 1.79 billion to 2.14 billion. Considering the popularity of model marketplaces like Amazon with billions of clients in their base have entered the potential dropshipping market.
In this blog, you will discover various aspects of Amazon Dropshipping. The primary step, advantages, and learning on how to start an online Amazon Dropshipping business and more.
What Is Amazon Dropshipping?
The name itself suggests Amazon Dropshipping is a rigorous business model where you can list products on Amazon and sell them without having an inventory. So, technically you are an exclusive member of Amazon, but without any large investments and any stocks.
Many dropshippers put their interest in Amazon Dropshipping due to its name and huge market shares. But, with Amazon, you have to obey their policies and be approved as a verified Amazon seller account. Amazon is a preferred platform due to its services like fast deliveries, returns, and a smooth shopping experience.
According to research,
The number of users has doubled since 2017 has doubled and on a daily basis, 3,728 sellers are added daily.
A Factual Analysis Of Dropshipping
Often this question is heard, Is dropshipping dead? To answer it in a word, no it is not! The stats and factual data can prove dropshipping is a potential e-commerce business model. Although the industry is saturated, 2023 has higher hopes for dropshipping and the market is expected to take an incredible reach by 2025.
Now and then the discussion says dropshipping is a saturated market, but the stats show that approximately, 27% of online retailers are using the dropshipping method. So, it is not true that dropshipping is dead but it keeps changing and updating.
Secondly, in e-commerce shipping products to customers is always a problematic process for the manufacturers especially shipping to far countries. Most businesses have complained they have to market the store and market products, and fulfill them when orders are placed, so businesses result in spending extra on marketing and fulfilling them.
Considering such scenarios, dropshipping becomes a better option and even better results are achieved. The dropshippers will take the orders and direct the orders to them and this helps in carrying out work with lower costs.
Thirdly, the burden of marketing is taken away and is looked after by the dropshippers. They also take orders and fulfill them. So, it helps businesses to earn higher profits by expending less on marketing and stocking. Lastly, higher profits are earned through dropshipping.
Coming to Amazon good profits can be earned at a higher margin. It is said that Amazon Dropshipping facilitates about 10% margins, but it is important to remember the account fee. So, in 2023 dropshipping has become more profitable and is a wonderful option for people looking forward to working in e-commerce.
Amazon Dropshipping shows great growth overall, and has seen its highs and lows but is growing by far at a good rate.
How Does Amazon Dropshipping Work?
Typically, there is a long process in starting an Amazon Dropshipping business and how the logistics are arranged. Here is a dropshipping model followed by Amazon.
- A signed agreement with the dropshipper.
- Customer places order online
- Sellers take the order.
- The order is confirmed.
- Seller forwards the order to the dropshipper and it is shipped
- The product is received.
A Look into Amazon’s Dropshipping Policy
Here are some must-haves that are to comply with using the Amazon Dropshipping model. They are,
- Always name yourself as the seller on packing slips, invoices, and other important slips and the external packaging.
- No-third part should be mentioned on the packing slips, invoices, and other products prior to shipping.
- You have to be responsible for accepting or processing customers’ returns of the products.
- All the policies are to be followed with other terms of the seller agreement.
Central Figures Involved in A Dropshipping Model
There are some key players involved, here are some of the integral figures in a dropshipping business.
The Seller
The seller of record is an individual selling product. They set the product price, record, and purchase as revenue and also have the responsibility of the sales tax and all the other important matters.
Manufacturers
Goods are purchased from wholesalers or manufacturers, goods can be purchased in bulk.
Wholesalers
Wholesalers can buy products from manufacturers and sell them to retailers and function as a middleman. They may also provide dropshipping services to retailers.
Advantages of a Dropshipping Business
Before you learn about the steps of starting the Amazon Dropshipping model, here are some of the benefits you need can learn. Amazon Dropshipping platform comes up with some outstanding benefits which attract more entrepreneurs.
It Does Not Cost a Lot
Unlike the traditional retail method, dropshipping is an economical method. You don’t have to hold on to a wholesaling method, buy merchandise, handle the products, pack or pick, and deliver it to the consumers.
It Is Easy to Start With
Starting an Amazon Dropshipping method follows a simple method to operate. You need an Amazon account, an online store, and social media pages. This can be handled by anyone easily. Moreover, it does even demand a license or any kind of professional certification.
A Clan of International Amazon Suppliers
Amazon brings their products from suppliers from around the world and later are supplied to the warehouse. They operate in many languages to deal with their clients. So, it raises an opportunity for businesses around the world to work with Amazon and makes it easier for them to communicate.
