Step-by-Step Guide: Dropshipping on Amazon for Beginners

Table of Contents

1. Introduction
2. What is dropshipping on Amazon?
3. The Legality of Dropshipping on Amazon
4. Finding Wholesale Suppliers for Dropshipping on Amazon
   • Search on Google for Wholesale Suppliers
   • Search on Amazon for Name-Brand Suppliers
5. Applying for an Amazon Seller Account
6. Getting a Resale Certificate
7. Creating a Wholesale Account with Suppliers
8. Finding Profitable Items for Dropshipping
9. Listing Items on Amazon
10. Fulfilling Orders and Providing Tracking Information
11. Conclusion

Introduction

In this article, we will explore the step-by-step process of dropshipping on Amazon. We will discuss the legality of dropshipping on Amazon, how to find wholesale suppliers, applying for an Amazon seller account, getting a resale certificate, creating a wholesale account with suppliers, finding profitable items for dropshipping, listing items on Amazon, and fulfilling orders. By following this guide, you will gain a comprehensive understanding of how to start and run a successful dropshipping business on Amazon.

What is Dropshipping on Amazon?

Dropshipping is a business model where sellers do not hold inventory but instead rely on third-party suppliers to fulfill orders on their behalf. Dropshipping on Amazon involves listing products for sale on the Amazon marketplace and, when a customer places an order, having the supplier ship the product directly to the customer. This eliminates the need for sellers to manage inventory, making it a popular business model for entrepreneurs looking to start an online business with low upfront costs.

The Legality of Dropshipping on Amazon

There is often confusion and misinformation regarding the legality of dropshipping on Amazon. It is essential to understand that Amazon does allow dropshipping, but there are specific guidelines to follow. While dropshipping from retail stores like Home Depot or Walmart is not permitted, dropshipping from wholesale suppliers is allowed.

To ensure compliance with Amazon's terms of service, it is crucial to only dropship from reputable wholesale suppliers and not engage in retail dropshipping. Retail dropshipping involves listing products from retail stores, which is against Amazon's policies.

Finding Wholesale Suppliers for Dropshipping on Amazon

One of the key steps in dropshipping on Amazon is finding reliable wholesale suppliers. Here are two effective methods for finding wholesale suppliers for your dropshipping business:

Method 1: Search on Google for Wholesale Suppliers

1. Use specific keywords related to your niche, such as "wholesale [product category] suppliers."
2. Look for suppliers that offer dropshipping services.
3. Visit the suppliers' websites and explore their product catalogs.
4. Check for high-quality products, favorable pricing, and clear contact information.
5. Contact the suppliers and inquire about their dropshipping program.
6. Verify their credibility by checking for reviews or recommendations from other retailers.

Method 2: Search on Amazon for Name-Brand Suppliers

1. Identify name-brand products that you would like to sell on Amazon.
2. Search for these products on Amazon's marketplace.
3. Find other sellers offering these products and check if they are fulfilled by Amazon (FBA) or using a third-party shipping method.
4. Research the suppliers of these products and reach out to them to inquire about their dropshipping program.
5. Follow their application process, which may involve providing business information and a resale certificate.

Applying for an Amazon Seller Account

Before you can start dropshipping on Amazon, you need to have an Amazon Seller Account. Here is a brief overview of the account creation process:

1. Go to the Amazon Seller Central website and click on the option to become an Amazon seller.
2. Choose the type of account you want to set up (individual or professional).
3. Complete the registration process by providing your personal and business information.
4. Choose a selling plan, either the free plan (with limitations) or the professional plan ($39.99 per month).
5. Confirm your account details and payment information.
6. Set up Amazon's two-step verification for added security.
7. Once your account is created, you can customize your seller profile and start listing products.

Getting a Resale Certificate

To work with wholesale suppliers and benefit from tax exemptions, you will need a resale certificate. The exact process and requirements vary by state. Here is a general outline of the steps involved:

1. Determine the specific requirements for obtaining a resale certificate in your state.
2. Apply for an Employer Identification Number (EIN) from the IRS if you don't have one already.
3. Complete the application for a resale certificate in your state, providing all necessary information and supporting documents.
4. Pay any required fees associated with obtaining the certificate.
5. Once approved, you will receive your resale certificate, enabling you to work with wholesalers and access tax exemptions.

Creating a Wholesale Account with Suppliers

Once you have identified reputable wholesale suppliers, you will need to create a wholesale account with them. Here is a general process for setting up an account:

1. Visit the supplier's website and look for an option to create an account or apply for a wholesale account.
2. Fill out the necessary information, including your business details and resale certificate number.
3. Submit your application and wait for approval from the supplier.
4. Once approved, you will have access to the supplier's inventory and pricing information.
5. Communicate with the supplier to ensure smooth operations and address any concerns.

Finding Profitable Items for Dropshipping

To run a successful dropshipping business on Amazon, it is essential to find profitable items to sell. Consider the following tips when selecting products:

1. Conduct market research to identify popular and trending products within your niche.
2. Analyze the competition by reviewing similar listings and their sales performance.
3. Look for products with a reasonable sales rank and positive customer reviews.
4. Calculate the potential profit margin by evaluating the difference between the supplier's price and the listing price.
5. Consider the shipping times and quality of the product to ensure customer satisfaction.
6. Use tools like Jungle Scout to gather data on sales estimates and market trends.

Listing Items on Amazon

Once you have identified profitable items, it's time to list them on Amazon. Here are the steps for listing items:

1. Log in to your Amazon Seller Central account and go to the Inventory tab.
2. Click on "Add a Product" and enter the product's information, including title, description, and images.
3. Set the price, quantity, and shipping options for the item.
4. Pay attention to Amazon's guidelines regarding product images, descriptions, and categorization.
5. Optimize the listing by incorporating relevant keywords and using high-quality images.
6. Monitor the performance of your listings and make adjustments as needed to improve sales.

Fulfilling Orders and Providing Tracking Information

As a dropshipper, it is crucial to fulfill orders promptly and provide accurate tracking information to customers. Here's how to handle order fulfillment:

1. Monitor your Amazon Seller Central account for incoming orders.
2. Place the order with the supplier by providing the customer's shipping information.
3. Pay the supplier for the cost of the item and shipping.
4. Communicate with the supplier to ensure the item is shipped promptly.
5. Receive the tracking number from the supplier and provide it to the customer via the Amazon seller account.
6. Keep track of the order's progress and address any issues that may arise.
7. Continuously communicate with the supplier to maintain a good working relationship.

Conclusion

Dropshipping on Amazon can be a profitable venture with proper planning and execution. By following the step-by-step processes outlined in this article, you can start and run a successful dropshipping business on Amazon. Remember to prioritize sourcing reputable suppliers, identifying profitable items, optimizing your listings, and providing excellent customer service. With determination and strategic decision-making, you can achieve success in the competitive world of dropshipping on Amazon.