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.
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:
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.
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:
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
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 |
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.