Higher Chances of Discoverability
Looking at the popularity of the platform and the traffic it generates, you can expect some amazon chances of being discovered. It is a huge market offering various products under different niches, so you can expect some astounding turnouts.
No Warehouse Hassles
By offering exclusive warehouses Amazon has taken up a notch. This program allows dropshipping of products without acquiring an inventory. So, they give you an edge and handle all the hassle.
Retail e-commerce sales from 2014 to 2026
Multiple Dropshipping Options on Amazon
Amazon offers some dropshipping models, right now they are offering three models.
Online Arbitrage
In this method products are bought online, are resold for profits. It is a legal process, and people purchase them to maximize their profits. It is a good process as long as products are sold on Amazon. Just remember when you are buying products you have to pay for the shipping and platform fee.
Private Label
In this method, products are directly purchased from the manufacturers or production. It also provides you with legal rights, if you don’t own the product. You can also decide on the product logo, label, and packaging of the products. Although this process takes time but makes a business grow for a longer term.
Amazon Merch on Demand
Amazon allows you to show your creativity and it is a great way to sell products without owning the products. In this method, designs are created and order the units are printed. Upon placing an order, the POD ships the products to the customer.
How To Start an Amazon Business: Learn Through Detailed Steps
The Amazon dropshipping business is a top model for building a successful business. You will be able to start selling through a direct channel to the customers, one does not have to buy products until an order
is placed. The global e-commerce market is rapidly growing, it is a potential market to enter and invest in.
Amazon is one of the biggest e-commerce platforms and products from every niche are available at the store. So, the step is to find the right third-party suppliers. How to do it? let’s learn a detailed step through the process to start an Amazon dropshipping business.
Identify Your Niche
Finding a niche and setting up an online store needs to go through ‘find the niche’. You need to determine what products you want to sell online.
This stage is critical as you have to stand out from the market and choose a category that has the potential to work in the market. Here is what you need to do for choosing a niche.
Product of interest
You know you want to sell, but what do you want to sell? Sell the products you are passionate about and can work more enjoyably. it is important because it makes it easier to sell and attract customers.
Product Demand
Make sure to keep products that have the potential to sell in the market. You don’t have to sell anything that is not demanded in the market. But on the other side, you can also sell seasonal products that capture the attention for a certain period.
Low Shipping Charges
If the delivery charges are higher it acts as an obstacle between the business and the customer. So, it is better to offer free delivery and affordable items as it takes in the cost of a business and helps to increase sales.
Take A Market Analysis
After coming up with a niche, the next step is to conduct a market analysis. This allows having a robust assessment of how the market is working and what are points to be covered. A competitive analysis is good as it allows one to focus on their niche. Once you have carried out the analysis it helps to choose the dropshipping store. Follow the below elements to conduct the market analysis.
Market Size
The market is an integral element to start with an analysis. Gather relevant information on the interested niche market, and look at its size, trends, and growth. This helps about the potential of the market and how much are chances of it to grow.
Target Audience
You need to look for them as they are the most important figure. So, take a look at their gender, demographics, income, range, hobbies, and other necessary elements.
Fellow Competitor
Checking and keeping up with the competitors is vital to keep a business going. Online tools are a great way to identify them and see how they are performing.
Register As a Seller Account on Amazon
To proceed with the selling process, you need to register as a seller account on Amazon. The process requires some significant information to fill in and start with the journey. Amazon offers two types of plans individual and professional. The individual plan comes up with some restrictions on selling, but the professional plan has no order minimum.
Find The Supplier
Finding suppliers is necessary to keep an Amazon store running. They should be honest, and credible and understands the concept of dropshipping. Many suppliers will come up with their conditions to start a business. Such ideas do not fit under the model of dropshipping. Amazon has vetted suppliers that are trustable to work with. They provide a list of dropship suppliers, thus swifts the process of finding suppliers.
Here is what you can do to find better suppliers.
- They want to trade at fair prices.
- Provide a tracking number.
- Keep a check on their packaging, and make sure they are consistent with it.
- Offer reliable and friendly dropshipping services.
- Note the time a supplier takes to process and deliver, make sure they are able to process returns.
- They should be capable of delivering what they have promised.
- They should offer flexible delivery policies and have low-costs and fast delivery.
- Have quick actionable customer service and must take proper measures to solve queries.
