What is Amazon Dropshipping: A to Z Guide For Beginners

Tony Pham Jun 27 2025

Table of Contents

Amazon Dropshipping is a potential sales channel, helping online businesses generate significant profits. So, how does this model work, and how can you optimize profits for your business? Let's explore with NextSky in the article below.

What is Dropshipping on Amazon?

Amazon dropshipping is a business model where the seller does not need to own or store the products. Instead of investing heavily in warehouses, you focus on promoting, selling, and managing orders. When an order is placed, you send the information to the supplier responsible for packaging and shipping the product directly to the customer. However, to operate this model, you need to comply with the following regulations:

You must be the sole seller.
Your business information must be clearly stated on all invoices and packages.
All supplier information must be removed before shipping the product to the customer.
You are responsible for receiving and handling return orders.
You must comply with all sales contract terms and Amazon’s dropshipping policy.

How to start Dropshipping on Amazon without losing money

Finding a niche market on Amazon

Before you begin dropshipping on Amazon, it’s crucial to identify a profitable niche market with low competition but high profit potential. This is a key step, as choosing the wrong niche can waste your time, effort, and money without yielding results. To make it effective, you must follow the steps below to stay on track carefully.

Check out best-selling products on AliExpress, CJ Dropshipping, or other wholesalers.
Follow AutoDS YouTube channels and blogs to stay updated on the latest trends.
Explore the "Best Sellers" section on Amazon, AliExpress, and Walmart.
Use the AliExpress Dropshipping Center to view data on trending products.
Use Google Lens to find product sources and suppliers.
Browse TikTok, Instagram, and Pinterest to spot viral product trends.
Utilize Amazon’s search suggestions, reviews, and featured categories for ideas.

Following these steps, you can find a lucrative niche and start your dropshipping business with minimal investment.

Find dropshipping product suppliers.

The great thing about the Amazon dropshipping model is that you don't need to pay the supplier until you receive money from the customer. However, to be successful, the seller must cooperate with reliable suppliers to provide quality products, competitive prices, and stable shipping services.

Clear shipping, return, and payment policies
Globally distributed warehouse system
Diverse product catalog, easy to expand
Product quality is guaranteed
Received many positive reviews from buyers

You can start free dropshipping by cooperating with many suppliers to optimize selling prices, expand the catalog, and have a backup plan when out of stock. Some free dropshipping suppliers today include:

AliExpress: A Huge source of goods with cheap prices and a global shipping service
DHGate: Wholesale platform connecting directly with manufacturing factories
Banggood: Specializing in electronics, household appliances, and gadgets at reasonable prices
SaleYee: Fast delivery in the US and Europe, free dropshipping support
Amazon Retailer (Retail Arbitrage): Re-import hot products directly from Amazon and sell them with reasonable pricing strategies

Register for an Amazon Seller Account

Next, you must register for a seller account on the Amazon Seller Central platform. There are currently two options for you: a personal account and a professional account.

Personal account: Limited to 40 products/month, $0.99 fee per sale.
Professional account: Fixed fee of $39.99/month, unlimited quantity, and no per-sale fee.
Both support the dropshipping model, however, if you are just starting out, a personal account is a reasonable choice.

Once you understand the market and want to expand your business, you can upgrade to a professional account to take advantage of advanced features such as in-depth reporting, advertising, promotions, etc.

Create an Amazon listing and import products

Once you've completed your registration, you can follow these steps to list your product right away.

Go to Inventory > Add a product > Create a new product listing.
Choose the category that best fits your product.
Upload beautiful, sharp photos.
Write detailed, compelling product descriptions.
Don't forget to optimize your content for SEO so your product "pops" in search results!

When setting your selling price, factor in Amazon's referral fee, which ranges from 8 to 15% depending on the product category. This is a mandatory fee you'll need to pay, regardless of whether you're using a personal or professional account.

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Promote your products on Amazon.

Although advertising options on the platform are limited, you can still promote your products on Amazon.

Run product-sponsored ads

If you have a substantial marketing budget, consider implementing the following strategies to boost your sales:

Product sponsored: A CPC (Cost Per Click) ad that helps your product stand out on search pages.
Amazon Vine: Send free products to trusted reviewers in exchange for quality feedback.
Influencer Marketing: Collaborate with KOLs (Key Opinion Leaders) to enhance brand recognition and credibility.
Product SEO Optimization: Improve your product descriptions, titles, and keywords to increase visibility.

