Amazon Dropshipping in Australia: How Does It Work in 2024?

From its humble beginnings as an online bookstore, Amazon has become one of the most well-known and trusted online shopping platforms in the world. More than 89 per cent of US buyers agree that they would rather buy products from Amazon than any other online retailer. With a brand value of over $350 billion and over 90 per cent market share in five product categories (batteries, home improvement, kitchen and dining, skin care and golf), there’s no doubt that this mammoth multinational platform can catapult your ecommerce business with the right tools.

If you’re planning on starting your own dropshipping business, you may be considering whether Amazon is right for you. Read on to find out how Amazon stacks up against the competition and how you can use Dropshipzone to supply your new Amazon store.

How does dropshipping differ from FBA?

Fulfilment by Amazon (FBA) is an alternative fulfilment method to dropshipping. Retailers can send inventory to Amazon fulfilment centres where they can be approved for selling. Amazon will handle customer service, shipping and returns, leaving online sellers to concentrate on their online store. Amazon FBA is quick and easy to set up, exposes your products to a larger customer base, and may lead to better profit turnover as retailers can sell their own stock at higher prices. Amazon also offers 24/7 customer support, so your customers will get answers and solutions as soon as possible.

However, there are some drawbacks. Firstly, Amazon charges a monthly fee of $49.95 per month to use FBA on top of storage fees and surcharges. Secondly, since you’re not in charge of customer service yourself, you may feel detached from Australian consumers, which may complicate your future marketing strategies. Finally, Amazon’s return policy is fairly lenient, so you run the risk of higher returns than other marketplaces. To find out more about Amazon FBA, read our blog What’s the Difference Between Dropshipping and Amazon FBA?

Pros and Cons of dropshipping with Amazon Australia

Vetted suppliers

Amazon has a reputation for a reason, one of which being their quality European suppliers. Like Dropshipzone, they do the hard work of choosing quality dropshipping suppliers so you don’t have to. You’ll be able to choose quality products in confidence knowing they come from a reputable source. 

Low startup costs

Dropshipping requires very little capital to sell products online. Unlike a wholesaler, you don’t have to buy products in bulk, you only pay for products that have already been purchased. Even though you're not buying bulk, you still have access to wholesale prices and discounts. There are also no storage fees, as you never have to handle your inventory. With two of the biggest money pits out of the way, dropshipping is a low-risk, high-reward venture for the right entrepreneur. 

Work anywhere

Since you don’t have inventory, you don’t need to be tied to a warehouse or office. You can work from anywhere and on most devices. All you need is the motivation to work and a fast internet connection. For more insight into the working life of a dropshipper, visit our blog How Many Hours Do Dropshippers Need to Work?

More exposure

As a hugely respected global company, Amazon can put you in front of thousands of buyers. With thousands of products in over 30 categories, you’ll be able to find exactly the right product for your niche market and reach them with super-targeted marketing. 

Scalability

Dropshipping is infinitely scalable - the only things preventing you from growing your ecommerce business are the hours of the day and your bandwidth. You can add or remove products at any time to keep up with the trends, and source from multiple suppliers to keep up with demand.

Low-profit margins

Despite low start-up costs, dropshipping also has lower profit margins than other businesses. The average profit margin for dropshipping is between 10 to 30 per cent, with most stores sitting at a solid 20 per cent. You can raise your margins through marketing and new products, but you’ll likely see low margins in the beginning.

Less control of branding and products

Unlike other platforms that allow dropshipping services, you’ll be fairly limited when it comes to your products and listings. Without signing up to the Amazon Brand Registry, you'll have very little control over your own branding. It will make it harder to stand out against your competitors and build brand loyalty. You'll also be responsible for customer purchases gone wrong, such as delayed shipping or breakages, even the dropshipping supplier was at fault.

Lots of fees

Compared to other platforms, Amazon has a lot of fees and subscriptions. This will cut into your profit margins significantly, with Amazon taking around 15 per cent of your revenue. 

What is unique to the Australian market for dropshippers?

One of the unique issues Amazon dropshippers in Australia will face is the taxation system. Every Australian business is charged income tax and must include a Goods and Services Tax (GST) in their product prices. The GST is always 10 per cent of the product’s price, and you don’t need to register for it until your revenue reaches 75,000 within 12 months. You also won’t need to pay GST when selling products from Australia to other countries (but you must still comply with that country’s tax law). Income tax is a progressive system - the more you earn, the higher your tax bracket and the more you pay in taxes. For more information, you can visit the Australian Taxation Office website.

