Amazon Dropshipping Guide: How To Dropship on Amazon (2022)

Amazon Dropshipping Guide: How To Dropship on Amazon (2022)

It’s obvious an entrepreneur would want to try Amazon dropshipping. In 2019, the company had over $300M active users and more than $280B in sales—using Amazon store dropshipping as a sales channel for your business can mean big returns. 

But how does Amazon dropshipping work? And how can you turn it into a profitable venture for your e-commerce business?

This guide will walk you through whether dropshipping on Amazon can be profitable, how to dropship on Amazon and top dropshipping tools to help you start selling today.

Does Amazon allow dropshipping?

Yes, Amazon lets you dropship on the marketplace as long as you follow a few housekeeping rules:

Always be the seller of record for products.

Identify yourself as the seller on packing slips, invoices, and other information in connection with products.

Remove all information that identifies the third-party seller before shipping the order, including invoices, external packaging, packing slips, etc. 

Stay responsible for accepting and processing returns.

Follow all terms of your seller agreement and Amazon and dropshipping policies.

Read more about Amazon’s drop shipping policy.

How much does it cost to dropship on Amazon?

Amazon dropshipping fees vary by product type but are usually in the 10% to 15% range. If you’re working with relatively small margins when dropshipping Amazon products, this will take a hefty chunk out of your profits.

You’ll also have to choose a selling plan. The Individual plan costs $.99 per unit sold, and the Professional plan costs $39.99 per month, no matter how many products you sell. 

Read more about Amazon’s commission fees. 

Is Amazon dropshipping profitable?

Amazon dropshipping can be profitable. The average drop shipping margin is between 10% to 30% margins. Amazon takes around 15% off your top-line revenue. 

So if your margins are around 30%, that means you’ll have a new margin of 15% after selling a product via ​​Amazon store dropshipping. These margins can be higher if you win the Amazon Buy Box, but it’s highly competitive and shouldn’t be something you rely on a long term.

Pros and cons of Amazon and dropshipping

Pros of Amazon and dropshipping

The advantages of selling on Amazon are similar to the benefits of eBay—it’s easy to get started, you have immediate access to a large audience, and you don’t need to worry about marketing or SEO:

Vetted Amazon dropshipping suppliers. Amazon buys products in bulk from mostly European suppliers. It then holds everything in warehouses until it’s ready to ship. Whether you’re a new seller or seasoned pro, you can sell quality products at scale to an international audience.

Zero warehouse cost. Amazon also offers its own fulfillment centers, known as Fulfillment by Amazon, which allow you to complement your dropshipping Amazon products with items of your own without having to deal with packing, shipping or warehousing.

More opportunities for discoverability. Amazon also has over 30 categories you can choose from. You can sell in as many different dropshipping niches as you want, which with the right dropshipping suppliers and products can help you reach super-targeted markets.

Cons of Amazon and dropshipping

Exposure of sales data. One risk you take using Amazon’s platform is that Amazon can see all of your sales data, from the items that sell best to how much you’re selling overall. Amazon has been accused of using this data to identify great selling opportunities and strengthen its own involvement in the niche, ultimately pushing out other merchants selling through its marketplace.

Less long-term connections with customers. It’s unlikely that you’ll be able to grow a long-term relationship with your customers. Amazon is more geared towards helping businesses sell products than building customer relationships. Be prepared to be severely restricted on how you can brand your business, display your products, and communicate with your customers.

No customization. You’re going to be really limited in terms of customization. Everything you do in terms of branding, UI, marketing, and everything else is under Amazon’s control.

Upfront investment. To meet Amazon’s fulfillment requirements, you’ll want to have products from the supplier in your inventory. This means you’ll need to invest money upfront in order to start dropshipping on Amazon.

How to start dropshipping on Amazon in 6 steps

The following steps will show you how to dropship on Amazon:

1. Choose an e-commerce platform 

Thanks to the Shopify and Amazon partnership, you can now sell on the world’s largest marketplace conveniently through Shopify. You can use the Amazon sales channel to track products and orders, plus: 

Create listings for new dropshipping Amazon products

Create and manage offers for existing products on Amazon

Link Amazon and drop shipping listings to your Shopify admin.