A Guide on How You Can Dropship on Amazon in 2024

Are you willing to kickstart your entrepreneurship journey with minimal or zero capital? Say no more. Amazon dropshipping is the way to go.

The report has it that e-commerce retailers that use dropshipping earn 50% more than other retailers. This automatically means that as a new entrepreneur, you can earn more as a dropshipper without the usual expenses new business owners have to deal with.

Dropshipping is a low-risk business model that involves selling products directly to customers without holding any inventory. A drop shipper can also be referred to as a marketer. When a customer makes a purchase, the retailer orders the products from a third party (manufacturer or wholesaler) - who then drop ships the item to the customer.

In this article, we will walk you through Amazon dropshipping and a guide on how you can dropship on Amazon in 2024.

What is Amazon Dropshipping?

Dropshipping on Amazon involves selling items on the Amazon website without owning any physical goods or products. Amazon is undoubtedly a preferred platform for dropshipping by many business owners in 2024 and here are a few reasons:

1. It is a trusted brand
2. It has a massive customer base
3. Amazon’s Fulfilment by Amazon enhances the sales process
4. Amazon provides marketing tools to help promote products.

To successfully dropship on Amazon in 2024, there are a few rules you must follow. These rules include:

1. You must identify yourself as the seller on all packing slips, invoices, and external packaging. No part of the product should include the details of the supplier.
2. Manage inventory appropriately to avoid stockout.
3. Follow Amazon’s seller code of conduct, which includes maintaining high-performance metrics, being transparent with customers, and following all applicable laws and regulations.
4. Provide excellent customer service.

What Are The Pros of Amazon Dropshipping

Dropshipping on Amazon has its advantages as well as disadvantages. However, this section is focused on the advantages of Amazon dropshipping, including…

1. Minimal Startup Cost

Dropshipping on Amazon requires no capital or warehouse cost. All you need to do is find an honest supplier, set up your business store on Amazon and post your items or products on sale.

2. Easy to Set Up

You don't need to partner with a hosting firm, register a URL, or perform a lot of backend website work if you are using Amazon for dropshipping. Instead, all you have to do is set up your business, furnish it, and put your goods on sale. You can save time and money by doing this, particularly if you've never built a website before.

3. Multiple Product Categories

With over 30 product categories, Amazon provides you with additional choices to cater to your preferred niche. You can open and run many stores in different locations more easily if you have reliable suppliers and the proper merchandise.

Be cautious, and avoid selling anything that violates Amazon dropshipping rules, such items include motorsports, medical supplies, and alcohol.

4. Massive Customer fanbase

Amazon is a reliable and trusted brand with more than 300 million active users. It has the biggest market share in the e-commerce industry and a sizable viewership. The potential traffic is enormous in comparison to the traffic that now visits your online store. This implies that there are a lot of advantages to using Amazon as a sales channel for your company.

Cons of Amazon Dropshipping

Here are some of the disadvantages of Amazon dropshipping.

1. No Longterm Customer Loyalty

Instead of fostering a relationship with customers, Amazon would rather assist suppliers in selling their goods. Compared to selling online, you have a lower chance of forming enduring relationships with your clients.

Amazon controls every aspect of establishing your brand, promoting your goods, and interacting with buyers. Establishing a warm and long-lasting rapport with your clients is impossible.

2. Reduction in Profit Margin

One of Amazon's policies stipulates that each item must automatically receive a selling fee of between 10% and 15%. Profit margins for dropshipping are typically between 10% and 30%. Therefore, you might only make half of what you could make selling on Amazon, even if your profit margin is 30%. This is extremely painful, particularly when an item already has low profit margins.

3. Account Suspension Risk

A retailer is highly dependent on the supplier for delivery, in cases of delays and mistakes from the supplier, your account could be banned or suspended. Amazon is well known for suspending seller accounts for various reasons, including policy violations, poor performance metrics, or customer complaints.

