Amazon Dropshipping: The Ultimate Guide to Rock Your Amazon Sales Forecast in 2025

Ask anyone what they think about dropshipping and most will either have no idea what you’re talking about OR declare it all dead and buried.

As it frequently happens in the digital world, the truth is dropshipping is far from dead — and Amazon dropshipping specifically is very much alive. It might have changed, and it will continue to change, but the truth is you can still make money selling products on Amazon on a dropshipping model.

How to do that? We’ve put together a guide to help you start selling on Amazon as a dropshipper — so keep reading if you want to learn more.

What is Amazon dropshipping?

Essentially, Amazon dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the seller doesn’t have to handle the product directly.

How does dropshipping work?

The dropshipping model is pretty straightforward:

• As a seller, you sign an agreement with the dropshipper. The agreement between you and the dropshipper can include information like product images, descriptions, and price lists.
• You list the products on your online store or marketplace like Amazon.
• A customer purchases a product from you.
• The order is forwarded to the dropshipper with all of the customer’s information.
• The customer receives an order confirmation.
• The dropshipper packages and ships the item directly to the customer.
• Customer receives their product.

In other words, dropshipping is like running an online store without the most logistically difficult parts that come with that — like carrying inventory, dealing with the different delivery companies and striking deals with them, or having to ship packages yourself.

What are the benefits of Amazon dropshipping?

Some of the main advantages of utilizing Amazon dropshipping include:

• Low startup costs: With traditional retail models, there is a significant investment required to purchase inventory and store it. Dropshipping eliminates these costs, making it an attractive option for those looking to start their own business with minimal funds.
• No need for storage space: As mentioned before, you don’t have to worry about storing any inventory when using the dropshipping model. This means you can operate your business from anywhere with an internet connection.
• Wide range of products available: Since you’re not limited by physical storage space, and you can work with multiple dropshippers at once, you can provide your customers with a very wide range of products in your niche.

Does Amazon allow dropshipping?

In short, yes, Amazon does allow droppshipping, but it’s not droppshipping in the fullest sense of the word. To be more specific, Amazon dropshipping “happens” when you choose Amazon to function as your Fulfillment Center. You ship all your products to their warehouse, in bulk, and they handle the fulfillment of each order.

There are two ways to do this:

1. You create and manufacture a branded product (and use band equity to grow your business, attract customers, and create loyalty among your existing shoppers)
2. You buy products from existing manufacturers and sell them on Amazon with their Fulfillment, case in which you are mostly competing on price (which is not bad in itself, it’s just that it might not be the best method to scale your Amazon business.)

Amazon’s dropshipping policy – 2024 updates

If you choose to work with Amazon for your “dropshipping” business, you do have to keep some rules in mind:

• You need to be the only official seller of the products (you must be identified as the seller on all invoices, packing slips, external packaging, and all other documents, nor can you mention your supplier or manufacturer.)
• You cannot purchase products form third-party suppliers and ship them directly from them. More even, any details identifying a third-party seller should be eliminated before sending customer orders to prevent confusion.
• You are required to handle and process customer returns.
• Adhere to all aspects of your seller agreement and Amazon’s dropshipping policy and Terms of Service.

Is Amazon dropshipping profitable?

In short, yes, Amazon dropshipping is profitable — even in 2024, despite what most people might think. There’s numbers to back this up too: According to Jungle Scout’s State of the Amazon Seller Report, 94% of sellers who dropship on Amazon are profitable, and the average profit margin for Amazon is around 20%. Of course, how profitable they are depends on a variety of factors, such as:

• Product selection and pricing strategy (e.g., choosing the right products that are in demand and setting competitive prices, which can significantly impact your profit margins)
• Supplier reliability means partnering with dependable suppliers who provide quality products and timely shipping, reducing risks and enhancing customer satisfaction
• Marketing and advertising efforts require effective strategies and ad campaigns that can drive traffic to your store and increase sales
• Operational efficiency can be achieved by streamlining operations such as order processing and customer service, which reduces costs and improves profitability
• Market competition in your chosen niche can affect pricing power and the ability to retain customers

How much does it cost to dropship on Amazon?

