What Is Amazon Dropshipping? How To Dropship on Amazon in 2024 - Shopify (2024)

Amazon dropshipping is a sales channel that can yield big returns for entrepreneurs. But how exactly does Amazon dropshipping work, and how can you make it profitable for your ecommerce business?

Ahead, learn how to dropship profitably on Amazon and discover simple dropshipping tools to help you start selling today.

What is Amazon dropshipping?

Amazon dropshipping is a business model where sellers list products on Amazon without holding inventory. When a sale is made, the seller purchases the item from a third-party supplier who ships it directly to the customer.

Does Amazon allow dropshipping?

Amazon allows dropshipping on its marketplace as long as you follow these rules:

• You must be the sole seller of record for products.
• Your business must appear as the seller on packing slips, invoices, and other information in connection with products.
• All information identifying the third-party seller must be removed before shipping the order to customers, to avoid confusion.
• You must be responsible for accepting and processing returns.
• You must follow all terms of your seller agreement and Amazon’s dropshipping policy.

How much does it cost to dropship on Amazon?

Amazon seller fees vary by product type but are usually between 8% and 15%. If you’re working with small margins when dropshipping Amazon products, this could eat into your profits.

Product categories with the lowest seller fees include appliances, consumer electronics, tools, and automotive products.

However, because Amazon charges fees as a percentage of the total price, the actual fee amount will vary depending on an item’s overall cost. For all types of products, Amazon takes a minimum fee of 30¢.

To sell on Amazon, you’ll also need to purchase a selling plan. Amazon’s Individual plan costs 99¢ per unit sold, while the Professional plan costs $39.99 per month, no matter how many products you sell.

Is Amazon dropshipping profitable?

There are many pros to Amazon dropshipping, and it can be profitable. Most Amazon sales are made by independent sellers, including drosphippers, who don't need to worry about unsold inventory or unpredictable shipping costs.

Dropshipping margins can reach as high as 40%, meaning there's lots of room for profit. But remember, Amazon will take referral fees on sales.

How to start dropshipping on Amazon in 6 steps

1. Sign up for an Amazon seller account

To sell on Amazon, you’ll need to create an Amazon seller account. Head to sellercentral.amazon.com to sign up. You’ll be asked for the following details about your business:

• Business email address
• Internationally chargeable credit card
• Government ID
• Tax information
• Phone number
• Bank account for receiving sales

2. Get approved in your product category (if necessary)

Amazon requires sellers to get approval for certain product types. Collectibles, music, and watches are popular categories that require approval before setting up your Amazon store. Check the overview of product categories to see if you need approval.

Note that certain products may require approval, even when their category doesn’t. To see if an individual product needs approval, search this list and click Show Limitations.

If you're looking for products to dropship, try Amazon'sProduct Opportunity Explorer, to see how customer demand for products on Amazon changes over time.

3. Log into your Shopify store

If you don’t have a Shopify store, start a free trial. Dropshipping through a Shopify store will make it easy to connect your Amazon listings with your product suppliers.

4. Connect your Amazon account to Shopify

Once you’ve created an Amazon account and requested any necessary approvals, connect your Amazon store to Shopify using an Amazon integration app from the Shopify App Store.

Amazon integration apps bridge Amazon and Shopify. Using an app, you can automate order fulfillment, give your customers up-to-date tracking information, and sync product inventory.

Here are some apps you might use:

• Shopify Marketplace Connect
• Amazon by CedCommerce
• Amazon Importer Spreadr
• Amazon MCF by ByteStand
• Amazon Integration Plus by Common-Services

Once you’ve selected and installed your app, you’ll be able to create listings for your products and manage sales across both platforms.

5. Create an Amazon product listing

Your dropshipping products don’t automatically list on Amazon after you add an integration app. To manage your Amazon dropshipping listings with Shopify, you have three options:

1. Link your listings on Shopify to your Amazon listings using your integration app.
2. Link an existing Amazon listing to your Shopify store.
3. Create a new listing for a new product on Amazon.

If you’re new to Amazon and dropshipping, you may not be able to list a large number of products right away. Amazon limits the number of new Amazon ID numbers, or ASINs, you can create each week until you become an established seller.

6. Promote your products on Amazon

While options for marketing on the marketplace are restricted, there are several ways to promote products on Amazon.

Run Sponsored Product ads

If you have a marketing budget, consider spending on Sponsored Product ads. Amazon’s ad program operates on a cost-per-click (CPC) model that will position your products more favorably in search results.

Optimize your listings

With all Amazon product pages sharing the same layout, features like product titles, images, and “About This Item” bullet points need careful thought and planning. Remember that your customers will skim your pages and compare items with similar products.

Use social media

There are no restrictions to promoting Amazon links on most social media platforms. That means you can create Instagram Reels to show off your product, or make a Facebook ad campaign.

How to choose a dropshipping supplier

Your main competitive edge over other Amazon dropshippers will be price, and—beyond cutting your profit margins where possible—the best way to outcompete sellers in your niche is to partner with the right dropshipping supplier. Here’s what to look for in a supplier:

• The supplier offers reliable shipping to your customers' locations.
• They stock a range of products in your niche of comparable or superior quality to competitors.
• There are no customer service red flags or regular poor reviews.
• They have low per-order fees that won’t eat into your profit margin.
• Other successful dropshippers use the supplier.
• The supplier can compete with average shipping times in your niche.
• They offer live customer support for your business.

Thanks to the popularity of dropshipping in recent years, there’s been an increase in fake or malicious dropshipping supplier services. Follow the latest dropshipping guidelines to avoid wholesalers that charge unnecessary fees.

