31Jan
By: Nicole Martins Ferreira January 31, 2017 Topic: Dropshipping

With the recent addition of the Amazon sales channel on Shopify, Shopify store owners can now sell on Amazon. In this Amazon dropshipping guide, you’ll learn what dropshipping is, the benefits of dropshipping on Amazon, Amazon success strategies, Amazon tools and how to sell on Amazon.

What is dropshipping?

Dropshipping is the process of selling a product without the responsibility of carrying inventory or shipping the goods. Notably, dropshippers can set their own product prices. The product manufacturer is responsible for manufacturing the product, maintaining inventory and shipping the goods to the customer.



Benefits of dropshipping

In this Amazon dropshipping guide section you’ll learn some of the benefits of dropshipping.

Hold no inventory

The biggest benefit of dropshipping is that the dropshipper doesn’t need to carry any inventory. This is great because it makes the business model less risky for the dropshipper. As there’s no inventory to carry, there is less work involved in the business. In addition, there’s also fewer costs as you don’t need to pay for a warehouse to hold the inventory.

Few skills needed

Few skills are needed to have a successful dropshipping business. A dropshipper needs to be great at marketing, administrative tasks and providing excellent customer service. If a dropshipper can master those three skills they can achieve great success. With great marketing skills they can attract more customers. Since they don’t carry inventory, they can intensify their marketing efforts as they don’t need to worry about inventory or the cost of labour associated with shipping products. Within the realm of administrative tasks the dropshipper will need to process orders, pay for taxes and expenses and more. Lastly, by providing excellent customer service they can maintain positive relationships with the customers who’ve purchased from them.

Easy to start up

Starting a dropshipping business is relatively easy. You can quickly set up a store within a day. All you need to do is choose products from AliExpress or Oberlo Supply using Shopify’s Oberlo app. You can even get your first sale on the day you launch if you start advertising right away. Compared to buying inventory for your store, you don’t need to wait to receive inventory or take product photos. With dropshipping, you can easily import product details such as specifications and images. This saves your business time and money.

amazon dropshipping guide

Test products easily

Another great benefit of dropshipping is that you can test products easily. Since you don’t carry inventory, you can run ads on products to see which products convert best. If certain items aren’t high performers you can remove them from your store easily. Since you didn’t purchase inventory, there’s no cost, aside from advertising, for a low performing product. In the event that you want to eventually purchase inventory, you’ll also know which products sell well as well as how many SKUs you can sell easily.

Low start-up cost

The dropshipping business model is low cost. First, you only purchase products when a customer places an order. Second, there’s no warehouse needed for inventory. Third, you don’t need to hire extra employees to manage the shipping of products. Next, your main expenses include cost of goods, advertising, and website.


Amazon Dropshipping Guide – Benefits of Amazon Dropshipping

In this Amazon dropshipping guide part, you’ll learn some of the benefits of Amazon dropshipping.

No warehouse cost

One of the benefits of Amazon dropshipping is that you don’t need to pay for the cost of a warehouse. Some Amazon sellers choose to make their products FBA (Fulfilled by Amazon). With FBA, sellers ship their products to Amazon and Amazon sends the products out for them.

Large audience to sell to

Notably, Amazon has 244 million active users. Thus, having Amazon as a sales channel for your business can mean huge returns. Sell the right product at the right price and you can lure in new customers. Your online store may attract different customers than Amazon. Thus, giving you an opportunity to connect with new customers who don’t fit your target demographics.

large audience

Lower ad spend

You have the option to run Amazon ads to gain sales and build a positive reputation on Amazon. However, as a marketplace, you can also benefit from organic traffic. By putting in upfront effort into optimizing your page, you can increase your odds of receiving organic traffic. Also, the cost of Amazon ads is set by you. You can control how much or how little you want to spend on Amazon ads as there’s no minimum requirements.


Amazon Dropshipping Cons

Amazon has created restrictions which can prevent dropshippers from selling on the platform. They do allow dropshippers to sell on the platform. However, they can only dropship via Amazon’s FBA program. Using an AliExpress or Oberlo Supply supplier is against their terms of service. According to their Dropshipping Policy, it states, that “Purchasing products from another online retailer and having that retailer ship directly to customers” is not permitted.