The cost of non-Amazon dropshipping mostly revolves around website-related costs (like domain, hosting, SSL certificates, and plugins), marketing expenses (such as Facebook ads), and any other software you use. If you choose to have your store on a different platform, like Etsy, you might have to pay some fees for that as well. And, of course, there’s also the cost of the dropshipping service to take into account.

With Amazon dropshipping, the range of costs you consider include:

To dropship on Amazon, sellers need to consider several costs:

• Selling plan: Amazon offers two options:
• • Individual plan: 99¢ per unit sold
  • Professional plan: $39.99 per month for unlimited sales
• Referral fees: Amazon charges 8% to 15% of the total sale price, depending on the product category. The minimum referral fee is typically 30¢ per item
• FBA fees (optional): If using Fulfillment by Amazon, additional fees apply for storage and shipping
• Product costs: You’ll need to pay your supplier for each product sold, including the item price and any shipping fees from the supplier to the customer.

Other potential costs to consider include tools like Seller Assistant (which costs between $15.99 and $79.99 per month, as well as optional services, such as prep centers, for example.)

How to start dropshipping on Amazon in 6 steps

Starting a dropshipping business on Amazon is a fairly simple process:

Step 1: Set up an Amazon Seller account

To begin dropshipping on Amazon, the first step is to set up an Amazon seller account.

This involves choosing between the Individual or Professional selling plan, based on your business needs and sales volume. The Individual plan charges per item sold, while the Professional plan involves a monthly fee, but allows for unlimited sales.

As a general rule, if you plan to sell more than 40 items a month, it’s best to choose the Professional plan. But if you’re not sure how things will go, and want to play on the safe side, you can also choose the Individual plan.

During the account creation process, you need to provide personal or business information, verify your identity, and set up your payment and deposit methods. All of these things are very easy to do and, once your account is active, you will gain access to Seller Central, where you can manage your inventory, orders, and more.

Step 2: Pick your products

Selecting the right products to sell is crucial for a successful dropshipping business on Amazon. Start with thorough market research to identify in-demand products with promising profit margins.

Consider factors such as competition levels, product demand trends, and potential suppliers’ reliability and pricing. Aim for a mix of trending items and evergreen products to balance your portfolio. As noted in our dropship on Amazon without money guide, focus on products that align with your passion or expertise to maintain sustained interest and success.

Step 3: Select your dropshipping supplier

Choosing a reliable dropshipping supplier is essential to ensure product quality and timely delivery. Look for suppliers with a good reputation, favorable shipping terms, and consistent inventory levels.

Use directories or platforms like AliExpress, Oberlo, and other trusted supplier networks to find potential partners. Contact suppliers to discuss terms such as pricing, shipping times, and return policies. Building a good relationship with your supplier will help you secure better deals and provide an excellent experience for your customers.

Step 4: Create an Amazon listing & import your product

Creating an effective Amazon product listing involves providing detailed product descriptions, high-quality images, and accurate pricing. Pay attention to keyword optimization for better search visibility.

You can follow our Amazon listing optimization guide for tips on creating a compelling listing. Once your listing is ready, import your product into your Amazon Seller Central account and make sure all details are accurate and comply with Amazon’s guidelines. This step is crucial to make your product appealing and accessible to potential buyers.

Step 5: Promote your listing

Promoting your Amazon listings effectively can increase visibility and drive sales. For example, you can consider running Amazon Sponsored Product ads to target specific keywords and appear in front of relevant audiences.

You can also use social media ads on Facebook or Instagram, influencer marketing (e.g., collaborating with Amazon reviewers on TikTok), and, in some cases, SEO (search engine optimization). The more you increase exposure for your listings, the more you’ll maximize the chances of attracting more customers and boosting sales.

Step 6: Fulfill customer orders

Once orders start flowing in, it’s important to establish a streamlined process for order fulfillment. With dropshipping on Amazon, you’ll coordinate with your supplier to ensure each order is shipped directly to the customer promptly.

Regular communication with your supplier will help prevent delays. Additionally, keep track of shipping details and order status through Amazon Seller Central to maintain transparency and reliability in your service.

Step 7: Provide exceptional customer service

Providing outstanding customer service is vital for maintaining high seller ratings and ensuring customer satisfaction. To that avail, make sure to:

• Be responsive to customer inquiries, addressing any concerns or issues as quickly as possible.
• Offer solutions for returns or refunds, in line with Amazon’s policies and your best practices.
• Use tools like Amazon Seller App to monitor and facilitate customer interactions smoothly.

