Dropshipping might be appealing if you’re looking to jump-start your business. This ecommerce solution can let you focus on marketing and promotion while a third party handles fulfillment. In this article, learn how dropshipping compares to Fulfillment by Amazon (FBA) and find tips for success.
Dropshipping is permitted in the Amazon store if you follow applicable guidelines, including Amazon’s dropshipping policy. There are also alternatives to dropshipping, such as Fulfillment by Amazon, or affiliate marketing through our influencer program.
If you see dropshipping as a stepping stone to building a brand, here are some things to watch out for and ways to protect the customer experience. In this post, we’ll cover:
- Amazon policies
- Tips for success if you use dropshipping with an Amazon store
- What to look for in a dropshipping supplier
- How dropshipping compares to other methods of selling online
- Steps to start dropshipping
- Dropshipping FAQs
For more background, learn what is dropshipping.
Amazon’s dropshipping policy
Be sure to follow Amazon’s dropshipping policy to avoid losing your ability to sell in the Amazon store.
Here’s an overview of our dropshipping policy:
- You must identify yourself as the seller on invoices, packing slips, external packaging, and other items included with the product.
- Don’t include wholesalers, suppliers, or manufacturers in product packaging materials or Amazon store product descriptions.
- You’re responsible for accepting and processing returns.
- Comply with Amazon Terms of Service, according to the seller agreement (login required).
Find more details on the Amazon dropshipping policy here.
Tips for success if you use dropshipping to sell with Amazon
Let’s cover some common dropshipping guidelines to avoid mistakes.
1. Make sure you’re the seller of record
To dropship on Amazon without penalty, you must be the seller of record. The seller of record is the person who is registered to sell the product to the end customer.
You’re responsible for setting the price, recording sales and revenue, handling returns, and paying sales taxes. In this scenario, you own the products before the dropshipping supplier ships them to customers.
2. Avoid ecommerce or retail sites
It’s tempting to use an ecommerce or retail store to supply products for your dropshipping business. If you do, however, you won’t be the seller of record.
Retailers are unable to list anyone else as the seller of record. So when these products ship directly from their stores, the packaging, invoices, and other shipping materials will contain the retailer’s information.
This is against Amazon’s dropshipping policy because it causes confusion for customers.
3. Make the customer experience seamless
One mistake Amazon sellers sometimes make when dropshipping is not taking accountability for the customer experience. When you become a dropshipper, you’re not selling as Amazon—you’re selling as your brand.
You’re not anonymous, which means customers will attribute your great (or poor) customer experience to your brand. This can hurt reviews and sales in the long run. To prevent fallout with customers, ensure they know who to contact for support. Include your contact information (e.g., email and phone number) with the product packaging so customers don’t wonder whether they should contact Amazon or the dropshipping supplier.
Also, check to make sure any manufacturers, suppliers, and dropshipping companies you work with don’t mind putting you as the seller of record.
Note that it’s prohibited to create an Amazon product listing for an item already on another retailer’s site (e.g., Sam’s Club, Target), take the order through Amazon, and then enter the order into the third-party retailer’s system so they can then ship it.
What to look for when you select a dropshipping supplier
Once you’ve found a dropshipping supplier that’s willing to list your brand on packaging, mailing slips, and invoices, here are some other factors to consider.
A good dropshipping supplier...
...doesn’t ask for control of your Amazon account.
Once you know you’ll be the seller of record, it’s time to set up an Amazon account. Remember that you’re responsible for the account, so don’t give access to a third party. If you provide access and they remove you, then you’ll lose control over the account.
If a dropshipping company requests access, then shop for a different vendor.
...has proof of authorization to sell products from specific brands.
Next, make sure the supply chain is in order. Ask the dropshipping supplier where they receive products from and whether they have letters of authorization from the respective brands or manufacturers. Check the authorization to ensure it comes directly from the product source.
Before moving forward with the supplier, confirm authorization is legitimate. Third-party suppliers generally receive authorization to sell products. You can review purchase documentation (such as an invoice and letters of authorization) to confirm this. Letters of authorization commonly state something like, “Supplier ABC is authorized to sell products under XYZ brand name.”
If a supplier is unable to provide invoices or letters of authorization, then don’t take any chances. Ensure they can prove they’re legitimately selling products so you don’t end up suspended from Amazon or in legal hot water.
...has dropshipped with Amazon sellers before.
As a bonus, you can ask the supplier if they’ve worked with Amazon sellers before. If so, ask for shipment histories to prove it. Avoid headaches by working with a dropshipping vendor that has experience with Amazon sellers and is aware of the process and applicable policies.
...offers customer service support
You’re responsible for customer satisfaction, and you’ll likely need cooperation from the dropshipping company, so it’s cohesive.
When dropshipping products, you don’t have complete control over inventory, since it’s coming from elsewhere. However, you’re still responsible for processing customer returns and refunds. Check to see whether the dropshipping supplier can receive and document returns within Amazon’s returns policies.
If the supplier will be handling returns, check to make sure they have the ability to document the return accurately. That includes taking images, identifying any damage, and noting the reason for the return.
What are alternatives to dropshipping?
If you try dropshipping and feel it’s not right for you, or if you’re interested in alternative sales methods, then consider FBA or affiliate marketing.
What is affiliate marketing?
Affiliate marketing is when you promote another company’s products through your own website or other sales channels. The affiliate marketer earns a commission by referring customers to the products for sale. This method can work well for those who already have websites, blogs, or social media accounts with steady traffic.
