You’re thinking of starting to sell online, but you’d like to do it while amortizing your operating expenses. You are therefore interested in dropshipping, a business technique that allows you to sell online, on your own e-commerce or a third-party site, without taking care of the warehouse in which to store the goods. It seems to be the perfect solution for you, and you’ve identified Amazon as the ideal store to use it on; however, you’re not sure how to do it.
If this is the case, don’t worry: in the next lines I’m going to explain you how to dropshipping on Amazon in detail. I’ll start with the basics to start the business correctly, then I’ll give you a practical example to get you started and, as you should, I’ll invite you to make your evaluations on whether or not to dropshipping on Amazon, in light of the pros and cons of this type of business.
Are you eager to know all the details about it? Well, then, take a few minutes of your free time and read what I have to tell you: you’ll see that, at the end, you’ll be able to evaluate whether to start dropshipping on Amazon and take all the necessary steps to do it. I just want to wish you a good reading and good luck for everything!
Table of Contents
Amazon dropshipping: how it works
I’d like to start the tutorial with a little introduction on what Amazon dropshipping is and how it works.
Well, the term drop ship, in this case referring to online sales, describes the trade of a product by a seller who does not have its own warehouse for the storage of goods, but only offers its web space to the consumer. The consumer will be able to use it as a showcase, to choose the products and place the order, which will then be processed by a supplier, the real owner of the goods, for what concerns the shipment and the delivery of the same.
With this technique, the seller can get rid of the burden of having a physical place to store the goods and also amortize the costs of packaging and shipping. All of this will be borne by the vendor.
If you’re wondering if you can dropshipping on Amazon, maybe because you were really planning to take advantage of the platform’s notoriety to start selling, I have good news for you: the answer to your question is yes.
Within Amazon, the most famous and globally organized marketplace, the seller can get his profit from the difference between the wholesale cost that the supplier of the goods makes and organizes shipments and the selling price displayed on the portal by the seller himself.
As you may have already understood, dropshipping is a commercial activity to all intents and purposes, so in order to practice it you will have to be fiscally compliant, for example by having a VAT number. Also, to complete the registration of a seller account, you will need a valid personal ID or passport.
Very important is Amazon’s regulation towards dropshipping sales: first of all, it is strictly forbidden to resell on Amazon products purchased from another online retailer and deliver them to the consumer with his credentials, as well as you cannot ship orders with packing slips, invoices, outer packaging and any other documentation that shows contact information different from those present within your Amazon seller profile. Read the policy for drop shipping services provided by Amazon.
For shipping, you should use Amazon Logistics, according to which the product must arrive at an Amazon logistics center before being shipped to the buyer. Currently, if you enroll for the first time in the Amazon Logistics program for European marketplaces, you’ll get a discount on shipping costs with Amazon Affiliated Courier, as well as free storage in Amazon warehouses for up to 50 standard size units and 30 oversized units and, again, free storage for up to 100 units of clothing. More info here.
As far as the functioning of dropshipping on Amazon is concerned, the preliminary steps you have to take to start your business, signing up to the platform as a seller, are few and simple.
First of all, you have to choose a sales plan that suits your needs: those proposed by Amazon are two.
- Individual, it’s the plan for you if you don’t yet have a precise idea of what to sell and, in any case, you expect to sell less than 40 products per month, without any particular logistical needs. The costs associated with this plan are limited to a commission on each item sold. However, keep in mind that in order to publish your sales offers, you will only be able to upload one item at a time.
- Professional, that is, the Amazon sales plan suitable for those who already have a defined and, perhaps, started business, so they also want to take advantage of the advanced tools made available by the platform, such as the Amazon Launchpad and Amazon Handmade programs. The fee for the Professional plan is 39€ per month, while there are no closing commissions that Amazon requires on products belonging to the Media category. Among the facilities provided by the Professional option is the ability to bulk upload several offers, even taking advantage of dedicated tools for the purpose developed by third parties.
Another thing you need to know is that there are other commission fees, of variable type, called reporting fees: they are charged to the seller according to the type of merchandise to which the items sold belong.
Then there is the VAT on the products: you may be required to file a VAT return, depending on the country where you live, work and sell. It is also a tax that you will have to add to the final price of the goods. Even if in the dropshipping practice you won’t be the one managing the shipping phase, be aware that when calculating the price of a product to the user, there might be customs duties to be included. To learn all about how to deal with VAT within Amazon
In order to publish offers on Amazon, and therefore to sell products, specific codes will be necessary, such as the GTIN (Global Trade Item Number) or UPC, or an ISBN or EAN code, which are indispensable for the exact identification of an item for sale. In your case, since you plan to sell in dropshipping, you can associate the sale offer to your supplier’s products, so these identifiers should already be created. If not, you may need to purchase a UPC code or ask for an exemption.
Very well: now that you’re clearer on how things work with Amazon dropshipping, you can dedicate yourself to opening your seller profile.
Amazon dropshipping: how to start
Once you’ve understood the mechanism of selling through third parties, now you’d like to move on to practice, so read this chapter dedicated to how to start dropshipping on Amazon.
In order to sell on Amazon you need to create a seller account on the platform, choosing one of the two management plans I mentioned in the previous chapter. To proceed from PC, connect to Amazon’s official website, then click on the Create your Amazon account button, fill in the form with the required data and press the Create your Amazon account button.
If, on the other hand, you already use Amazon for shopping and you already have your own account, select the item Accounts and Lists, located at the top right, then enter your login details and press the Sign In button. For any clarification on this, read my guide on how to sign up on Amazon.
From the Accounts and Lists menu, now go to the Other Accounts section, then choose the Sell on Amazon item and go to the Register Now option, then re-enter the password you used to create your basic account and click the Next button.
Now type in the required data and verify your profile by phone call or SMS: you’ll receive a PIN code to be written in a special field. Then set up a payment method and perform the verifications that the program requires, until your Amazon shop is active for sales. If you want to know in detail all the steps for its configuration
Maybe you would like to activate your seller account using a smartphone or tablet, know that at the moment it is not possible to create it exclusively from mobile devices. However, you can proceed by downloading the Amazon Seller app, which allows you to follow the flow of account management (which you have already created from desktop) and offers: if you use an Android device you can find it on Google Play Store (or an alternative store, if you do not have Google services) or if you have an iPhone or iPad you can download it from the App Store.
Once installed, log in with your seller credentials, which you can get by following the procedure I described at the beginning of the chapter, and use the internal menus Manage your inventory to view and, if necessary, modify the active offers, Manage your orders to view the products sold (although the shipping is not directly managed by you), Communications, to respond to messages that users have sent you, and Manage returns, to understand how to organize returns, in agreement with your supplier.
In this regard, to find suppliers you will have to inquire and contact them directly to understand if they are interested in your Amazon dropshipping project and establish an agreement. Search among companies that sell wholesale and contact them by phone or email, giving credit above all to those who demonstrate their reliability and also allow you to have a transparent view on pieces available in stock and shipments. Above all, you must specify that no other sender should appear on the parcels if not your name, or that of your business on Amazon.
Find out about the account of the companies, maybe reading feedback and reviews on Google and forget about those who ask you additional costs on the services offered. If not inflated, also try to address big brands. When you’ll be able to find your suppliers, you can start to publish your sales offers on Amazon: if you want, take advantage of the photos of the products and the descriptions provided by the supplier, but they must be clear and report all the data necessary for the compilation of the product sheets according to Amazon’s guidelines. Also know that you can allocate a budget to sponsored listings, to highlight your offers, compared to similar ones from competitors.