Remember, positive customer experiences not only foster future sales but also generate valuable word-of-mouth referrals. More even, it can increase customer loyalty (which is extremely important because according to PwC, a 5% increase in customer loyalty can lead to profits increase as high as 25% to 95%.)

How to choose the best dropshipping supplier

Choosing the right dropshipping supplier is a critical step in ensuring the success of your dropshipping business on Amazon. A reliable supplier can significantly impact your business by maintaining product quality and ensuring punctual deliveries. Below are some essential criteria to consider when selecting your supplier:

Quality assurance

Ensuring that your supplier provides high-quality products is fundamental to maintaining customer satisfaction and positive reviews. Verify the quality through samples before committing to a partnership. Consistent quality checks are necessary to ensure ongoing product satisfaction.

Shipping times and costs

Consider your supplier’s shipping times and costs, as these will directly affect your delivery promises and profit margins. A good supplier should offer competitive shipping rates and processing times, helping you stay competitive in the market. Efficient shipping times reduce wait times for customers, enhancing their overall experience.

Supplier reputation

Research supplier reviews and ratings to understand their reliability and reputation in the industry. A reputable supplier with positive reviews is more likely to provide a dependable service, minimizing risks in your business operations. Prioritizing a supplier with verified feedback helps to avoid issues related to unfulfilled orders or poor communication.

Return and refund policies

Clear and fair return and refund policies are crucial for handling potential issues with orders. Ensure that your supplier’s policies align with your business needs and Amazon’s regulations. These policies should offer flexibility while protecting your interests as a seller.

Communication and support

Effective communication with your supplier is vital for smooth order processing and problem resolution. Opt for suppliers that are easily accessible and responsive to your queries. Good communication supports a collaborative relationship, enabling you to address challenges efficiently.

Top Amazon dropshipping software

There are quite a lot of software options you can use for your Amazon dropshipping business, and while they all provide specific benefits, the most popular ones include:

Helium 10

Helium 10 is a comprehensive suite of tools for Amazon sellers. It offers product research capabilities, keyword research and tracking, competitor analysis, and listing optimization features. Helium 10 also includes inventory management, financial analytics, and a complete FBA course to help sellers manage their Amazon business more effectively.

Jungle Scout

Jungle Scout is a popular choice for Amazon private label product research. It helps sellers find profitable products, research keywords, estimate sales, and perform competitor analysis. Jungle Scout also offers inventory management, profit analytics, and accurate sales estimates to support sellers in making informed decisions.

Keepa

Keepa is a powerful price tracking tool that provides historical data on Amazon product listings. It displays graphs showing Best Sellers Rank, average price, number of sellers, and other useful information directly on Amazon product pages. Keepa is particularly helpful for product research and for retail arbitrage and wholesale resellers.

Feedvisor

Feedvisor offers AI-based platforms for advertising, brand optimization, and pricing. It provides advanced features like automated keyword harvesting, optimized bidding through deep learning algorithms, and a patented algo-repricer to help win the Buy Box. Feedvisor also supports sellers in ranking on both organic and paid campaigns and optimizing Product Detail Pages.

SellerLabs

SellerLabs is an all-in-one tool that offers smart PPC management, keyword research, and automated buyer-seller messaging. It includes an Ignite tool for autopilot PPC management to maximize ad spending efficiency. SellerLabs is designed to help sellers optimize product revenue and drive e-commerce business growth.

Other methods of selling on Amazon

Amazon dropshipping is not the only method you can use. Other methods include:

Wholesaling

Wholesaling involves purchasing products in bulk directly from manufacturers or distributors at a discounted rate and selling them on Amazon for a profit. This method often requires a significant upfront investment and involves maintaining an inventory.

A notable advantage of wholesaling is the ability to sell recognized branded products, capitalizing on established demand. However, it also requires managing logistics, storage, and handling potential overstock situations.

Arbitrage

Arbitrage, in the context of Amazon, typically involves buying products at a lower price in retail or online stores and reselling them on Amazon for a profit. This model can be attractive due to its relatively low barrier to entry, as it requires less capital than other methods.

