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How to Dropship on Amazon Without Money: The TRUTH for 2022 (+ 5 Cost-Effective Strategies)

May 13, 2022

Wondering how to dropship on Amazon without money? Here's how to do it with the lowest possible cost: First, get an individual Amazon seller account. Then, find a product supplier that will not request a resale or sales tax certificate from you. List up to 40 products (you will need to pay $1 per listing). When a customer purchases, use your credit card to buy the product from your supplier. The supplier will ship your Amazon product directly. Amazon will take a 15% cut, and you will have your funds in 2-3 weeks.

how to dropship on amazon without money

Does this sound like a sustainable eCommerce business? Even though it’s one of the easiest ways to make fast cash, you won’t be able to scale without putting a bit more money up front. In the end, doing eCommerce like this won’t take you away from your 9-5.

A Bigger Investment Will Set You Up For Success

To heighten your chance of success dropshipping on the Amazon marketplace, invest some money. These steps are necessary if you want your chance at success, and they come at a cost:

  • Have the right documentation per your state and your dropship supplier (more info below)
  • List over 40 products (do so with a professional Amazon seller account)
  • Have at least $500-$1000 in capital up front, rather than credit (too big a risk)
  • Provide faster customer service than Amazon to keep metrics high. Watch metrics like order defect rate (must stay under 1%) and cancellation rate (must stay under 2.5%)
  • Automate purchase orders, finding the right product, repricing your listings, and inventory reporting
  • Watch your already tiny profit margins- usually at around 10-30%.
  • If you choose to use a retailer like Walmart and Home Depot, your margins will be bigger than if you use a wholesaler. But, make sure that the external packaging only identifies you as the seller. If the retailer is identified in any way, your account might be suspended. Read more about how to avoid Amazon suspension before starting this tactic. 

How Do You Start a Dropshipping Business Without Investment? 5 Strategies to Keep Costs Low

1. Apply for Credit Cards

It’s extremely common for an Amazon dropshipper to use credit cards to buy orders. If you have good credit, or get a co-signer, you might have tens of thousands of dollars in credit. Then, when a customer purchases your product, you will get their money from Amazon (minus 15%) in 2-3 weeks. You won’t have to pay your credit card bill for about 30 days.

Here’s what’s great about this strategy:

Your credit card serves as a catch-all until Amazon pays up.

You won’t have to halt business until you have the funds.

Your card may generate points, and you can earn cashback. Cashback can go back into your business. If your card offers 5% cash back, that’s $1000 in your pocket for every $20,000 you spend. 

You can use your points for gift cards, too. Use the gift cards to buy more product. If you buy a VISA gift card, you can use it as a credit card, even after it's empty.

Here’s the bad:

If Amazon suspends your account, which is common with dropshipping, you might lose access to your funds for 3 months or more. Imagine paying off a credit card bill on $30,000 or more with no capital coming in.

2. Get a Loan

Another option is to get a personal or business loan. You could even borrow money from a friend or relative.

The good:

This is REAL money, and the interest will be far less than your credit card.

Your monthly payments may be smaller than your credit card bill.

You can budget your monthly payments ahead of time.

The bad:

Your monthly payments would make your profit margin even smaller.

Borrowing money from friends/family can lead to broken relationships, especially if Amazon cancels your account and you can’t pay them back.

What will you do if you run out of capital? Are you willing to apply for a second loan and add a second monthly payment?

3. Save 

Saving is the most solid way to collect start-up capital, but it can take the most time. To save up, you can work extra shifts, or sell clothes/electronics that you no longer need.

4. Minimize Your Chance of Suspension 

If you work to minimize your chance of suspension, you won’t have to worry as much about those 2-3 weeks that Amazon holds your funds. You also won't worry about the 3 months Amazon can keep your money if they close your account.

  • Hire a virtual assistant to handle customer service and order fulfillment. Amazon swoops in on A-Z claims. They often approve them immediately, far before the drop shipper provides excellent customer service. A VA may help you provide refunds and handle complaints before they turn into claims. This way, you may avoid lowered metrics and a suspended account.
  • Season your account. Amazon watches new accounts closely for their first 3-6 months. They also support FBA users much more than FBM users. This is because Amazon makes more money from sellers that need an Amazon Fulfillment Center to house inventory. So, start your account with an Amazon FBA strategy. After six months, shift business models to dropshipping.
  • Purchase a seasoned account. 

How Much Does a Seasoned Dropshipping Store Cost to Purchase?

You will probably need around $4K-$5K to purchase an account with good selling history. But, if you do, Amazon will watch you less closely. Also, you won’t need to waste your time on a business model that you aren’t interested in.

5. Dropship From Amazon, Not To Amazon

If you choose to use Amazon as a dropshipping supplier rather than your platform, you won’t have to deal with their stringent rules and 15% Amazon fees. So, consider using another platform, like Shopify dropshipping or eBay dropshipping.

What is the Difference Between Amazon to eBay Arbitrage and Dropshipping from a Wholesaler?

eBay arbitrage is the perfect example of dropshipping from Amazon rather than a wholesaler. It costs $0.35 per listing. eBay also collects 12.9% of the sale price plus $0.30/order. Being an eBay dropshipper first is a great way to try out the business model with far less pressure.