4. New Policy Vulnerability

As an Amazon retailer, your business and product are subjected to Amazon policies and structures. Should new policies be made, your business is vulnerable to them even if they may affect your price and further erode your profit margin.

Steps on How You Can Dropship on Amazon in 2024

Here are basic steps you should follow on how you can dropship on Amazon in 2024:

1. Create an Amazon seller account

Create an Amazon seller account by clicking on sellercentral.amazon.com. Then select your seller account which is one of the most crucial steps you must take when you decide to begin selling on Amazon.

There are two account plans available: Professional and Individual.

Individual plan: $0.99 per sale commission and a monthly cap of 40 sales for a free membership.

Professional Plan: You can sell a lot of things with this account, which has a $39 monthly charge.

2. Find a high-demand product to sell

The next step is to do research and carefully consider the goods you wish to offer directly on Amazon. The product you select must strike a balance between price and popularity well, especially considering the fierce competition. Identify profitable niches and products with high demand and low competition. Tools like Amazon Best Sellers, Google Trends, and market research software are essential to how you can dropship on Amazon in 2024.

3. Finding a reliable supplier

After choosing your preferred product to sell, it is time to locate a dropshipping supplier to handle the order. You need to take into consideration product costs, quality assurance, delivery costs, and supplier reputation when choosing the best supplier to partner with.

Use social media networks or Google Search to aid your search for a reliable one.

After locating the ideal dropshipping source, you may calculate your price by referencing the supplier's pricing and contrasting it with that of other online retailers. You can then assess if your profit margin is sufficient.

You can also partner with our team to help upscale your business from any part of the world.

4. List Your Product on Amazon

Create detailed and optimized product listings with high-quality images, compelling titles, informative descriptions, and relevant keywords. This helps to generate as much online traffic as possible.

Your product listing is the only reference your customers have when they visit your Amazon store. They will make purchasing decisions based on the information provided here. Ensure your prices are competitive which cover your costs and has a reasonable profit margin.

5. Optimize Listing for SEO

Focus on your product title, product images, key features, product description, and keywords to drive more traffic to your listings. Amazon's algorithm improves your product visibility when listings have been optimized.

6. Promote Your Store

To increase visibility and sales, you need to promote your business. On a platform as highly competitive as Amazon, promoting your product differentiates you from the competition. Creating a plan that emphasises giveaways, social media promotions, and product events supported by Amazon will help you achieve this.

How Much Does It Cost To Dropship on Amazon?

Amazon dropshipping fees are charged based on the categories of products. Automotive products like tools, appliances and electronics have low dropshipping fees. The costs could range from 8% - 15% of product prices.

However, the professional account comes with a monthly subscription of $39.99 that covers unlimited product sales.

How Much Can I Make on Amazon as a Dropshipper?

According to Amazon dropshipping stats, retailers who use this business model can potentially be 50% more profitable than those who work with an onsite inventory. Profit generated on products as an Amazon dropshipping depends on the choice of products, pricing strategy and suppliers' cost.

1. A highly demanding product equals more sales.
2. Maintaining a competitive pricing structure enhances patronage with a diligent profit margin.
3. Negotiate with supplier. Ensure supplier's costs are minimal so that it doesn’t affect your price margin.

Where To Find Suppliers For My Product

84% of e-commerce retailers reacted to finding a notable supplier as the main obstacle to their businesses. To find a supplier as you dropship on Amazon in 2024, ensure the supplier you select has high-quality merchandise. They also need to provide outstanding customer service and dependable delivery. Prioritize forming enduring relationships with suppliers when you are searching for them. Look beyond the price.

Explore all available options online for reputable suppliers, and check reviews before proceeding with your product request.

How Does Amazon Dropshipping Contribute To The Economy?

