Start selling with AliDrop today

Amazon, the dominant force in global e-commerce, offers entrepreneurs a powerful platform to establish their online businesses. For those seeking to enter the e-commerce world with minimal financial investment, dropshipping on Amazon is an appealing option. This business model enables you to sell products without holding inventory, managing fulfillment, or dealing with shipping. All you need is an internet connection and a willingness to learn.

Starting a dropshipping business on Amazon is both an exciting and strategic endeavor. The platform provides an extensive customer base and reliable infrastructure, making it an ideal choice for newcomers and seasoned entrepreneurs alike. In this guide, we will walk you through the entire process of setting up a dropshipping business on Amazon, from establishing your seller account to scaling your business. If you’ve ever wondered how to get started with dropshipping on Amazon, this step-by-step guide will show you exactly what you need to do.

How Does Dropshipping on Amazon Work?

To understand how dropshipping works on Amazon, it's essential to break down the mechanics of the model. In a dropshipping business, you never have to purchase inventory upfront. Instead, you partner with third-party suppliers who handle inventory, packaging, and shipping. When a customer purchases from your Amazon store, you forward the order to the supplier, who then ships the product directly to the customer. Your profit comes from the difference between the price you sell the product for and the price you pay the supplier.

While Amazon handles payments, customer service, and delivery processing, you’re responsible for managing your product listings, ensuring the products are high quality, and attracting customers to your store.

Why is Setting Up Your Amazon Seller Account Important?

Creating a seller account on Amazon unlocks a world of opportunities. Not only does Amazon provide you access to millions of potential customers, but it also offers tools to help manage your business. Once your account is live, you’ll be able to list products, manage inventory (even if you don’t physically handle it), and make your business visible to Amazon’s global audience. Your account must be set up correctly to avoid delays and ensure a smooth start.

Set Up Your Amazon Seller Account: A Detailed Walkthrough

Setting up your Amazon Seller account is the first critical step to starting your dropshipping business. This account acts as your gateway to selling on Amazon, and the process is straightforward yet essential to ensure everything runs smoothly. Whether you plan to sell a few products or expand into a large-scale operation, a well-organized seller account is key to your success.

Step 1: Set Up Your Amazon Seller Account

The first step to starting your dropshipping business on Amazon is setting up a seller account. This process is straightforward and essential to get your products in front of millions of potential customers.

How to Set Up Your Amazon Seller Account

1. Register on Amazon Seller Central
   
   • To begin, visit Amazon Seller Central and click on the "Register Now" button. You’ll need to provide basic details, such as your name, email address, and password. Make sure you have your information handy, as you’ll need to verify your identity during the registration process.
2. Choose Your Selling Plan: Amazon offers two plans for sellers:
   
   • Individual Plan: This plan is ideal for new sellers who don’t expect to sell more than 40 items per month. There’s no monthly fee, but you’ll pay a $0.99 fee per item sold. It’s a great starting point for testing the waters.
   • Professional Plan: If you plan to scale your business and sell more than 40 items per month, the Professional Plan is a better option. This plan costs $39.99 per month, and you’ll gain access to advanced features, such as promotional tools, detailed reporting, and better product listing options.
3. Provide Business Information: You’ll need to submit some essential business details during the registration process. This includes:
   
   • Business Name: If you’re operating under a registered business, enter the name of your business.
   • Contact Information: Your address, phone number, and email.
   • Tax Information: You’ll need to provide a GST (Goods and Services Tax) number in India, as it’s required for tax compliance.
   • Bank Details: A valid bank account is necessary for Amazon to deposit your earnings.
4. Identity Verification: Amazon will require you to verify your identity. You’ll need to upload a scan of a government-issued ID (such as a passport or driver’s license), along with proof of your business address, such as a bank statement or utility bill. This is an important step to ensure your business is legitimate and to prevent fraudulent activities.

Once your account is verified, you’re officially ready to start listing products.

Step 2: Choose Your Dropshipping Supplier

Selecting the right supplier is crucial to the success of your dropshipping business. Your supplier will handle all inventory, packaging, and shipping, so it's important to partner with a reliable, efficient, and trustworthy supplier.

