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What is dropshipping and how does it work?

Sep 11

Want to start your online business? But unable to achieve your goals due to low capital? No worries, Amazon got you covered here.

Amazon dropshipping is a great option for emerging entrepreneurs to start their own online empire. However, in this article, we’ll help you know everything about Amazon dropshipping and how it can help you generate huge revenue.

Let’s dive in;

What is Dropshipping?

Dropshipping is a unique business model and retail fulfillment where merchants don't need to manage inventory. Instead, they buy it from third-party suppliers and ship it directly to the customers to fulfill orders. Mainly this is the key difference between the retailer and dropshipping business model. 

In the first place, it saves you from the frustration of managing and stocking logistics. As a dropshipper, all you have to do is to drive potential customers to your online store. Whenever a customer places an order, your third-party supplier or manufacturer takes responsibility to ship the product to your customer.

Comparatively to the traditional retail model, dropshipping is an ideal option to grow your business and generate maximized revenue out of it. 

What is  Amazon Drop Shipping - How does it work?

As one of the biggest marketplace, Amazon is great to start dropshipping. Many people are making huge revenue through this model. As the name says, it allows dropshippers to list products on Amazon. Moreover, you can also sell products directly from Amazon without managing or handling inventory. 

Here you work as a bridge between suppliers and customers. You have to drive traffic and potential leads to your Amazon store and then fulfill orders from the suppliers. Amazon doesn’t restrict, so anyone can start dropshipping on Amazon. However, there are some terms and policies that you just need to adhere to to get started with Amazon. 

Advantages & Disadvantages of Dropshipping on Amazon

It is an ideal choice for entrepreneurs who want to start their own business on Amazon. However, it comes with advantages and disadvantages. So, before starting, you just need to know about them.


- Low Startup and Overhead Cost 

Managing and stocking a vast product range comes with a cost. You need to set up a warehouse and hire employees to start your online business with Amazon. Obviously, it requires capital. However, when you start dropshipping with Amazon, you don’t need to worry about such costs as you can start your business with zero investment and inventory. 

-Ability to offer a wide range of products 

With dropshipping, you don't have to wait till stocking to start advertising new products. Moreover, it offers the ability to offer a wide range of products. You can control which product to advertise at the right time. At the same time, you can also test different products to find a profitable niche. 

- Helps in Scalability 

Additionally, by giving you the chance to offer multiple products dropshipping helps businesses to scale and grow. Moreover, with low starting & operating costs, you have the opportunity to scale up or down according to your requirements. 

- No Inventory and low fulfillment cost 

Having an online business comes with inventory costs that are significantly reduced in dropshipping. It saves merchants from the headache of picking, packing, and shipping inventory. Moreover, it also reduces fulfillment costs. 


- Low Profits 

With lots of competition, you may have to sell products at a low cost. This can somehow reduce the profit margins that you are likely to receive. So, it is suggested to go with the products that can give you maximum profits. 

- No Customer Service

In dropshipping, you mainly rely on third-party suppliers. Any delay or wrong delivery can result in bad customer service. Due to no control over your inventory, you can not solve your customers' issues. But you have to wait for the suppliers to do so. 

- No or Less control over inventory 

You are dependent on third-party supplier’s stocks. So, you have little or no control over your inventory. Moreover, it also results in poor inventory management that can affect sales as well. 

Amazon Drop Shipping Policy

To start dropshipping on Amazon, you need to adhere to some set standards and policies. These includes

- You need to be the seller of record 

- You need to specify your identity as a seller on all slips, invoices, and other information related to the product 

- As a seller, you have to handle refunds, returns, and exchanges 

- You can’t disclose third-party supplier information on the products. Moreover, you need to remove information that identifies that any third-party supplier is fulfilling customer’s orders.

- You need to agree with all the terms & conditions of the Seller agreement and Amazon policies. 

Best Amazon Dropshipping Tools

Additionally, there is a wide range of reliable tools available that can help you to streamline your dropshipping process. Here we have enlisted the best Amazon dropshipping tools in 2021. 

Obrelo: With over 3600 active Shopify stores, Oberlo is a top-rated dropshipping tool helping businesses grow online. Moreover, it works as a virtual warehouse to manage your inventory and ship it directly to your customers. All you have to do is find the right product and the customers to sell them.

WooDropship: WooDropship is a widely used dropshipping plugin tool. Using it, you can easily import products from Aliexpress. So an ideal option to start your Aliexpress dropshipping business. 

SaleHoo: This amazing tool will help you find low-cost products that can drive high profit for your business. With a community of wholesalers and suppliers, you can make your product line and resell it on Amazon.

AutoDs:  AutoDS is known as the #1 dropshipping tool that automates all your selling operations. You can find trending products and list them directly in your store to drive customers. Moreover, it also allows 24/7 price and stock monitoring. 

Sellery: The Sellery is a well-known repricing tool that helps dropshippers in winning Amazon buy box. Moreover, it also allows retailers to come up with competitive pricing strategies to drive maximum revenue. 

How to start dropshipping on Amazon 

Now at the final, you need to know how to start your dropshipping business on Amazon. So let’s dive into the easy steps to get started. 


1- Create an Amazon Seller Account 

In the first place, you need to create an Amazon seller account to start selling your products. Moreover, it's better to go with a professional account to sell high volumes of sales. 

2- Find Profitable Products 

Once you create your account, the next step is to find low-competition products. Using different dropshipping tools, you can fulfill your product research goals. Additionally, it will help you in gaining huge profits.

3- Start Finding Third-party supplier 

Next in line is supplier research. There are multiple dropshipping directories where you can find third-party suppliers and wholesalers. However, one of the B2B marketplace to hunt suppliers is Aliexpress. 

4- Create Amazon Listing 

The last and final step is to create your Amazon product listing. And woah you are all ready to start dropshipping on Amazon!


We hope the article has helped you gather enough information about dropshipping and how you can start your Amazon dropshipping business. However, to generate maximum revenue, you must follow and comply with Amazon's policies. And if you are still confused, no need to worry. You can get amazon account management services and sit back relax while your account manager handles your business for you.