The recent addition of the Amazon sales channel on Shopify allows store owners to sell on Amazon through dropshipping. This Amazon dropshipping guide teaches what dropshipping is, how to start using it, its benefits, Amazon success strategies, Amazon tools, and how to sell on Amazon. (Disclaimer: it is not currently possible to dropship on Amazon using the Oberlo app.)

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What is Dropshipping?

Dropshipping allows sellers to sell a product without having to carry inventory or ship the goods themselves, while setting the product prices themselves. The product manufacturer makes the products, maintains the inventory, and ships the good to customers.

Benefits of Dropshipping:

This guide explains the benefits of dropshipping and why and how to dropship on Amazon.

Hold no inventory

A big benefit is that dropshippers don’t have to carry any inventory, which is great because it makes business models less risky for dropshippers. With no inventory to carry, there is less work for a business, and fewer costs as sellers don’t need to pay for a warehouse to hold inventory.

Few skills needed

There are few skills needed for a successful dropshipping business. The things a dropshipper needs to be good at are marketing, administrative tasks, and providing excellent customer service. Mastering these skills can help to achieve success.

Great marketing skills attract more customers, and since drop shippers don’t have to worry about inventory or cost of labor associated with shipping products, they can focus more on marketing. Dropshippers will have to process orders, pay for taxes and expenses, and more. Providing excellent customer service helps maintain good relationships with customers.

Test Products Easily

Dropshippers can test products easily because they can run ads on products to see which ones convert best. Items that aren’t high performers can be removed easily from a store. There is no purchased inventory, so there is no cost, aside from advertising, for a low performing product. This allows sellers to see which products they eventually want to sell as well as how many SKUs can be sold easily.

Low Start-up Cost

Dropshipping is low cost because products are only purchased when a customer places an order, and there’s no warehouse needed for inventory. Sellers also don’t need to hire employees to manage shipping of products, and main expenses include cost of goods, advertising, and a website.

Amazon Dropshipping Guide – Benefits of Amazon Dropshipping:

This part of the guide will explain the benefits of Amazon dropshipping and how to do it.

No warehouse cost

Amazon dropshipping has the benefit of not needing to pay for a warehouse, as some Amazon sellers choose to make products FBA (fulfilled by Amazon). This means sellers ship their products to Amazon and Amazon send the products out.

Amazon suppliers

Amazon sources suppliers in Europe from whom they buy products in bulk, and then these items are held in Amazon warehouses ready to ship to customers. They handle returns and customer services in many different languages for their suppliers. Working with Amazon allows small businesses to grow quickly and operate globally. Amazon suppliers receive help from account managers to guide businesses and increase profits.

Large audience to sell to

Amazon has 300 million active users, so having Amazon as a sales channel for a business can bring huge returns. Selling the right product at the right price can lure in new customers, and an online store may attract different customers than Amazon. This gives an opportunity to connect with customers who don’t fit a target demographic.

Lower ad spend

Sellers have the option of running Amazon ads to gain sales and build a positive reputation on Amazon, but they can also benefit from organic traffic. Put in upfront effort into optimizing a page to increase odds of receiving organic traffic. The cost of Amazon ads is set by the seller, and the seller can control what amount to spend on Amazon ads.

Amazon Dropshipping Cons:

Amazon has some restrictions that can prevent dropshippers from selling on the platform. While they do allow dropshippers to sell on the platform, dropshippers can only dropship via Amazon’s FBA program. It is against Amazon’s terms of service to use Oberlo, as they say that “purchasing products from another online retailer and having that retailer ship directly to customers” is not permitted.

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How Amazon Works

One of the biggest ecommerce websites, Amazon grew in popularity because it allows retailers to sell on their platform as an additional sales channel for their stores. Not all brands and products get approved, but after approval sellers are able to start selling on Amazon.

To start dropshipping on Amazon, use the Fulfilled by Amazon program. This program ships products to Amazon which carries inventory and ships directly to customer. This program has the benefit of some of the fastest shipping times on the market so customers can get products sooner.

Amazon Dropshipping Guide: Amazon Strategies

This part of the guide gives strategies for succeeding on Amazon.

Win the Buy Box

Most of Amazon’s sales come from the Buy Box, so a dropshipper’s goal is to win the buy box in order to maximize sales. First, have a higher seller rating above 95%. Second, ship products quickly, within 14 days. Third total cost of product plus shipping should be lower than most other offers. Other things that help are having a low refund rate, fast customer response time, and high feedback score.

Don’t rely on Amazon

Sellers should have their own store too instead of depending on Amazon alone. Having Amazon as a sales channel aside from others improves odds for sales and minimizes risk. When customers recognize a seller’s brand they will be more likely to buy on Amazon. Be where the customers are.

Aim for a 95% seller rating

There is a greater chance of winning the buy box with a 95% or higher seller rating. This is good because it makes sellers more likely to appear in organic searches. Having a higher seller rating makes customers more likely to trust a store, and gives the store a competitive advantage over stores with lower ratings.

Do keyword research

Amazon product pages should be optimized just as a store’s product pages are optimized for search engines. Use tools such as Merchant Words to determine popular keywords. Running Amazon ads gives access to a supply of keywords which optimize product pages. Doing this helps stores rank organically, and sellers who run ads will target customers better.