A Shopify store costs $29/month, $79/month, or $299/month, depending on the package you choose. The package you choose dictates the cut Shopify collects from your sales. This amounts to 2.9% plus $0.30/transaction, 2.6% plus $0.30/transaction, and 2,4% plus $0.30/transaction, respectively. You can upgrade or downgrade this at any time.

How Much Does it Cost to Start Dropshipping on Amazon?

Around $600, at the very least. Here’s how this amount breaks down:

  • $39.99/month Amazon Seller Central Professional account. You could opt for a “free” individual account, but you will only be able to list 40 products at $0.99 per Amazon listing. Listing so few products is not a good strategy with the drop shipping business model.
  • $0-$125 reseller certificate. Depending on the supplier you use, you might need a resale certificate. This certificate allows you to sell without paying local sales tax. Apply for one in the state in which you have a physical address. Or, look into multi-state resale certificates through the Streamlined Sales Tax Governing Board or the Multistate Tax Commission. Some states do not require the certificate, but the supplier you wish to use might.
  • $25- a few hundred dollars business license. You will need a business license to get a resale certificate. 
  • $0-$100 sales tax certificate. Finally, depending on the state you are dropshipping from, you may also need sales tax certificates.
  • $500-$1000 at the very least, to start you off buying products. While Amazon holds your funds, you don’t want to fulfill orders without money while you wait for the release. 

SUMMARY:  Do You Need a Tax ID Number or Resale Certificate to Dropship on Amazon?

You might. It depends on the supplier you want to use and the state you live in. Start with this guide to find out what your state requirements are. Ask suppliers up front about their policies so that you do not make a deal before learning you lack the proper documentation.

Non-Essential Costs to Starting Your Amazon Store

  • Some wholesale suppliers charge a pre-order fee, deposit, and/or even membership fees. It’s of utmost importance to ask about this up front before committing to purchase.
  • You can use Amazon PPC ads to push your product. This can amount to $50-$100/day. While Amazon ads help you stand out above other sellers, your profit margin is already minimal. Use this only if your margins can survive.
  • Tools and software can help you automate aspects of your Amazon drop shipping business. You can find free tools, like DS Amazon Quick View. This plugin adds Amazon ranking and the seller’s information to the search page. Inventory Source connects your supplier’s inventory directly to Amazon for $99/month. This is especially important because Amazon will ask you for proof that your inventory is available so that they are not promoting out of stock products. If you cannot produce this, there’s a high chance of suspension.

What are the Advantages of Automated Repricing on Amazon?

Above all, automated repricing will keep you competitive. And, on a platform that favors Amazon FBA (Amazon Prime) sellers, this is key. Remember, you can only win the Amazon Buy Box if you are selling Prime-eligible products. You have the most chance of sales when your product is in the buy box.

With automation, there is also less chance of human error and/or emotion getting in the way. Automation tools complete tasks quickly, and free up your valuable time.

Some dropshippers use Amazon automation agencies. There's a lot of debate out there about these agencies, so consider this cost before forming your Amazon dropshipping business. 

Startup Costs and Every Day Expenses: How Does Dropshipping Compare to Other Methods of Selling on Amazon?

Even though it’s not possible to start dropshipping sustainably with no money at all, there are costs that you will not have to think about while dropshipping on Amazon. Here are some common expenses of Amazon FBA business models that you will avoid with dropshipping:


FBA

Brand Creation

Product Creation

Bulk Product

Gas

Crowd-fund

Materials

Dropshipping

Cell
Cell
Cell
Cell
Cell
Cell
Cell

Wholesale

Cell
Cell
Cell
Cell


Retail Arbitrage

Cell
Cell
Cell
Cell
Cell

Online Arbitrage

Cell
Cell
Cell
Cell
Cell
Cell

Liquidations

Cell
Cell
Cell
Cell
Cell

Private Label

Cell
Cell
Cell

Passion Product

Cell
Cell

Amazon Handmade

Cell
Cell
Cell

Merch by Amazon

Cell
Cell
Cell
Cell
Cell

Amazon KDP

Cell
Cell
Cell
Cell
Cell
Cell
how to dropship on amazon chart

Dropshipping on Amazon also helps you avoid the costs that occur when creating your very own online store. For example, if you create your own eCommerce site, you will have to build your site and pay a host. In addition, you might pay for ads to boost traffic to your otherwise unknown site.

Related Article: Amazon FBA Startup Costs (Bare Minimum vs. Optimal Amount to Start)

Conclusion: What is the Best Way to Go About Starting an Amazon Dropshipping Business with No Money?

There is no way to start an Amazon dropshipping business with absolutely $0, unless you use a credit card for all expenses. However, with a small investment to open your Amazon account, an open line of credit/business or personal loan, and thorough research into state and supplier requirements for licensure, you can minimize costs significantly. And so, Amazon dropshipping remains one of the fastest ways to make an extra cash on the platform. 

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