Get Approval in The Product Category
Amazon demands approval under certain niches, such as beauty, fashion, and accessories before they are allowed to go up to the store. Other products like electronics, games, and books do not require approval. Make sure to not sell anything prohibited on the platform.
Create An Amazon Product Listing
Amazon product listings are one of the marvelous features they have introduced. They pop up when a customer visits the page and products are easily searched through the search bar. It also helps in making purchasing decisions based on content, prices, quality, and location. To excel, you need to induct the right keywords.
Being discoverable in the Amazon product category is to keep your business popular. It is necessary to keep your dropshipping business in the game and draw more customers toward you. As much as the dropshipping model is growing you need to make your business more convincing. Creating a product list for Amazon is a tricky process, and Amazon has introduced A9 Algorithm.
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What is A9 Algorithm?
It is a subsidiary of Amazon and it develops the company’s search engine development technology. It is a powerful lean methodology that takes up the rankings. The AI-based method helps to rank products and match with the customer’s query.
Sync The Inventory
Now move on to having a Shopify inventory as it is a needed tool to keep every dropshipping process under a proper channel. By syncing the Shopify inventory with Amazon Sales Channel, it helps to keep updated about the products available in the inventory. Also, the system keeps updated according to the availability and nonavailability of the products.
Market Your Dropshipping Business
After establishing a store, and making everything legal and optimized, move on to marketing the store. A good marketing campaign has always been a topic choice for businesses. Every business needs to apply a marketing and acquisition strategy. Choose the following channels to make the most of marketing.
Email Marketing
You must have subscribed customers on your list. You can attract and keep them in your account with various discounts and offers. Email marketing has some best practices that help in keeping clients as your advocates.
Social Media
It is one place that never goes out of fashion in reaching and targeting customers. Social media platforms like Facebook, Instagram, and Twitter host billions of people, thus they are effective platforms for market and generating a higher customer base.
Search Engine Optimization (SEO)
SEO is a top method to rank websites on search engine platforms. Applying great SEO strategies can help in ranking websites at a higher place on the SERP.
Amazon Dropshipping: Fulfillment by Amazon (FBA)
Similar to the dropshipping method, Amazon has been introduced to take advantage of Fulfillment by Amazon (FBA). The program also has similar benefits to dropshipping which does not require a warehouse or an inventory.
If you are willing to dropship on Amazon but don’t have connections as an FBM seller, you have the option for Amazon FBA. The process simply asks to ship the products directly to the Amazon Fulfillment Center, the rest of the process is carried out by them.
They also store the products for you and when an order is placed, they pack and deliver it to the customer. But there are conditions to it the cost of the time of the year and the product you sell. If the product lies in their inventory for more than 6 months, you have to pay a long-term fee.
Dropshippers who use the Amazon FBA method have to follow the private label method and cannot be a part of drop surfing or include the packaging slip with the logo of another company.
How Much Does It Cost To Start An Amazon Dropshipping Business
Amazon Dropshipping business fees vary according to the type. For this, you need to sign up on the official selling account. The profit margins may vary from product to product from 10% to 15%.
The individual plan costs $0.99/per unit and the professional plan costs $39.99.
How To Choose the Best Dropshipping Product in 2023
Since you have learned details on every aspect of dropshipping, you also need to pick the perfect products to sell on an e-commerce store. Here is a well-researched list of the products to sell in 2023. These are collected by looking into insights, user behavior, patterns, and the most popular niches.
5 Tools to Use for Amazon Dropshipping
If you have planned to start Amazon Dropshipping Business, here are some tools that can help in learning and maintaining dropshipping.
Shopify
Shopify is one of the robust tools to expand your sales, it is an e-commerce platform that helps in setting up and running an online store. To use Shopify be sure you are not following the FBA method. It helps you to connect Amazon as a sales channel to your store. It also helps in other means by alerting and keeping inventory tracked.
- Basic Store USD 19
- Shopify USD 49
- Advanced Shopify USD 299SD
Sellery
The tool helps to maximize sales, and own the Buy Box. Sellery is a repricing software customized with built-in strategies. Through the software, prices can be changed easily, and reprices the products as soon as there is a change in the competition. The tools offer a free 2-week trial and can do much more than automatic pricing.
- Sellrey Cost $50 to $2000.
AutoDS
AutoDS is a full automation tool that allows you to quickly import, monitor, and find products. The tool helps to add trending products that can fit into your dropshipping store. You can look through some big stores, and suppliers, and compare their costs, delivery time, comments, and more. To keep a balanced check on pricing AutoDS has an automated monitoring process.