Top Amazon dropshipping software

The tools in this list are designed to help you get started with Amazon dropshipping:

MerchantWords

This software checks search volume and data for product keywords.

Price: Paid plans start at $35 per month.

Sellery

This real-time Amazon repricing software suggests repricing strategies to win the Buy Box and increase sales.

Price: You can use the trial version for free. Paid plans are 1% of your gross monthly sales with a minimum fee of $50 per month.

FeedCheck

FeedCheck monitors customer reviews to help you respond promptly across Amazon and other sales channels. Plus, it lets you monitor competitors’ product reviews and questions so you can analyze and improve your own product descriptions.

Price: Starts at $129 per month.

Seller Tools

Seller Tools helps automate your Amazon dropshipping store. It includes a keyword manager, PPC management tool, and product research tools.

Price: Starts at $37 per month for the Chrome extension.

How to run an Amazon dropshipping business without money

Most dropshippers spend money to build their businesses, investing in assets like an online store, content creation, advertising, and marketing or management software. But it is possible to start dropshipping on Amazon without spending a dollar. Here’s how:

Choose the Individual Seller plan

Unlike Amazon’s professional seller plan, which is a paid subscription, the Individual plan is charged per item sold—so you won’t be billed before you’ve made a sale.

Pick suppliers with zero upfront costs

Most reputable dropshipping suppliers will not charge an upfront fee to do business with you. That means you shouldn’t need to pay your supplier until you’ve made a sale and have been paid by the customer.

If you can spare a few dollars, you may want to purchase the product(s) you intend to sell. Being able to physically hold, view, and try out your product will greatly help when creating marketing content.

Create your own content

Write your own product descriptions and reviews, take your own product photos, and create product demonstration videos using your phone.

There’s no denying that self-made marketing content is time consuming, and depending on your writing and production skills, it may be hard to replicate the quality of professional copy and images.

However, by paying close attention to your competitors’ content, and deeply researching your target customers, it’s possible to create effective content that communicates the key details of your products—and explains why your customers will benefit from buying them.

Harness organic marketing channels

Organic marketing channels are the most accessible way to promote your products without spending money on advertising.

Social media platforms like Facebook, Instagram, and TikTok are powerful tools for spreading awareness about your products—if your content can strike a balance between entertainment and promotion. Spend time absorbing the latest trends and put your own twist on popular memes.

SEO marketing strategies involve optimizing your content to rank higher in search engine results. By including relevant keywords in your product descriptions and making your content as useful as possible, you can appear more often in Amazon and Google searches.

Running a dropshipping business with your online store

The alternative to dropshipping Amazon products through third-party marketplaces is to start your own online store to list and promote your products.

Using your own store may be a more successful dropshipping business model in the long term, as it gives you more control over your customer service and flexibility over marketing and branding.

Pros of dropshipping with your online store

More control

When you build your own online store, you get to create a shopping environment that’s conducive to selling your products. You can customize the look and layout—and create custom product pages optimized to suit your customers and niche.

Easy design

With store builders like Shopify, there’s no barrier to designing and running your own store. And once your site is up and running, it’s simple to add extra features that increase your conversion rate.

Within a day, it’s possible to create a store, brand it, add your products, and connect a payment gateway to make your first sale.

Mobile-ready

Don't prevent your customers from shopping on their mobile devices. If you choose to build your online store with an ecommerce platform, your site will be responsive, which means it will adapt to different screen sizes.

No third-party fees

With your own store, you won’t have to pay Amazon’s referral fees, which will significantly improve your profit margins.

Building a real business

By creating an independent store, you’re building a long-term business with a distinctive feel. That makes it possible to pursue repeat business and a loyal set of customers who will tell others about your website.

More shipping and supplier options

When you run a dropshipping business on your own site, you can build relationships with different wholesalers.

Cons of dropshipping with your online store

No free traffic

With your own site, you’ll be responsible for generating traffic through marketing, social media, SEO, and paid advertising.

Other ways to sell on Amazon

If you want a seller presence on Amazon, but feel that a dropshipping business isn’t right for you, there are other options. Two popular ways to sell on Amazon besides dropshipping are affiliate marketing and fulfillment by Amazon.

Amazon affiliate marketing

Amazon’s affiliate marketing program, known as Amazon Associates, is a free, popular alternative to dropshipping. Amazon affiliates promote products sold on Amazon via their own websites, ads, or social media posts.

When a website visitor or social media user clicks on an affiliate link, they are taken to Amazon to make their purchase. Affiliates receive a commission whenever they persuade a customer to buy a product through an affiliate link.

Commission rates vary depending on the product category, but most range from 3% to 5%. To become an Amazon affiliate, first check that your website or social media account meets the eligibility criteria.

Amazon FBA (Fulfillment by Amazon)

Amazon also has its own fulfillment centers, known as Fulfillment by Amazon.

With this model, you send your products to Amazon’s FBA centers. Amazon takes care of storage, packaging, and shipping products to customers. It also handles customer service and order returns.

While this can save a lot of time and effort, FBA comes with various fees, including storage fees and fulfillment fees (see the link above).

Amazon FBA vs. dropshipping

Amazon FBA and Amazon dropshipping are both fulfillment models that allow you to list and sell products without holding inventory.

The difference between FBA and dropshipping is that, with FBA, Amazon will store, pack, and ship your products. With dropshipping, on the other hand, a third-party supplier handles inventory management and order fulfillment.

Grow your dropshipping business today with Shopify

Amazon dropshipping can be a great way to increase sales for your business, whether you’re established or just starting out. If you choose to include this dropshipping method in your Shopify store, there are many tools ready to help you with dropshipping fulfillment, sourcing, pricing, and marketing—be sure to also check out some top dropshipping tips.