The primary challenge in arbitrage is in finding profitable products consistently and managing Amazon’s guidelines, which can be restrictive for certain categories. Retail arbitrage can offer good returns if sellers are adept at quickly spotting and capitalizing on deals.

Private label

Private labeling involves creating your own brand by sourcing generic products directly from manufacturers, customizing them, and selling them under your own brand on Amazon. This method provides higher profit margins and greater control over branding and marketing strategies.

The investment and risk are higher than in methods like arbitrage, as it often requires upfront costs in product development and marketing. However, a successful private label can result in a highly valuable and scalable business with strong customer loyalty potential.

Third-party fulfillment

Third-party fulfillment refers to using external companies to store, package, and ship products sold on Amazon. This approach allows sellers to offload logistical responsibilities, focusing more on marketing and sales strategies.

Fulfillment by Amazon (FBA) is a popular choice, offering competitive shipping rates and customer service benefits. While convenient, third-party fulfillment can lead to higher fees, so it is crucial to balance cost against potential sales growth and customer satisfaction.

Affiliate marketing

Affiliate marketing on Amazon involves promoting products and earning a commission on sales made through referral links. It doesn’t require handling inventory or shipping, making it an attractive option for individuals with strong digital marketing skills and an established online presence.

This model allows for passive income generation, although success largely depends on the ability to consistently generate traffic and convert that traffic into sales. Developing an effective marketing strategy is key to thriving in an affiliate marketing role.

Amazon FBA vs. Dropshipping

Amazon FBA (Fulfillment by Amazon) and dropshipping are two distinct e-commerce business models with key differences in operation, cost structure, and logistics.

In Amazon FBA, sellers send their products to Amazon’s fulfillment centers, where Amazon then handles storage, packaging, and shipping to customers. This method provides sellers with access to Amazon’s robust distribution network and customer service, which can enhance customer satisfaction and increase sales.

However, FBA requires upfront investment in inventory and incurs storage and fulfillment fees, making it vital to maintain a balance between stock levels and demand.

On the other hand, dropshipping allows sellers to list products on Amazon without holding inventory. When a product is sold, the order is forwarded to a third-party supplier who ships it directly to the customer.

This model requires less initial capital, as there is no need to purchase products upfront, reducing financial risk. Nevertheless, dropshipping often involves longer shipping times and less control over product quality and availability, which can affect customer satisfaction and trust.

The choice between Amazon FBA and dropshipping hinges largely on the seller’s capacity to handle upfront inventory costs, the desired level of control over the supply chain, and business strategy priorities.

Print-on-demand dropshipping

Print-on-demand (POD) dropshipping is a business model where sellers create custom designs and sell products like t-shirts, mugs, and posters without holding inventory.

Basically, with POD, when a customer makes a purchase, the order is sent to a third-party supplier who prints the design onto the product and ships it directly to the customer. This model is advantageous for creatives and entrepreneurs looking to build a brand with minimal initial investment, as it eliminates the need for bulk purchasing and managing inventory.

The primary benefits of POD dropshipping include low financial risk and the ability to offer a wide variety of personalized products. Sellers can experiment with different designs and product lines without significant upfront costs.

However, this model also presents challenges such as reliance on suppliers for product quality and shipping speed, which can impact customer satisfaction. Effective marketing and a strong design portfolio are crucial to attracting customers and building a successful POD business.

Pros and cons of Amazon dropshipping

Amazon dropshipping comes with a pretty long list of benefits — but before you jump into it, you should be aware of the cons as well. Here’s everything you should know:

Pros of dropshipping on Amazon

Dropshipping on Amazon offers various advantages that make it an appealing option for entrepreneurs looking to start an online retail business with minimal costs and complexities. Here are some of the key benefits:

• Low startup costs: Since there’s no need to purchase inventory upfront, the financial barrier to entry is reduced.
• Minimal risk: With no inventory to manage, sellers face lower financial risk if products don’t sell.
• Wide product offering: Sellers can offer a diverse range of products without the burden of storing stock.
• Location independence: Dropshipping allows sellers to run their business from anywhere, as they don’t need to manage physical inventory.
• Flexible scaling: The model supports easy scaling by simply increasing the number of products listed without substantial operational changes.