How to Find a Reliable Dropshipping Supplier

There are several platforms where you can find suppliers for your Amazon dropshipping business. Here are a few trusted options:

• For those seeking higher-quality products and faster shipping times, Spocket is a great alternative. It works with suppliers from the US and EU, so it offers much faster shipping compared to China-based suppliers like those on AliExpress. Spocket is ideal for those who want to sell premium products and ensure a superior customer experience.
• SaleHoo is a supplier directory that offers access to a curated list of verified suppliers. It’s particularly useful for sellers who want to avoid working with the overwhelming number of suppliers on platforms like AliExpress. SaleHoo provides reliable, vetted suppliers and offers valuable insights, such as profit margin data and supplier reviews.

What to Look for in a Supplier

• Shipping Times: Shipping speed is critical in dropshipping. Customers expect fast delivery, especially when shopping on Amazon. Opt for suppliers who can fulfill orders quickly and ensure timely delivery to your customers. If you’re selling to customers in the US or Europe, consider suppliers that can ship from those regions to reduce shipping delays.
• Reliability: It’s important to choose a supplier with a solid reputation. Check customer reviews and ratings to ensure the supplier is dependable. A trusted supplier will consistently fulfill orders on time and deliver quality products.
• Product Quality: Order samples from potential suppliers before listing their products on your Amazon store. This ensures that the product meets your quality standards and that it aligns with your brand’s reputation.

Step 3: Create Your Product Listings on Amazon

Once you have your supplier in place, the next step is to create compelling product listings on Amazon. Your listings need to be clear, detailed, and optimized to stand out in a crowded marketplace.

How to Create Product Listings

1. Log in to Amazon Seller Central
   
   • After logging into your seller account, go to the “Inventory” section of your dashboard and click on “Add a Product.” This is where you’ll start creating your product listings.
2. Provide Product Details
   
   • Product Title: Your title should be clear and concise, incorporating keywords relevant to the product. Make sure it accurately reflects what you are selling while adhering to Amazon’s character limits.
     
     
   • Product Description & Features: A well-written description can make or break your listing. Include all key details, benefits, and specifications. The more comprehensive your description, the higher your chances of attracting customers.
   • Product Images: Use high-quality images of the product to showcase it from multiple angles. Amazon allows several images, so take advantage of this to highlight the product’s features, packaging, and any important details.
3. Set Your Price and Quantity
   
   • Set a competitive price for your product while factoring in the cost of the item from your supplier, Amazon fees, and your desired profit margin. Don’t forget to include shipping costs (if applicable).
   • For quantity, since you’re dropshipping, you'll generally leave this at the default setting unless you're selling items that you store in Amazon’s fulfillment centers.
4. Optimize for SEO
   
   • Use relevant keywords in your product title, description, and backend search terms to increase your product's visibility. Tools like Helium 10 or JungleScout can help you identify the best keywords for your niche.

Step 4: Manage Orders and Customer Service

Once your listings are live, you’ll begin receiving orders. Managing these orders efficiently and providing excellent customer service are essential for growing your dropshipping business.

How to Manage Orders

• When a customer places an order, you’ll receive an order notification via Amazon Seller Central. Promptly forward this order to your supplier so they can begin processing it.
• Ensure that the supplier provides tracking details once the product is shipped. You will need to update the tracking number in Amazon Seller Central to keep the customer informed of their order’s status.
• Be responsive to any customer questions or concerns. Address any issues promptly to maintain positive feedback and high ratings on your seller profile.

Step 5: Scale Your Dropshipping Business on Amazon

Once your business is up and running, it’s time to scale. Expanding your product range, utilizing Amazon’s advertising features, and automating certain aspects of your business can help drive growth.

Tips for Scaling Your Dropshipping Business

• Use Amazon Sponsored Products to promote your listings and drive traffic. Sponsored ads help your products appear at the top of search results, which can lead to more clicks and sales. 
• As you grow, continuously add new products to your store. Diversifying your product range allows you to reach a wider audience and increases your chances of making a sale.
• Use dropshipping tools like Oberlo or AutoDS to automate processes like product imports, order fulfillment, and inventory management. Automation will save you time and help streamline your operations, allowing you to focus on scaling your business.

Understanding Amazon's Dropshipping Policies and Guidelines

Before diving into the world of dropshipping on Amazon, it’s essential to understand the platform's policies and guidelines. Amazon has specific rules that govern dropshipping businesses, and failing to comply with them can result in account suspension or even termination.

