Dropshipping on Amazon in 2025: Rules, Tools, and Growth Strategy
Dropshipping on Amazon in 2025 still captures the imagination of entrepreneurs looking to start an online business without holding inventory. But while the concept remains appealing — list a product, forward the order to a supplier, and let them handle the shipping — the execution has become more structured, regulated, and competitive. If you’re asking how to start a dropshipping business on Amazon, whether Amazon allows it, and how to make it profitable, you’re in the right place.
In this guide, we’ll break down how Amazon dropshipping works, what you need to begin, which tools to use, and how to scale your business in a sustainable, policy-compliant way.
In this guide, we’ll break down how Amazon dropshipping works, what you need to begin, which tools to use, and how to scale your business in a sustainable, policy-compliant way.
How Amazon Dropshipping Works in 2025
Let’s begin with the basics: what is dropshipping on Amazon? In essence, it's a retail model where you don’t keep the products you sell in stock. Instead, when someone places an order, you buy the item from a third-party supplier, who then ships it directly to the customer. Your role is to manage the listing, customer service, and make sure the product gets delivered on time and in good condition.
Unlike Fulfilled by Amazon (FBA), where you send your inventory to Amazon’s warehouse and they handle storage and shipping, dropshipping through Amazon is a form of FBM — Fulfilled by Merchant. The key difference? The fulfillment is done by your supplier, not by you.
So, is Amazon dropshipping legal? Yes — but only if you strictly follow Amazon’s policy. You must:
Unlike Fulfilled by Amazon (FBA), where you send your inventory to Amazon’s warehouse and they handle storage and shipping, dropshipping through Amazon is a form of FBM — Fulfilled by Merchant. The key difference? The fulfillment is done by your supplier, not by you.
So, is Amazon dropshipping legal? Yes — but only if you strictly follow Amazon’s policy. You must:
- Be the seller of record for all products.
- Identify yourself as the seller on all packaging slips, invoices, and external packaging.
- Remove any mention of a third-party supplier.
- Handle all customer service and returns yourself.
That means no AliExpress packages with Chinese labels, no Walmart invoices inside boxes, and definitely no confusion about who the customer bought from. If you break these rules, Amazon will suspend your seller account. It’s that simple.
What You Really Need to Start
One of the most common misconceptions about Amazon dropshipping is that you can just start with no money, no business setup, and no supplier. In 2025, that’s a fast path to failure. Amazon treats sellers as professional partners — and expects you to act like one.
First, you’ll need a Professional Amazon Seller Account. That costs $39.99/month and gives you access to advanced tools, analytics, and the ability to use the Buy Box.
You’ll also need a legally registered business entity. Most sellers use an LLC, especially in the U.S., but local equivalents work too. This is essential for payment setup, taxes, and working with many suppliers.
Next, you’ll want to decide what to sell. Choosing the right category is crucial. Not all product types are beginner-friendly. Some categories are gated, meaning you need prior approval (e.g., health supplements or top electronics). Others are flooded with competition. Your best bet is to focus on evergreen products with steady demand — like home improvement tools, kitchen accessories, or office supplies. Look for low return rates, medium price points, and minimal brand attachment.
Then comes the critical step: finding a supplier. This is where many drop the ball. To stay compliant with Amazon dropshipping policy, your supplier must:
First, you’ll need a Professional Amazon Seller Account. That costs $39.99/month and gives you access to advanced tools, analytics, and the ability to use the Buy Box.
You’ll also need a legally registered business entity. Most sellers use an LLC, especially in the U.S., but local equivalents work too. This is essential for payment setup, taxes, and working with many suppliers.
Next, you’ll want to decide what to sell. Choosing the right category is crucial. Not all product types are beginner-friendly. Some categories are gated, meaning you need prior approval (e.g., health supplements or top electronics). Others are flooded with competition. Your best bet is to focus on evergreen products with steady demand — like home improvement tools, kitchen accessories, or office supplies. Look for low return rates, medium price points, and minimal brand attachment.
Then comes the critical step: finding a supplier. This is where many drop the ball. To stay compliant with Amazon dropshipping policy, your supplier must:
- Ship products under your business name.
- Not include their branding, logos, or promotional inserts.
- Provide neutral packaging and invoices.
- Offer tracking and reasonable shipping times (preferably 2–7 days).
There are several ways to find reliable Amazon dropshipping suppliers:
- Use vetted platforms like Spocket, Inventory Source, or SaleHoo.
- Partner directly with manufacturers or wholesalers.
- Avoid retail sites like Walmart, Target, or AliExpress for fulfillment.
Lastly, set up your internal systems. Even if you don’t handle inventory, you need workflows for order tracking, customer communication, refunds, and performance monitoring. Amazon expects fast response times and high reliability, even in a dropshipping model.
Tools That Help You Pick Winning Products
You can’t build a sustainable Amazon dropshipping business if your products don’t sell — or worse, if they sell and then get returned or reviewed poorly. That’s why product research is the backbone of your success.
The good news? You don’t have to guess. With tools like AMZScout, Helium 10 and Jungle Scout you can quickly assess product demand, track sales volume, analyze competition, and estimate potential margins before listing anything. These platforms help reduce risk and speed up research. For dropshipping-specific needs, tools like AutoDS, DSers, and Inventory Source can help you connect with suppliers, automate order processing, sync inventory, and streamline fulfillment. Used together, these tools form the backbone of a data-driven, scalable Amazon dropshipping business.
