Dropshipping has been a great and profitable business for a long time and so far, people are mostly doing it using Shopify. However, Amazon offers a similar business model and it’s frankly profitable if you follow the rules.
Here is the article from Amazon supporting the statement: https://sellercentral.amazon.com/gp/help/external/201808410
Oberlo has an awesome video explaining what is dropshipping:
The mentioned model in the video is mainly for Shopify Dropshipping, however, Amazon dropshipping is quite the same. All you need to understand about Amazon dropshipping that the orders you get in your Amazon store will be handled by third-party suppliers on your request.
Amazon has some rules though, which are
Also, Amazon warns about a number of instances, which as described:
Definitions of drop shipping not permitted:
Failure to meet these requirements may result in your selling privileges being suspended or removed.
Unlike FBA, you do not need to pay any extra fee to Amazon to sell these. FBA model works by sellers sending products to Amazon warehouse along with fees for storage and referral fee. However, these fees are eliminated in the dropshipping model.
The way Amazon dropshipping differs from Shopify is that Amazon already has hundreds of million active shoppers. So, your products have more discoverability while in Shopify you need to advertise to gain traffic.
Running ads on Amazon is far efficient than running on Facebook or Instagram. It’s because Amazon has more data to target accurate shoppers while facebook/Instagram requires a lot of testing to get a perfect audience.
The major problem that arises from the Amazon Dropshipping model is complying with their TOS. In their TOS, it is completely prohibited to have third party labels on your product. This is a very big problem since every drop shipper wants to deliver products from a third party vendor. However, it can be sorted out by negotiating and probably paying an extra fee to the supplier to private-label your product.
Most of the profits of Amazon come from the order package. And, as a drop shipper, your goal is to win the buy box so you can boost your sales as well. Next, you’re going to need a high seller rating. Many have noticed that it performed well for them to have a ranking of 95%. Second, goods need to be delivered quickly, preferably within 14 days. Third, your cost (shipping and product cost total) should be lower than most of the other offers being presented. It also helps you win the buy box with a low return rate, quick customer response time and strong feedback score.
Link to a supplier to get their products listed on Amazon. You’re going to have to make sure this supplier is willing to ship directly to the buyer so you don’t have to, but once you do that, you’re free to start creating listings on Amazon for those products.
Build listings and sell products as if you would usually be on Amazon (i.e. as if they were from your own stock). Once the consumer clicks ‘ buy,’ it is up to you to collect the money from them, which covers both the cost of retail and shipping.
You’re expected to hand over some money to the supplier, but it’s not going to be 100% of what you’ve just collected from the buyer. Alternatively, the selling cost of the product and the delivery price are generally what you will have to pay out, along with maybe a handling fee if the manufacturer asks for it.
The boring task of delivering the commodity to the customer is now being finished for you, and you can sit back and count your money. That’s what it is. The only thing left now is to concentrate on the next sale of nabbing.