Cons of dropshipping on Amazon

While dropshipping on Amazon can be enticing, it also presents several challenges that potential sellers should carefully consider:

• Lower profit margins can occur because dropshipping requires paying a supplier for each unit, which, after Amazon’s fees, can leave slim profits.
• Limited control over fulfillment happens when relying on third-party suppliers, which can lead to inconsistencies in product quality and shipping, impacting customer satisfaction.
• Less control over inventory is a risk since suppliers might run out of stock, potentially causing order cancellations and unhappy customers.
• Competition and saturation arise due to the low barrier to entry, leading many sellers to list the same products, making it challenging to differentiate and compete on price.
• Logistics challenges include longer shipping times as sellers depend on suppliers’ timelines, which might reduce customer satisfaction and repeat purchases.
• Compliance and policy risks are present because Amazon has strict policies regarding dropshipping, and failure to comply can result in account suspension or termination.

4 Tips to Succeed with Amazon Dropshipping

There’s no secret recipe to succeeding with Amazon dropshipping — but there are some basic best practices that will help you find your way to success. Some of them include:

1. Test various product for optimal success

Testing various products allows sellers to identify which items have the highest demand and profitability potential in their niche. This process helps them refine their inventory and focus on top-performing products.

2. Add Influencer images and UGC to your product pages

User-generated content (UGC) refers to any form of content, such as images, videos, reviews, or testimonials, created by customers rather than brands themselves.

Encouraging customers to create UGC can be achieved by creating engaging and shareable experiences, offering incentives like discounts or features, and fostering an active community around the brand on social media platforms. Incorporating influencer images and UGC on Amazon product pages can enhance authenticity and trust, providing potential buyers with real-life perspectives and experiences.

3. Run Amazon Ads to drive traffic

Running Amazon Ads is an effective strategy to increase visibility and drive traffic to your product listings. By investing in targeted advertising, sellers can reach a specific audience, improving their chances of converting views into sales. Leveraging Amazon Ads helps in standing out in a competitive marketplace, enabling sellers to maximize their exposure.

Types of Amazon ads you can run include:

• Sponsored Products
• Sponsored Brands
• Sponsored Display
• Amazon DSP (Demand-Side Platform)
• Sponsored Video

4. Automate your store

Automating your Amazon dropshipping store can significantly enhance efficiency by reducing the manual workload and freeing up time for strategic growth activities. It involves using tools and software to handle tasks like inventory management, order processing, and customer communication.

Automation helps ensure timely updates, accurate stock levels, and smooth fulfillment operations. By streamlining these processes, sellers can focus more on improving product offerings and marketing strategies, ultimately driving business success.

FAQs

Is dropshipping on Amazon legal?

Yes, dropshipping on Amazon is legal when you adhere to Amazon’s specific policies and guidelines. This means that sellers must ensure that they follow best practices and comply with applicable laws.

It’s crucial to act by the rules set out by all parties involved, including the online retailers from whom the products are sourced, and the terms of service provided by Amazon. By maintaining transparency and responsibility throughout your dropshipping operations, you can confidently run your business on Amazon’s platform without encountering legal issues.

Can I dropship on Amazon for free?

You can dropship on Amazon for free, but you will have to set up a free Independent seller account for that. This free plan allows you to sell at a fee of $.99 per product sold. However, if you plan to sell more than 40 products, the Professional plan might be a better option.

Do you need a license for dropshipping?

A dropshipping business is a retail business, so yes, you need a license if your state or municipality requires a business license for retailers.

Which platform is best for dropshipping?

There’s no “best” dropshipping platform or marketplace, as each of them comes with its own pros and cons. The most popular ones include Shopify, WooCommerce, BigCommerce, Wix, Squarespace, and Amazon — but there are others you should look into as well.

How much can a beginner make from dropshipping?

Your profit on each sale can typically range from 15% to 45%, influenced by the type of products you sell and your pricing strategy. Earnings can vary greatly depending on factors such as niche selection, supplier costs, marketing expenses, and competition. While some dropshippers achieve significant profits, others find it challenging to reach breakeven.

Is it hard to dropship on Amazon?

Since dropshipping on Amazon doesn’t require owning inventory, it’s fast and easy to start. You don’t have to wait for inventory manufacturing or shipping to the fulfillment site—it’s ready to go. All you need is a sale.

Nicole de Mocskonyi( Head of Marketing )