How Amazon Works

Amazon is one of the biggest ecommerce websites. It grew in popularity because it allows retailers to sell their products on their platform. Manufacturers and brands are able to sell on Amazon as an additional sales channel for their stores. After being approved for an Amazon seller account, you’ll be able to start selling on Amazon. However, not all brands and products get approved.

You can dropship on Amazon through their Fulfilled by Amazon program. In this program, you ship your products to Amazon where they carry the inventory and ship directly to your customers. The benefit of this program is that Amazon has some of the fastest shipping times on the market so your customers get their products even sooner.

Amazon Dropshipping Guide: Amazon Strategies

In this part of the Amazon dropshipping guide, you’ll learn a few strategies for succeeding on Amazon.

Win the Buy Box

Most of Amazon’s sales comes from the buy box. Thus, your goal as a dropshipper is to win the buy box so you too can maximize your sales. First, you’ll need to have a high seller rating. Many have found having a rating above 95% has worked well for them. Second, you need to ship products quickly, ideally within 14 days. Third, your cost (shipping and product cost total) should be lower than most of the other offers being presented. Having a low refund rate, fast customer response time and high feedback score also help you win the buy box.

Don’t rely on Amazon

Don’t be dependent on sales from Amazon alone. Have your own store too. By having Amazon as one of many sales channels, you improve your odds for sales while minimizing risk. Also, if a customer recognizes your brand they’ll be more likely to buy from you on Amazon. Be where your customers are.

Aim for a 95% seller rating

Having a 95% or higher seller rating has improved the likelihood that you’ll win the buy box. It’s also great because it makes you more likely to appear in organic searches. Also, it’s important to have a high seller rating as customers will be more likely to trust you if your rating is high. It gives your Amazon store a competitive advantage over those with lower ratings.

Do keyword research

Just as you’d optimize your store’s product pages for search engines, you should optimize your Amazon product pages as well. You can use tools like Merchant Words to determine popular keywords. If you run Amazon ads you’ll also have access to a supply of keywords you can optimize your product pages. Doing this well will help you rank organically. If you’re running ads, it’ll help you target customers better.

amazon keywords research

Make sure you price your products accordingly

When pricing products for Amazon there are a few factors to consider. First, is the cost of Amazon fees. You want to ensure your margins are high enough that you can afford to pay Amazon’s monthly and other associated fees. Second, you want to ensure your margins are high enough to make a profit. However, you also need to consider pricing competitively to ensure that you win the buy box and generate sales. As an AliExpress dropshipper, you can often offer free or cheap shipping which allows you to stay competitive as well.

Offer a better coupon discount than competitors

By creating an Amazon coupon, you can help encourage customers to buy from you. If you promote the coupon to coupon sites you can help drive more traffic from those looking to score sweet deals. Remember that you need to price the coupon in a way that allows you to pay your expenses and remain profitable.

offer amazon coupons

 


Amazon Dropshipping Tools

Merchant Words – You can use Merchant Words to view the search volume, keywords and keyword data.The pro plan costs $30/month.

FeedCheck – FeedCheck allows you to view all your product reviews in one place. If you have a large selection of Amazon products on your store, this is a great tool. By having easy access to reviews, you can work on improving your reviews while providing better customer service. It also allows you to monitor competitor’s products. Their pricing starts at $19/month.

Shopify – You can use Shopify to add Amazon as a sales channel on your store. Also, Shopify can be used to track your inventory. It’ll also alert you if you have Amazon sales you need to fulfill.

Sellery – This tool helps you win the Amazon buy box with its repricing strategies. It allows you to run pricing experiments to stay competitive while maximizing profits. You can try this tool for free.

Feedback Express – Feedback Express helps you get more reviews on your Amazon store. It also helps remove negative reviews so that you can maintain a high rating on your products and store. You can even blacklist customers who are notorious for leaving negative reviews. Pricing starts at $20/month.