To dropship in Australia you’ll also need an Australian Business Number. Most dropshipping suppliers and wholesalers will require an ABN to use their services, including Dropshipzone. You’ll also need an ABN when registering for GST, registering a business name, and registering certain web domains. Applying for an ABN is free, though you may choose to engage a tax agent who will charge their own fees. For more information visit our blog Do you Need an ABN for Dropshipping in Australia? For any other licenses or permits you may need, you can visit the Australian Business Licence and Information Service (ABLIS) and check by state.

Legalities aside, the Australian ecommerce market is full of opportunities for a start-up with a dropshipping business model. According to the 2023 Auspost Inside Australian Online Shopping report, 82 per cent of Australian households made an online purchase in 2022, totalling $63.8 billion dollars of online retail spend. While the frequency of online purchases has stabilised since the Covid-19 lockdowns, it is expected that one in three Australian dollars will be spent online by the year 2033. Variety stores experienced particular success, with 24 per cent of Variety shoppers driving 65 per cent of category purchases. Australians have long been frustrated by a lack of choice compared to overseas. This bodes well for dropshippers, who have the ability to buy, sell and ship from anywhere in the world. Retailers with Dropshipzone are uniquely set up for success with access to thousands of products across many product categories.

Can you dropship on Amazon legally?

There are two things you need to know before dropshipping products on Amazon. First, you need to make sure your products comply with the consumer laws of the country you’re selling to. For Australia, this means complying with the Competition and Consumer Act and Australian Consumer Law. These laws protect consumers from unfair practices and include restrictions on using customer data, laws around unsafe products and due diligence, and certain consumer guarantees that you cannot supersede. If you do now comply with these laws, you may be reported to the Australian Competition and Consumer Commission (ACCC) and may be asked to pay fines and compensation. 

Secondly, you must comply with Amazon’s Dropshipping Policy, which states that you must be recognised through packing slips, external packaging and invoices as the seller of record. This means you are the only seller identified with your product and the party responsible for processing customer returns and complying with Amazon policy including the Business Solutions Agreement.

By following these rules and regulations, you can ensure your own ecommerce store or business is dropshipping legally on Amazon.

How much does it cost to dropship with Amazon and is Amazon dropshipping profitable?

There are four main fee types that you will have to contend with when dropshipping (and selling in general) on Amazon.

Selling plan

Amazon offers two basic selling plans:

• Individual account: $0.99 per item plus additional selling fees. 

• Professional account: $49.95 per month plus additional selling fees.

An individual plan is useful if you sell less than 40 units per month, don’t need to use advanced selling tools, or are unsure what to sell. The Professional plan gives you access to tools such as API integration, on-site advertising tools, and access to reports. You can also run promotions including free shipping, apply to sell in additional categories, and add multiple users to your account. If you sign up for the Professional plan, don’t use any of the tools or benefits and want to end your plan, you are eligible for a one-off refund. You can downgrade at any time. For more information on selling plans, check out the Amazon AU website.

Note: If you want to expand to selling worldwide using merged accounts, you will pay the equivalent of $39.99 USD per month, split proportionately across each country or region in which you have an active listing and charged separately in each local currency.

Referral fees

Amazon takes either a percentage of the total price (including shipping) or a minimum amount for each item sold. Each category has its own referral fees ranging from 6 per cent (video game consoles) to 15 per cent (software, books, jewellery and some beauty sales).

Fulfilment fees

If you use FBA, Amazon will charge a fee per item shipped. This price depends on the size and weight of your package. Products over 25kg are charged at a base rate with an additional fee for each kilogram over 25kg. You will also be charged storage fees each month for unsold inventory: $23.30 per cubic metre from January to September and $29.20 per cubic metre from October to December.

Amazon Advertising

If you want to include paid advertising in your marketing strategy, you can use Amazon Advertising. They use a cost-per-click, auction-based pricing model, which means you can set the maximum amount you’re willing to pay when a customer clicks on your ad. 

You can use the Amazon Revenue Calculator to determine if any given product on Amazon will be able to turn a profit after fees and help you find the right selling price. Overall, Amazon dropshipping services can be profitable, though you’ll need a profit margin above 15 per cent to justify the expense as Amazon will take around 15 per cent of your top-line revenue.

How to get started with Amazon dropshipping

Step 1: Register your Amazon seller account

To become verified as an Amazon seller you’ll need:

• A current passport, driver’s license or business license.

• A mobile or telephone number that can receive SMS or phone calls.

• Credit card details (for your monthly subscription fee)

• Proof of business validity, e.g. bank or credit card statements issued in the last 180 days).

• A business address

You will need to provide a legible colour scanned copy of your documents or a clear photo taken from your mobile device. You cannot provide a screenshot.