And finally, the AMZ Sales Estimator gives you a rough but useful view of how many units a product moves per month, based on BSR. It’s great for sanity-checking any idea before you commit.
With these tools, you can:
The good news? You don’t have to guess. With tools like AMZScout, Helium 10 and Jungle Scout you can quickly assess product demand, track sales volume, analyze competition, and estimate potential margins before listing anything. These platforms help reduce risk and speed up research. For dropshipping-specific needs, tools like AutoDS, DSers, and Inventory Source can help you connect with suppliers, automate order processing, sync inventory, and streamline fulfillment. Used together, these tools form the backbone of a data-driven, scalable Amazon dropshipping business.
And finally, the AMZ Sales Estimator gives you a rough but useful view of how many units a product moves per month, based on BSR. It’s great for sanity-checking any idea before you commit.
With these tools, you can:
- Filter out products with low margins or poor sell-through rates.
- Spot seasonality or market saturation.
- Find supplier matches based on actual demand.
The best part? Most of them offer trials or starter plans, so you don’t need to overinvest before making your first sale.
Key Risks and How to Avoid Them
Like any business model, dropshipping with Amazon comes with risks — and unlike more flexible platforms like Shopify, Amazon enforces its rules hard. Here's what to watch out for.
- Supplier compliance is the biggest threat. If your supplier puts their own branding in the package or ships items late, you’re the one who gets penalized. To avoid this, always test orders before listing, and maintain a tight relationship with your supplier.
- Shipping delays are another red flag. Amazon buyers are used to Prime delivery speeds. While you’re not required to use FBA, your delivery promises must match reality. Use suppliers with U.S. or EU warehouses when possible.
- Inaccurate listings — especially if you copy generic descriptions or leave out key product details — lead to returns and negative reviews. Invest the time to customize your copy and answer common questions upfront.
- Return issues are often overlooked. You must have a return solution, even if you're dropshipping. Some sellers use a local prep center for this; others negotiate with suppliers to handle returns directly.
- Account health metrics matter more than you think. If you miss messages, get too many order defects, or cancel too many orders, Amazon may deactivate your account — even if your intentions were good.
To protect your business, build routines early. Use checklists when adding products or new suppliers. Monitor your account health through Amazon’s dashboard. Respond to customers within 24 hours. And keep up with Amazon’s policies — they change frequently.
Scaling and Standing Out
Once you’ve made a few dozen sales and stabilized your systems, the next question is: what now?
Scaling a dropshipping business on Amazon can be done in multiple directions. One is expanding your product catalog — but only with data. Use sales reports, return rates, and customer feedback to decide what to list next. If customers consistently buy phone stands from you, maybe it’s time to add cable organizers or charging docks.
Another path is improving your brand perception. Even if you’re not doing full private label, small touches can make a big difference: custom packaging, thank-you cards, a cohesive storefront, or even a simple logo. Buyers don’t always expect big brands — but they do respond to professionalism.
At this point, automation becomes your best friend. Tools like AutoDS, DSM Tool, or even Zapier workflows can help route orders, update tracking, sync inventory, and request reviews. The less manual work you do, the more you can focus on growth.
Many sellers also begin building off-Amazon channels — whether it’s a Shopify store, an email list, or social media presence. While Amazon will likely remain your main revenue driver, having a backup ecosystem makes your business more resilient.
Eventually, you might transition into private labeling — taking your best-performing dropshipping products and manufacturing them under your own brand. That gives you better margins, fewer competitors, and a real asset you can sell or expand.
Scaling a dropshipping business on Amazon can be done in multiple directions. One is expanding your product catalog — but only with data. Use sales reports, return rates, and customer feedback to decide what to list next. If customers consistently buy phone stands from you, maybe it’s time to add cable organizers or charging docks.
Another path is improving your brand perception. Even if you’re not doing full private label, small touches can make a big difference: custom packaging, thank-you cards, a cohesive storefront, or even a simple logo. Buyers don’t always expect big brands — but they do respond to professionalism.
At this point, automation becomes your best friend. Tools like AutoDS, DSM Tool, or even Zapier workflows can help route orders, update tracking, sync inventory, and request reviews. The less manual work you do, the more you can focus on growth.
Many sellers also begin building off-Amazon channels — whether it’s a Shopify store, an email list, or social media presence. While Amazon will likely remain your main revenue driver, having a backup ecosystem makes your business more resilient.
Eventually, you might transition into private labeling — taking your best-performing dropshipping products and manufacturing them under your own brand. That gives you better margins, fewer competitors, and a real asset you can sell or expand.
Conclusion
Amazon dropshipping in 2025 is alive and well — but not for those looking for a quick win. The platform has matured, the rules have tightened, and the competition is smarter. But that also means there’s more opportunity for sellers who take the model seriously.
If you’re willing to learn the policies, choose the right tools, and treat suppliers and customers with care, you can build a real, revenue-generating Amazon dropshipping business. Start small. Move carefully. Think like a brand — even if you don’t own one yet. That’s how to do dropshipping on Amazon in 2025 — and how to do it right.
If you’re willing to learn the policies, choose the right tools, and treat suppliers and customers with care, you can build a real, revenue-generating Amazon dropshipping business. Start small. Move carefully. Think like a brand — even if you don’t own one yet. That’s how to do dropshipping on Amazon in 2025 — and how to do it right.