Make sure you price your products accordingly

There are a few factors to consider when pricing products for Amazon. Consider the cost of Amazon fees so that margins are high enough to afford to pay Amazon’s monthly and other associated fees, and to make a profit. Dropshipping with Oberlo allows sellers to offer free or cheap shipping which allows them to stay competitive as well.

Offer a better coupon discount than competitors

Creating Amazon coupons encourages customers to buy from a store. Promote the coupon to coupon sites to help drive more traffic from people looking for deals. Price the coupon in a way that allows for paying expenses and remaining profitable.

How to Dropship with Amazon:

Amazon has listed a set of dos and don’ts to keep in mind when using Amazon Dropshipping. Users must always:

  • Be the seller of record of products
  • Identify as the seller of products on all packing slips and other information included or provided in connection with products
  • Be responsible for accepting and processing customer returns of products
  • Comply with all other terms of the seller agreement and applicable Amazon policies

Examples of dropshipping that is not permitted:

  • Purchasing products from another online retailer and having that retailer ship directly to customers
  • Shipping orders with packing slips, invoices, or other information indicating another seller’s name or contact information

More information can be found on Amazon’s dropshipping webiste.

Amazon dropshipping tools:

These are some tools that come in handy when learning how to start dropshipping with Amazon.

  • Merchant Words – use this to view search volume, keywords, and keyword data. Pro plan costs $30/month.
  • FeedCheck – allows users to view all of their product reviews in one place. This a good tool for sellers who have a large selection of Amazon products. With easy access to reviews, sellers can work on improving customer service and monitor competitor’s products. Pricing starts at $19/month.
  • Shopify – use this to add Amazon as a sales channel on a store. It can also be used to track inventory, and will alert when there are Amazon sales to fulfill.
  • Sellery – helps to win the Amazon buy box with its repricing strategies, and allows users to run pricing experiments to stay competitive while maximizing profits. This tool is free.
  • Feedback Express – helps to get more reviews on an Amazon store, and removes negative reviews to maintain a higher rating. It even allows user to blacklist customers who are notorious for leaving negative reviews. Starts at $20/month.
  • Amazon Volume Listing Tools – tools that Amazon offers to simplify seller experience. Users can easily download spreadsheets regarding order and inventory information, and can modify pricing and product quantity easily.

How to Sell on Amazon:

Choosing an ecommerce platform

Shopify has recently partnered with Amazon so using their ecommerce platform is ideal. Shopify allows users to add Amazon as a sales channel to simplify managing orders on both platforms.

Do you sell the right products?

If store owners want to sell products on Amazon they must follow several requirements and restrictions. Amazon niches like books, computer and video games, electronics, office products and more can open up without approval. Amazon has also created a list of restricted products for various Amazon niches including hoverboards, dangerous goods, and more, which will not be approved.

Create an Amazon seller account

To sell a high volume of products, it’s best to have a professional account. Individual selling plans are charged 0.99 cents per item sold which can eat away at margins. Sellers will also have to offer competitive pricing, and occasional discounts, while still ensuring enough profit to reinvest in the business. It is important to have decent margins. With a professional seller account users pay a subscription each month as well as additional fees.

Users will want to register with an email on Amazon Seller Central and fill out name email, and password. Other screens will prompt to provide more details about the business such as address and tax information.

Get approved in your product category

As mentioned earlier, certain niches and products require Amazon approval. View specific approval requirements for each category on Amazon.

Set up your Amazon account on Shopify

Once approved, an account created, connect the Amazon account to the Shopify store. In the left panel in the Shopify account, scroll down to Sales Channels and click on the + button beside it. A pop-up will come up, and Amazon should be the first item on the list. Click Add Channel. Add Channel, and continue with “Connect to Amazon”.

Create Amazon product listings with ease

Click on the Amazon sales channel link to see Shopify’s left panel and click create listing. Click Select Product. There will be two options. If a brand makes the product, be sure to purchase UPC codes. As a dropshipper, click on the second option “This product is made by another brand.” Next search for the product to become a seller for the SKU. When the product has been found click Select. Finally, click Publish for the process to be completed.

Have Shopify track inventory

Make sure that Shopify tracks inventory levels, which will ensure that when a customer orders on Amazon that the product is still in stock. Don’t allow customers to order products that are out of stock, which can lead to negative reviews.

Start promoting your Amazon store

Then send traffic to the Amazon store to encourage sales. Create Amazon ads to help boost sales.

Dropshipping from Amazon to eBay

This is a dropshipping model that has been used for many years. Sellers buy underpriced items on Amazon and sell them for a higher price on eBay. This means that the end user will receive the product that they bought from eBay in Amazon packaging, which is not a great user experience. It is not illegal to do this, but it is frowned upon y manufacturers as this model increases profits for the dropshipping without the manufacturer knowing. It is best to stay away from this model.

Want to Dropship from Your own Brand Instead?

Those who want to dropship their own products instead of selling on Amazon can use Oberlo. Oberlo Verified suppliers are the most trusted suppliers in the Oberlo network.