- Import $9.90/per month
- Starter Plan $1.790/per month
- Advanced $32.90/per month
FeedCheck
If you have a great number of Amazon products in the store FeedCheck allows you to review them in a place. Viewing and reading the reviews, can help you in improving products or eliminating some practices. Moreover, it also gives access to keep a staggering competitive analysis.
- Lite $79/per month
- Plus $330/per month
Google Analytics
It is necessary to have an insight into every movement of your dropshipping store. While there are many tools that offer benefits, nothing can beat a tool like Google Analytics. The tool has a swift process after this you will not require to use any other kind of tool. All related data, metrics, and insights are displayed on the dashboard to help you in measuring out everything. Google offers two versions of the platform GA is free and GA 360 is a paid version.
5 Ideas to Help You Improving an Online E-Commerce Store
2023 is the year of e-commerce business and is expected to make a phenomenal performance. All the online e-commerce platforms are competitive with each other. A report by Statista shows that Amazon is expected to become the largest retail store in sales worldwide by 2027.
So, if you have planned to run an Amazon dropshipping store, have an actionable plan to make a way in the market. There are always chances to modify the strategies for running an online e-commerce store. So, if you are looking to increase sales on Amazon here are some updates.
Take Care of The Ratings
Ratings and reviews play an integral role in running an online store. Make sure you are keeping up with the target to reach a 95% satisfactory rate. Good reviews and rates make stores trustworthy and advance to reach organic searches. There are various strategies available to see your rating on Amazon increased, ranging from ensuring that shipping happens swiftly, to replying to queries made by customers at the drop of a hat. Track critical metrics and improve things you’re not quite nailing yet to get those good reviews pouring in.
Always Optimize Product Titles
Adding relevant keywords is a required step, but stuffing keywords do not add to the benefit of the product title. Instead, focus on optimizing the titles of the products placing the brand name in the title followed by the color, weight, and model of the products.
Point to Remember: The usage of keywords is updating and is not decreasing in its importance. It is important to stay ahead of the game and carve out ways for keywords. Plenty of tools online boost SEO.
Target For the Buy Box
Amazon has millions of sellers, and they might be selling the same products. In this dense market, your product may never get the views, so you need to compete with fellow competitors by targeting the Buy Box. It is a small yet very important and visible section available on the product pages.
It allows customers to make instant purchases and they do not have to go through the research method. So, the seller who has the buy box will have more sales and be able to make a name in the market. A seller achieves the Buy Box through sales drive, and traffic compared to other sellers.
Update The Product Photography
Images of products matter a lot, and they have to be top-notch to attract customers. So, it is necessary to work on photography of the products by following basic principles.
- Shoot at daylight and make sure to do it in the daytime.
- Keep a balanced set of the camera, avoid flash, and set it on white balance.
- Take multiple shots from every angle.
- Use a backdrop that sparks the products and compliments its niche.
Abide By the Amazon’s Given Terms and Conditions
Lastly, but most important is to follow the terms and conditions given by the platform. Amazon has a set of rules that have been created to keep the platform credible. So, follow them to run a sustained dropshipping business.
The Key Takeaways
The dropshipping model of Amazon is well-planned and comes up with mediocre risks. It does not demand heavy investments in terms or conditions.
It is a great platform to earn profits without stocking products and only find products, have a commitment, and promote the dropshipping store.
No one has to worry about the costs of inventory or keep the products in the warehouse. The process is an easy take up to the e-commerce market.
Frequently Asked Questions
- How do I start an Amazon Dropshipping business?
To be on Amazon as a sell you need to identify yourself as a seller and be responsible of the queries related to the products.
- Is dropshipping a legal method?
Yes, it is a legal fulfillment method being used by every e-commerce market around the world. Although there are some legal steps involved to verify as a dropshipping business.
- Does Amazon allow Dropshipping?
Amazon allows dropshipping, but one has to obey the rules such as identifying yourself as a seller and attaching invoices, packaging, and slips. One supplier is also responsible for customer feedback, returns, and the quality of the product.
- What is Amazon Buy Box?
Amazon buy Box is a small box visible on the right side of the Amazon product page. It enables users to make a quick purchase without searching through the search box. A Buy Box is achieved through sale drives and conversions.
- Does Amazon Dropshipping provide profit?
Yes, but you need to make sure your business is gaining enough profits. You have to reach a decent markup to earn profits. It is up to you how you choose to set the process of products. Often profits are earned by offering products in fewer niches.