Why Understanding Amazon's Dropshipping Policies is Crucial

Amazon prides itself on offering a seamless and trustworthy shopping experience for customers, which is why it maintains strict rules for sellers. If you're drop-shipping on Amazon, you'll need to ensure that your business practices align with their policies to avoid disputes, penalties, and negative customer feedback.

Not adhering to Amazon’s dropshipping guidelines can not only harm your seller account but also damage your reputation as a seller. If customers face problems with their orders—such as delays or low-quality products Amazon will hold you responsible, even though the supplier is at fault. Therefore, being informed about Amazon's rules will help you build a legitimate and trustworthy dropshipping business that thrives in the long term.

Key Amazon Dropshipping Policies to Keep in Mind

1. You Must Be the Seller of Record

Amazon requires that you be listed as the seller on all customer invoices and packaging. This means you cannot have your supplier’s name or information visible on the product or packaging. You are the one Amazon holds accountable for fulfilling orders, regardless of who ships the product. This is important to prevent issues with refunds, returns, or disputes.

2. Responsibility for Order Fulfillment

Even though your dropshipping supplier handles product fulfillment, you remain responsible for ensuring that the orders are delivered on time and meet Amazon's standards. Your supplier must fulfill orders promptly and accurately. Failure to do so can lead to negative feedback from customers and impact your seller performance metrics.

3. Prohibited Dropshipping Practices

Amazon’s guidelines strictly prohibit certain dropshipping practices. For example, you cannot use third-party fulfillment services or drop ship from retail giants like Walmart or Target. Instead, you must work directly with a supplier who fulfills orders directly from their warehouse to the customer without involving a third-party retailer.

Additionally, using a third-party fulfillment center is acceptable, but you must still ensure that all orders are shipped under your Amazon seller account, and the packaging must not mention any other company.

4. Quality Control and Product Responsibility

As the seller, you are responsible for the quality of the products and ensuring that they meet Amazon’s standards. If a product is defective or does not meet customer expectations, it’s your responsibility to manage the return, replacement, or refund process. You must work with suppliers who are willing to accept returns and provide replacements if needed.

5. Comply with Amazon’s Performance Metrics

Amazon has strict performance metrics that all sellers must meet, including:

Order Defect Rate (ODR): Less than 1% is the goal.
Late Shipment Rate: Less than 4% is acceptable.
Pre-Fulfillment Cancel Rate: Should not exceed 2.5%.

Failing to meet these performance standards can negatively affect your account health, potentially leading to account suspension.

6. Returns and Customer Service

Amazon requires all sellers to provide a clear and reasonable returns policy. Even though you may not handle the product directly, you must offer returns and manage customer service following Amazon's guidelines. It's essential to ensure that your supplier can process returns quickly and handle customer issues professionally.

How to Stay Compliant with Amazon’s Dropshipping Policies

• Work with Trusted Suppliers
  Always choose suppliers who understand and comply with Amazon’s dropshipping rules. You should communicate clearly with your suppliers to ensure they can ship products without revealing their details on the package or invoice.
• Monitor Your Seller Account Health
  Regularly check your seller account's performance metrics in Seller Central. If you notice any decline in your ratings, investigate the reasons and resolve them promptly to maintain a good standing on Amazon.
• Ensure Proper Packaging and Branding
  All packages shipped to Amazon customers should appear as if they are directly from your business. This includes using your company’s branding and contact information on packaging to avoid customer confusion.
• Automate Compliance
  Use tools like AutoDS or Oberlo to automate the order fulfillment process and stay compliant with Amazon’s policies. These platforms can help ensure that orders are processed on time and that the correct shipping information is provided to customers.

Conclusion

Starting a dropshipping business on Amazon offers a fantastic opportunity for aspiring entrepreneurs looking to break into the world of e-commerce. With minimal upfront costs, a massive customer base, and Amazon’s powerful platform, dropshipping can be a rewarding business model. By following the steps outlined in this guide—setting up your seller account, choosing a reliable supplier, creating optimized product listings, managing orders, and scaling your business you’re well on your way to building a successful online store.

Amazon’s infrastructure and large audience provide a solid foundation, but it’s your commitment, smart marketing, and customer service that will set you apart. So, take the plunge, follow the steps, and start your Amazon dropshipping journey today.