eCommerce business is gradually becoming one of the profitable business opportunity to venture into. With the rest of the world gradually shifting to the internet space, there is no doubt that the business model is here to stay. One of the rising and emerging business model in the ecommerce sector is dropshipping.
Dropshipping is an ecommerce model that allows people to buy directly from a producer or supplier who ships them to customers around the world. It is a business that can be done online at the corner of your room. You don’t even need to worry about keeping inventory or shipping products as all that would be handled by the supplier. You won’t even need to buy a product before selling. All you would do is to outsource the handling and shipping of the products to a third party.
In dropshipping, your job is to promote products in online stores. When a product is ordered, you send the order to the dropshipper who is also the supplier and inform the customer on the status of the products. The physical aspect like, packaging and shipping of products are all out of your hands and performed by the supplier.
In dropshipping, you are like an agent or middleman who promotes and sell products from suppliers in an online shop. There are many online shops where dropshipping can be done, but for the sake of this article, our online shop will be amazon. Once a customer places an order for a product, you order it from the supplier and have it sent to the customers from the online shop.
One of the perks of dropshipping especially on amazon is that you would not need to buy or stock any goods or pay for shipping cost. Everything will be perfected by your supplier. All you need to do is to order the product from the supplier and send it to the customer through the online store (amazon).
How Does Dropshipping Work?
With all that have been said about dropshipping, you will realize that it is an online business model that can generate high returns for you as an entrepreneur. The capital requirement is also very low. You will only need to pay for your chosen seller plan on amazon and not for the purchase of any product. If you are aspiring to join the business model, you would need an overview of how it works.
1. Customer Places an Order For a Product
The moment your product has been listed for sale in your online store, it starts catching the attention of potential customers customers out of which one or few of them would buy. Let’s assume the you listed the product at a retail price of $150 dollars, the buyer would pay for the product immediately after placing an order.
2. You Forward The Order to The Supplier
The supplier is like the wholesaler. After a customer has placed an order, you would immediately forward the order to the supplier, wholesaler or manufacturer with the wholesale payment of the product while keeping the profit. Let’s assume the product has a wholesale price of $150 , that means you get to keep $50 dollars as your profit without opening a shop or running around to have goods delivered.
3. The Supplier Ships The Product Directly To The Customer
Once the supplier or manufacturer receives the order and payment, he will then send the product to the customer. Although, you still remain the seller of the product to the consumer and will have your name printed on the invoice.
How To Start Dropshipping On Amazon
Now that you know all that dropshipping entails, you might be wondering on how to get started with this simple business model. Here are the steps to start an amazon dropshipping business:
1. Create an Amazon Seller Account
In order to sell anywhere, even as a physical business owner, you would need a shop or store. This is the same thing that applies online. In order to sell on amazon, you would need an amazon seller account. You can easily create one by visiting sellercentral.amazon.com. During registration, you would be given the option of creating either an individua account which cost $0.99 per unit sold or professional account which costs $39.99 per month.
2. Research On Products In High Demand
You will need to make research on the products you want to sell as it is not all products that will be demanded by people. It will be best if you go for high-demand/low competition products. There are also some tools that have been designed to research and find high demand/low competition products to dropship on.
3. Research a Dropshipping Supplier
The kind of product you decide to sell will determine the kind of supplier you will need. Buying from a manufacturer is not really advisable as many of them sell products only in bulk quantities which you will have to store. Only a few manufacturer offers dropshipping services. Some sellers buy their dropshipping products from websites like, Aliexpress, Shopify or any other supplier that sells the product they want to sell.
4. Create An Amazon Product Listing
Now that you already have your seller account ready, the product you wish to dropship and a supplier, the next step is to create an amazon product listing. It is very easy to do. All you need is to visit your seller central account inventory and carry out the instruction that follows. When setting your price, do not forget to add Amazon’s fees to your budget. Fees charged by amazon varies depending on the category of product and type of seller.
5. Receive Orders and Send Them To Your Supplier
Since your product has been listed for sale, you can now begin to receive orders. When your orders come, contact your supplier to have them delivered to the customer. Also remember to remind the supplier to add your name as the seller on the invoice and packaging as that is what amazon wants. Your customer is not expected to know that you are not the original seller. To Amazon, you remain the original seller, dropshipping or not.