Amazon Volume Listing Tools – Amazon offers various tools to simplify your seller experience. You can easily download spreadsheets regarding order and inventory information. You can also modify pricing and product quantity with ease.


How to Sell on Amazon


Choosing an ecommerce platform

As Shopify recently partnered with Amazon, using their ecommerce platform would be ideal. Shopify allows users to add Amazon as a sales channel to simplify managing orders on both platforms.

Do you sell the right products?

There are several requirements and restrictions that store owners must follow if they want to sell their product on Amazon. According to Amazon’s list of eligible stores, Amazon niches like books, computer and video games, electronics, office products and more can open up an Amazon store without approval. Notably, Amazon also created a list of restricted products for various Amazon niches which includes hoverboards, dangerous good and more which cannot be uploaded and will not be approved.

list-of-eligible-stores

Create an Amazon seller account

If you plan on selling a high volume of products, it’s best to have a professional account. In the individual selling plan, you’re charged 0.99 cents per item sold which can eat away at your margins. Keep in mind that you’ll also need to offer competitive pricing, the occasional discount, while ensuring you make a large enough profit to reinvest in the business. Thus, it’s important to have decent margins. With a professional seller account you pay a subscription each month as well as a few additional fees.

You’ll want to register with your email on Amazon Seller Central. Then, You’ll need to fill out your name, email, and password. You’ll continue being directed to new screens where you’ll provide more details about your business such as address and tax information.

amazon-seller-central

Get approved in your product category

As mentioned earlier, certain niches and product types require Amazon approval. Fashion, Beauty, and Jewelry are some of the popular niches that require approval before starting up your Amazon store. You can view the specific approval requirements for each category.

Set up your Amazon account on Shopify

Once you’ve been approved and your account is created, connect your Amazon account to your Shopify store. On the left panel in your Shopify account, scroll down to Sales Channels and click on the + button beside it.

You’ll have a pop-up come up. Amazon should be the first item on the list. Click Add Channel.

add amazon sales channel Shopify

Then, Add Channel. You’ll need to then continue with ‘Connect to Amazon.’

add channel amazon

Create Amazon product listings with ease

Click on the Amazon sales channel link, see Shopify’s left panel. Click create listing. Next, click Select Product. You’ll see two options. If your brand makes the product, you’ll need to make sure you purchase UPC codes. However, as a dropshipper, you’ll click on the second option ‘This product is made by another brand.’ Next, you’ll be able to search for the product to become a seller for that SKU. Then, once you’ve found the product click Select. Lastly, you’ll need to Publish for the process to be completed.

Have Shopify track inventory

Make sure that Shopify tracks inventory levels. This ensures that when a customer orders on Amazon that the product is still in stock. Notably, don’t allow customers to order products that are out of stock as this can lead to negative reviews.

Start promoting your Amazon store

Then, you’ll have to send traffic to your Amazon store in order to encourage sales. You can create Amazon ads to help boost sales.


Want to dropship for your own brand instead?

Don’t want to sell on Amazon? Those who want to dropship their own products can use Oberlo to dropship from AliExpress or Oberlo Supply. You’ll find millions of products you can sell online. No expensive seller fees. Meaning more money in your pocket. While you can’t sell on Amazon as an Oberlo user, you’ll be able to build your own brand without any restrictions holding you back.

In this Amazon dropshipping guide, you’ve learned everything from the benefits of dropshipping on Amazon to how to sell on Amazon.


Want to learn more?


Best of luck generating more sales with your new Amazon sales channel. Have you tested it out? Let us know how it goes in the comments below!


  • Hannu JH Polvi

    Hi, Isn’t the statement”can quickly ship with ePacket” too positive? The delivery time varies a lot. From around 10 days to 30 days. The questions: 1. if tou say on the Amzn product page delivery in 14 days, wouldn’t people go after faster shipping? 2. What if customers receive orders after 22 days after the order, wouldn’t that cause negative reviews, and then you are screwed? 3. Could you tell exactly how this way of selling through Aliex works in reality without painting nice picture? 4. How do you do it if you dropship from Ali to Amzn? 5. What delivery times do you use, etc? 6. Do you price your products on Shopify and Amzn the same? Amazon is always on the side of the buyer. You as a seller need to prove you are not guilty.