Optimize your product listings.

Product title: Short, clear, and includes the main keyword, product name, brand, and key features.
Product images: High quality, sharp, multiple angles, with a minimalist background to highlight the product.
Product description: Clearly outline the features, uses, and instructions. Optimize with SEO keywords to enhance visibility.
Product features: Summarize key advantages and highlight features to help customers easily compare and make decisions.

Social media advertising

Social media is an effective channel to promote your products on Amazon, reaching customers through Facebook, Instagram, Twitter, YouTube, etc. TikTok, a popular platform among young people, is a potential tool for promoting products to your target audience. Here are some marketing strategies you can use on TikTok:

Use Hashtags: To increase reach, select relevant and trending hashtags related to your product and brand.
Run TikTok Ads: There are 11 types of ads, such as In-feed, TopView, Spark Ads, etc., which require a TikTok Agency ad account.
Collaborate with Influencers: Connect with influencers in your niche and ask them to promote your product to their followers.

Pros and Cons of Amazon Dropshipping

There is no denying that dropshipping on Amazon comes with both advantages and disadvantages. Below are some of the strengths and limitations of this platform.

Advantages of Amazon Dropshipping

Large customer base: Amazon attracts global traffic daily, making it easy to reach customers and expand your dropshipping business across over 30 categories.
High-quality, reputable suppliers: Every product on Amazon undergoes strict quality checks to prevent fraud and counterfeit goods, ensuring a reliable source of products for dropshippers.
Low or no upfront costs: Dropshipping does not require significant expenses for storage, packaging,..., keeping selling costs to a minimum.
Low risk: You can experiment with different products without violating policies. Additionally, Amazon offers a diverse product range, providing flexibility for sellers.

Disadvantages of Amazon Dropshipping

High competition: Due to low startup costs and many sellers offering the same products, it is becoming increasingly difficult to appear in search results or win the "Buy Box."
Limited customer service control: Amazon prioritizes sales support over brand building, making maintaining and growing long-term customer relationships difficult.
High cancellation rate: The inability for customers to view products in person leads to a higher cancellation rate, resulting in losses such as decreased revenue, additional shipping costs, and negative impacts on Amazon rankings.
Strict policies: Amazon has specific rules for dropshipping. If a seller violates these regulations, their account can be suspended, damaging their reputation and severely affecting revenue.

Is dropshipping profitable on Amazon?

Dropshipping on Amazon offers several advantages and has the potential to generate attractive profits. Most of the sales on this platform come from independent retailers, including those running dropshipping businesses. The profit margin for dropshipping can reach up to 40%, creating numerous opportunities to increase income. However, it is essential to note that Amazon charges a referral fee for each order sold.

Tips for successful dropshipping on Amazon

To increase your chances of success with dropshipping on Amazon, you can apply some practical tips from the very beginning:

Increase product promotion: If customers cannot access or see your products, selling is almost impossible. Therefore, most Dropshippers utilize advertising campaigns to attract traffic and boost sales effectively.
Focus on excellent customer service: In the Dropshipping model, you don’t need to worry about manufacturing, warehousing, or shipping. This is when you put much effort into building the best customer experience.
Import quality test samples: Before posting products on Amazon, you should import a few samples to accurately evaluate the quality and have authentic images for advertising materials.
Diversify your store's products: Expanding your catalog will help you quickly find popular items to optimize profits.
Optimize customer experience: Provide clear descriptions, realistic images, choose reputable suppliers, fast delivery, and send post-purchase incentives to retain customers.
Improve overall customer experience: Experience is the key factor that helps customers make purchasing decisions and return many times. Some practical ways include providing clear descriptions, realistic images, reputable suppliers, fast delivery, and sending post-purchase incentives.

Other ways to sell on Amazon

If dropshipping isn’t an option, you can still sell on Amazon through two other popular methods:

Amazon Affiliate Marketing: Amazon Associates allows you to earn commissions by promoting products through your website, blog, or social media. When users click on the link and make a purchase, you’ll earn a commission of 3% to 5%. This is a simple way to get started and requires no inventory capital.
Amazon FBA (Fulfillment by Amazon): This is a service that allows sellers to send products to Amazon’s fulfillment centers to be stored, packaged, and shipped to customers. Amazon will also be responsible for customer service and handling returns.

Amazon Dropshipping is a great way to increase sales for your business or create an additional source of online income. Hopefully, through this article of NextSky, you will have a better understanding of how to start and do business on Amazon.

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