Amazon's dropshipping business structure has reformed and reshaped the culture of business in 2024. The following are ways this business structure has contributed to the economy:

1. Job Creation

Emerging entrepreneurs and small business owners can now begin their entrepreneurial journey with little or no capital as a dropshipper on Amazon. Jobs are created across the following industries including logistics, warehousing and technology services. This has contributed immensely to the economy by helping citizens earn passive income while they still have their 9 - 5 jobs intact.

2. Access to the Global Market

Local businesses can reach the global market via Amazon dropshipping without an investment in international logistics or infrastructure. Dropshipping promotes national economic interconnection and integration, which supports the stability and expansion of the world economy.

3. E-commerce Expansion

As many individuals integrate into the e-commerce ecosystem, dropshipping fosters the expansion of the online business structure. Amazon dropshipping encourages the use of e-commerce platforms, online payment platforms and digital services.

4. Tax Revenue

Amazon dropshipping generates money for governments through sales taxes, especially in areas where rules governing internet sales taxes are enforced.

5. Market Competiton

Dropshipping increases competition in the market, which can result in more affordable prices, higher-quality products, and greater customer support. Businesses are compelled by the competitive landscape to innovate and enhance their products to differentiate themselves from competitors.

Products Restricted on Amazon

Amazon's business model is different from other online businesses due to restrictions on some products. The restricted items include:

1. Alcoholic Beverages

Alcoholic items are prohibited on Amazon. Only a few sellers with appropriate licenses are allowed to sell wine in certain categories.

2. Animals and Animal Related Items

Live animals and their feeds are prohibited on Amazon.

3. Counterfeit Products

It is against Amazon’s policy to use any product that has been manufactured, copied, or cloned unlawfully. Amazon does its due diligence in investigating products before uploading them on its website.

4. Currency or Gift Cards

Prepaid gift cards or currency collectables are not allowed on the platform.

5. Music

It is prohibited to sell bootlegs, unapproved live performances, unapproved soundboard recordings, and unapproved goods.

6. Medical Devices and Drugs

7. Software and Video Games

Software duplication or recopying in any form is forbidden. Prohibited uses for the software include academic, OEM, fulfilment, promotional, beta (prerelease), and unlicensed freeware/shareware.

• Sex wellness products

Certain novelty items and adult products may be subject to local laws and Amazon restrictions.

The Difference Between Amazon FBA and Dropshipping

Dropshipping is quite similar to private label business as it essentially acts as a middleman between the supplier and the customer; you don't own any inventory. Dropshipping does not include any inventory instead products are shipped from the supplier to customers upon purchase. All label that identifies suppliers to the product must be removed before shipping.

In the case of the Amazon FDA program, you must ship the products to Amazon and have them stored in Amazon's warehouses. Amazon pays for all local shipping and returns in return.

Form Your Company with Incorpuk Today

At Incorpuk, we will help you through the company formation process and file your confirmation statements to help your business stay compliant. Whether you're a UK resident or a non-UK resident, our team is ready to provide guidance and help you establish your company in the UK. Contact us here today.

Frequently Asked Questions FAQs

Do I Need To Register My Dropshipping Business in the UK?

Yes, you must register your dropshipping company with HM Revenue and Customs (HMRC) if you're a lone trader. You must register with Companies House if you're forming a limited business or partnership.

How do I ensure my dropshipping products meet UK safety standards?

Sure, you have to make sure your items adhere to UK safety regulations. This entails verifying that your items adhere to the rules that are particular to their category (e.g., electronics, toys, cosmetics), and keeping records as evidence of compliance, like UKCA or CE certifications.

Do I need insurance for my dropshipping business?

Yes, insurance is strongly recommended for dropshipping businesses, even though it's not legally required. If you want to shield your company from lawsuits and legal fees, think about purchasing professional indemnity insurance and product liability insurance.

Winding Up

Amazon dropshipping is a good way to earn money as a new business owner in 2024. With its seamless process and zero startup capital, you should leverage this advantage to build and scale up your brand. Contact our team at Incorpuk to help bring your business dream to full actualization.