  • Chris Dunne

    Hi Nicole,

    Thanks for mentioning FeedbackExpress in this great article.

    If any readers are interested in signing up to our Amazon feedback software, they can get a free-30 trial. Plus if they use promo code FEX10, they’ll get 10% off their first months bill

    http://feedbackexpress.com/

  • Sarah McArthur

    Would love a reply to Hannu’s questions. The answers would be incredibly helpful when deciding to go this route through Amazon. As an FBA seller for brand products, it would be nice to know what it looks like on customer/rating side for using companies such as AliExpress for product sourcing.

  • Dan Laguardia

    1. There are 2 types of shoppers. Impulse or immediate need shoppers that want the product in their hands as soon as possible and price is not a factor. And there are bargain shoppers looking to save as much as they can, even if it means waiting 3-4 weeks. “Spend time to save money” VS “Spend money to save time”.
    2. If you are using drop shipping from AliExpress, it’s best to be clear and up front with the customer before they add anything to their cart regarding shipping time expectations.
    3. I sell through Shopify and Oberlo. The process is simple. a) customer orders product, b) Shopify collects payment and puts order in the Oberlo queue, c) through the Oberlo app, I complete the order with AliExpress where Oberlo automatically fills in all the customer shipping information, and I finalize the purchase of the item(s), d) depending on the supplier’s processing time, I will check their fulfillment status and then use the Oberlo app to update the same status on the Shopify site. This in turn notifies the customer that their order has shipped and provides a tracking number.
    4. In my opinion, drop shipping from AliExpress using Amazon may have challenges. First, the Amazon fees will eat into your profits. And many sellers on Amazon are doing FBA where they have invested in having inventory available that is both very inexpensive and eligible for Prime shipping. So there is a lot of competition.
    5. I will put “Allow 2-3 (or 3-4) weeks for delivery of this item” in all the descriptions on my store.
    6. You will want to price Shopify and Amazon items differently based on the fees each platform will charge.
    Hope this answers your questions.

  • Brivvy

    “First, you only purchase products when a customer places an order.”

    Let’s say that the flood gates open on day one, and you get 100 orders. Amazon holds your funds for 14 days. You may have $1,000 in your account to purchase products for quick shipping, but you have to wait two weeks just to have enough money to purchase the product to ship. 🙁 It’s discouraging.

    I went to another website and read the posts, the people there were mean to a guy asking that question as though he shouldn’t be in business unless he has a $25,000 loan sitting in a bank for that purpose. Not everyone can do that. So how does a TRUE DAY ONE ENTREPRENEUR start on Amazon with very little funds?

  • William V. Woody

    Start with shopify and make your own e-com store.

  • Nitin S

    which itself has monthly costs at the minimum and then separate costs for each useful plugin.

  • Hubert Junior Jean-philippe

    Hi
    im from canada and it seems i can t open an amazon channel due to the fact i don t have a US adress can it be done through oberlo?

  • Roee Arbel

    I heard that Amazon doesn’t really appreciate dropshipping, and using this technique may cause them to close my account. Is this true?

  • Alexandre Lopes

    Hubert, try something like MyUs.com, can be helpful for you with the adress issue.

  • CarynZ

    It states in the Seller materials that dropshipping is allowed, but the manufacturer cannot include items with their name in the shipment. Everything has to come from you. But it does say they do not allow dropshipping with other online merchants, like eBay.

  • Stian Slatlem

    Good article. As a complete newbie to Amazon I am still a bit unsure of the Amazon drop shipping policies. So basically, I can *not* get Company X ,who is also a manufacturer and online reseller to drop ship their products for me? They will need to send their goods to an Amazon fulfillment center first?

    And say, if they agree to send products to Amazon for me to sell – what happens if only a few of them get sold? Can they simply be sent pack to Company X, with me paying for the return shipping costs?

    Cheers