Dropshipping on Amazon without money – is it possible in 2023?

What are Amazon’s rules on dropshipping products?

Amazon wants to give its customers the best possible experience with all third-party sellers on its platform, so to avoid customer confusion they have implement the following rules to make sure all sellers give a consistent experience for purchasers:

• All invoices, packing slips and external packaging that come with the product sold must identify you as the seller of the product purchased. None of these can feature details of the manufacturer’s name or business.
• Sellers cannot use the supplier’s or manufacturer’s name in any of the product packaging materials or Amazon store product descriptions.
• The seller is completely responsible for accepting and processing returns.
• All sellers must adhere to the wider “Comply with Amazon Terms of Service”, according to the seller agreement.

The above conditions don’t make it impossible to dropship using Amazon, but they do make it very difficult – in our opinion, more difficult than it’s worth for small time sellers. If you’re planning to source your products from retailers, you may think that you can just order from the retailer directly to the customer, but this will put you in violation of Amazon’s policies and you’ll probably get your account banned. Sure, you could order the item to your own home and then remove all the packaging, invoices or anything else that identifies the retailer – but this kind of ruins the whole point of dropshipping which is for you to be hands off when it comes to shipping and fulfilment.

This isn’t the only consideration you have to take into account if you want to dropship on Amazon. It’s worth remembering that it’s you as the seller that is taking all the risk. You’re very unlikely to have a live stock feed from your supplier. It’s inevitable that eventually you’ll advertise something for sale and the supplier will come back and say “sorry, that thing’s on back order for two weeks.” You now need to have an awkward conversation with your customer about why you were advertising something that you didn’t have in stock.

If you repeatedly break the dropshipping guidelines or repeatedly have to cancel orders because your supplier can’t fulfil orders, Amazon will mark this against your seller account which could lead to your account being suspended or even terminated.

So considering this, are there any other ways that you can still make money on Amazon without having to dodge all the risks and pitfalls or dropshipping? Yes, there is – and it’s called retail arbitrage.

What are the alternatives to dropshipping on Amazon?

Retail arbitrage is not a new concept but it’s one of the most effective ways to make money on Amazon without assuming all the risks associated with dropshipping. Retail arbitrage sounds fancy but it’s actually a really simple concept:

1. You find an item that you can buy from a retailer for $x and sell it for more than $x.
2. You buy the item.
3. You ship the items to Amazon using FBA.
4. You list the item for sale on Amazon.
5. Your customer buys the item.
6. Amazon ships the item to the customer and pays you.

Now, you do have to put in a bit of money upfront but the main benefit of doing this is that you can now sleep at night, not worrying about whether your account is going to get banned. Amazon is perfectly fine with retail arbitrage – in fact, they actually encourage it, whereas they heavily discourage dropshipping. You can find out more about retail arbitrage and how it works in our helpful guide: The ultimate guide to Amazon retail arbitrage in 2023.

Additionally, you’re only getting involved in the sourcing of products – the shipping and fulfilment is handled completely by Amazon (you can also do this yourself if you want to, but we’d recommend getting Amazon to do it through FBA.) This makes your business a lot more scalable and efficient, as you’re free to focus on finding profitable products and not worrying about whether your dropshipping supplier is going to come back and tell you they can’t fulfil an order.

However, by far the biggest benefit of running an online arbitrage business is that you’ve got a greater scope of suppliers that you can source products from. You aren’t restricted to using a limited number of unknown dropshippers. Instead you can tap into basically any US retailer that sells products that are also sold on Amazon. All of these factors make retail arbitrage a far more sensible and potentially profitable enterprise than dropshipping on Amazon, but it can seem rather daunting to source products – for example, do you have to trawl through retailer’s websites, hoping to find something you can make a little money on?

Well, no. That’s where SourceMogul comes in. SourceMogul allows you to search for millions of products every day from some of the biggest retailers in the US to try and find the best deals possible. The tool also allows you to calculate your profitability and helps you choose which products are best for you to sell online and start making money on Amazon. It even tells you how many products it expects will be profitable – making your product sourcing very, very easy.

We’ve got a number of guides and articles on how to use SourceMogul, but the best way to learn and identify your next profitable item is to sign up for a no-obligation, 7 day free trial, which you can do using the button below.