Affiliates can promote products using their own websites or by creating landing pages where they display links to products for sale in the Amazon store. Amazon pays commissions based on how much revenue is generated from each referral. Here’s how the Amazon affiliate program works:
- Create an Amazon affiliate account
- Receive a unique Associate ID from Amazon
- Submit an application and, once approved, you can create affiliate links in your Amazon portal
- Place affiliate links in blog posts, landing pages, and other areas
- Receive a commission when someone clicks your affiliate link and makes a purchase
What is FBA?
Fulfillment by Amazon (FBA) is a service where sellers store products in Amazon storage facilities. This means you don’t have to worry about shipping products to customers yourself. Some benefits of FBA include:
- Sell more than one type of item at a time.
- You don’t have to deal with returns or refunds, or worry about limited warehouse space.
- Unlike with dropshipping, you can customize products through a manufacturer to sell under your brand with an Amazon storefront.
Fulfillment by Amazon allows us to provide a seamless experience and focus on what we’re good at—which is creating and curating products—and allowing Amazon to work on everything else.
FBA vs. dropshipping
Here’s a comparison of FBA and dropshipping with an Amazon store:
- Dropshipping – No need to pre-purchase products and store inventory. Products ship directly from the supplier or manufacturer to the customer. Amazon provides a storefront for your business, helping to attract shoppers to product listings. You and the dropshipping supplier are responsible for customer service, refunds, and returns.
- Fulfillment by Amazon – Requires you to purchase product inventory in advance and then ship to Amazon fulfillment centers. Then Amazon fulfills orders by shipping products to customers, and processes returns and refunds on your behalf.
Key differences between dropshipping and FBA revolve around:
- Who pays for and stores inventory
- Who handles shipping
- Shipping times
How to combine dropshipping + Amazon
Ready to begin dropshipping? Here’s how to get started.
1. Set up an Amazon seller account
Before you can start selling, create an Amazon seller account.
2. Do product research
When you’re ready to start selling, it’s time to decide what products to dropship. There are various tools to help with product research. The goal is to find products with high demand, but low competition.
Here’s a guide for choosing products to sell. You can also find ideas using Product Opportunity Explorer on Seller Central. As you’re browsing for product ideas to dropship, keep these tips in mind:
- Find what’s trending – Use Amazon’s Best Sellers list to see what items are popular now. This showcases the top trending 100 products and updates hourly. You can also look at the Movers and Shakers list, which updates daily.
- Choose a niche – What do you want your brand to be known for? Select a niche and search for products within that industry (for example, baby products, children’s toys, or women’s exercise equipment).
- Check the competition – Are there major brands selling similar products? Then it may be tough to compete. The same goes if there are lots of other sellers who offer the same type of item.
Check out this guide to finding wholesalers and suppliers for your business, along with guidlines for sourcing products from Amazon Seller University:
3. Find a dropshipping supplier
Choose a supplier that understands Amazon’s dropshipping policy to help ensure shipping and returns will run smoothly. Different suppliers have unique requirements, so ask about them to see if they align with your business needs.
For example, some charge a monthly fee or have a minimum monthly order requirement, which can be expensive or problematic if you’re just starting out.
Also, don’t forget to ensure you’re the seller of record.
4. Do keyword research
Keyword research can be a powerful tool for boosting product sales. The goal is to zero in on keywords related to the product. Preferably, the keywords will have low competition, with not too many other brands trying to rank for the same term. Then you can optimize product listings in order to rank in search results.
One way to do keyword research is with Amazon’s search bar. Try typing a keyword and you’ll see an auto-complete menu appear with more keyword ideas.
There are also keyword tools you can use to find keyword ideas based on what’s trending, such as:
Keyword research software can allow you to see the number of searches per month, the level of competition for a given term, and other information that can help you decide which keywords to focus on. Learn more in this guide to Amazon SEO.
5. List products
After selecting products to sell, a dropshipping vendor, and keywords, it’s time to create a product listing. This is what appears in Amazon search when shoppers type in keywords.
To make your listing stand out, you could add multiple photos, different color options, or offer a discount.
When shoppers click on a product listing, they’ll land on the product description, which shares details about the item for sale (for example, price, shipping time, product information, and product images).
6. Track sales in Seller Central or the Amazon Seller app
After listing a product, shift your focus to monitoring sales performance. You can do this using Amazon’s Seller Central and the Amazon Seller mobile app.
Use these tools to manage seller tasks in one place:
- List new products or updating product details
- Track daily sales and inventory
- Handle payments, returns, and refunds
- Monitor customer metrics to learn more about buyers
- Respond quickly to customer messages
Find the right fulfillment solution for your business
Building an Amazon storefront can help you reach millions of online shoppers. How will you get products to customers? If you choose dropshipping, keep track of the Amazon policies and best practices we’ve covered in this post to help ensure a positive customer experience and achieve success selling online.
Learn more about the steps of fulfilling a customer order in this guide to ecommerce fulfillment, or start from the beginning by learning how to start an ecommerce business.
Want to sell as a dropshipper or brand with an Amazon storefront? Explore Seller University videos for walk-throughs and tips.
FAQ: Dropshipping on Amazon
Can you dropship in the Amazon store?
For example, you must be the seller of record and include your information and branding on packaging and shipping materials, instead of Amazon’s or the dropshipping supplier’s.
Can I use FBA and dropship?
How much does it cost to dropship in Amazon store?
As an Amazon seller, you have a choice between the Individual plan ($0.99 per unit sold) and the Professional plan ($39.99 per month, no matter how many units sell).
Is it profitable to dropship with an Amazon store?
How do you dropship without money?
What are the best items to dropship in Amazon stores?
Learn more about dropshipping, and start by searching for trends via Amazon’s Best Sellers list, the Movers and Shakers list, and using product research tools like Product Opportunity Explorer. For more details on how this can work, here’s a guide to finding product ideas.