A Step-by-Step Guide to Amazon Dropshipping

Explore Amazon dropshipping with our step-by-step guide. Learn the benefits, drawbacks, and Amazon's policies. Start your online business with minimal upfront investment.

Isiah Kurz

October 13, 2023

For many aspiring entrepreneurs, the idea of starting an online business can be intimidating. Not everyone has the capital to invest in inventory or the time to attend to shipping and handling operations. In response to these barriers, some sellers choose a different route: Amazon dropshipping. This business model allows sellers to list products on Amazon that are shipped directly from a supplier, eliminating the need for inventory and handling.

Here is a step-by-step guide that will walk you through the process of setting up your Amazon dropshipping business.

What Is Dropshipping on Amazon, Anyway?

Dropshipping is the process of selling products through a third-party supplier who fulfills the orders on behalf of the seller. In the case of Amazon dropshipping, sellers list products on the online marketplace, and when an order is placed, the supplier ships it directly to the customer.

The process of Amazon dropshipping is pretty straightforward. First, you need to find a reputable supplier that offers the products you want to sell. Once you find a supplier, you can set up an account with them and create a product list. Then, you list the products on Amazon and wait for customers to purchase them. When an order is placed, the supplier ships the product directly to the customer so you don’t have to.

The Benefits and Drawbacks of Amazon Dropshipping

One of the biggest advantages of Amazon dropshipping is the minimal amount of upfront capital required to start. You don't need to invest in inventory or warehouse space. Additionally, you don't have to worry about handling and shipping products.

However, there are some downsides to consider. With dropshipping, you have less control over the product quality and shipping times. Also, you may have to deal with returns and refunds, which can cut into your profits.

Amazon’s Dropshipping Policy

Amazon has a strict policy on dropshipping, and it's essential to abide by these rules to avoid account suspension or other penalties. According to Amazon's policy, dropshippers must have an agreement with their supplier authorizing them to sell the products. The supplier must fulfill the orders directly, and the seller must clearly display that the product is being dropshipped.

Additionally, sellers must responsibly accept and process customer returns that comply with the Business Solutions Agreement (BSA) and applicable Amazon policies. Lastly, sellers cannot allow anything that identifies the third-party supplier including packing slips, invoices, or external packaging.

How Dropshipping Differs from Fulfillment By Amazon (FBA)

Fulfillment By Amazon (FBA) is another option for Amazon sellers that allows them to store their inventory in Amazon warehouses and have Amazon handle shipping and handling for them. While FBA requires an upfront investment in inventory, it provides sellers with more control over product quality and shipping times.

Will You Take Advantage of Amazon Dropshipping?

Amazon dropshipping can be an excellent option for entrepreneurs looking to start an online business with minimal upfront capital. However, it's crucial to understand the process, policies, and potential pitfalls before jumping in.

‍For more Amazon seller best practices, check out our blog.

ABOUT THE AUTHOR

Isiah Kurz

Isiah is an experienced content writer with more than a decade of experience in journalism, public relations, and marketing.

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