Next, you’ll choose your business location and business type from the drop-down menu. Your business can be:

• Privately-owned

• Publicly-listed

• Charity

• State-owned

• Individual

Once you fill out the required identification and billing information, you’ll be asked to provide information about your store and products. This includes providing a business name, trademark information and identifying a manufacturer. Next, you’ll be asked to upload your verification documents. Finally, you’ll be asked to verify with an associate from Amazon either instantly over the phone or at your scheduled convenience. Make sure you have a working webcam, microphone and speaker, a stable internet connection and a compatible browser like Safari or Google Chrome for the call. In some cases, Amazon will send you a postcard after this call with additional steps to verify your address. Once Amazon has reviewed your information, you will be verified and you can begin using your Amazon seller account.

Step 2: Get approved in your product category (where applicable)

Some product types require approval before selling. Fashion, jewellery, music and grocery are just some categories that require approval, but you can read the full list of restricted products at Seller Central.

Step 3: Connect your Amazon account to your platform of choice.

There are many multi-channel fulfilment apps aimed at Amazon sellers can help sync your ecommerce platform of choice with Amazon, even from your own website. Use these apps to sync your inventory, manage orders, automate price changes, and more. 

Step 4: Create your Amazon product listings.

Once your store is fully set up and verified, you can start listing your products. Access your Seller Central dashboard and find the Add Products. You’ll be given the option to find the product you want to sell in the Amazon catalogue, sell a product not on Amazon, or upload a file to add multiple products at once. If you’re a Dropshipzone retailer, this is your chance to upload your inventory CSV file and add your products in bulk.

When choosing your product category, choose the most specific category that accurately represents the product. If you’re unsure which category is right for you, search the category you’re considering on Amazon and see if your product matches the search results.

If you’re the first seller to offer this kind of product (whether it’s a brand new product or you’re a private label), you’ll create a new listing. If other sellers offer the same product, you’ll match the existing listing. If you’re selling products under your own registered trademark, you can sign up for free to the Amazon Brand Registry, which will give you more control of the detail pages that use your brand name.

Step 5: Optimise your listings

With your products chosen and uploaded, it’s time to optimise them for Amazon shoppers. To make the most of the optimisation process, some knowledge of SEO and the Amazon algorithm will help immensely. Amazon’s search engine is named A9, after the subsidiary company that handles SEO. It determines which items best match a customer’s search query and scores them based on relevancy to the consumer. With the right titles and descriptions, you’ll be picked up by the algorithm in no time. 

Professional image quality

Marketing is as much about visual content as it is written content. Amazon gives you one main product image and eight additional slots, so you have plenty of opportunities to put your best foot forward. You should have clean, high-resolution, high-quality product images. You may want to provide a variety of angles, the product in and out of the packaging, and the product as it may be used. You also want to make sure your product is professionally edited, with everything in the right proportion and no changes that could misrepresent your product, such as oversaturation. 

Keep in mind Amazon’s own expectations. According to their best practice guidelines, the best product images:

• Have a pure white background

• Have at least 1,000 dpi, so that it won’t turn fuzzy when customers zoom in on your image.

• Show the entire product, and have the product occupy at least 80 per cent of the image area.

• Include only what the customer will receive.

Dropshipzone members have access to professionally shot and edited product photos suitable for use on Amazon.

Keywords

Undertake keyword research to determine the most relevant keywords for your product. You can do this by using tools such as Ask the Public, Ubersuggest, Google Trends or even through the Amazon search bar, which autocompletes searches with popular long-tail keywords. 

Correct product categories

Make sure your product categories are specific and accurate so customers can find you easily. 

Optimised titles

Use effective product titles with just the right keywords. The title should match what would be on the product packaging - avoid subjective descriptions like “best-seller” and only includes relevant product information. Amazon limits titles to 80-100 characters, but keep in mind that shorter titles are more likely to attract attention. Other restrictions include not using symbols, all-caps, or keyword stuffing. A possible title format may look like this: [Brand] + [Model number] + [Model Name] + [Product type] + [Colour]

Optimise key product features and descriptions

The key features are expressed in bullet points beside your product. You have five bullet points to present your best features, and your first priority should be clearly communicating to the customer why they need your product. Keep them clear and concise, and keep all five bullet points under 1000 characters. Do not include pricing or promotional information here.

Your product descriptions should be detailed and accurately represent your product and how it operates. Descriptions should be kept to 2000 characters, avoid suggestive commentary, and not use symbols or HTML. Other suggestions include putting your features and benefits at the top of the description and focusing on benefits over features. Include relevant features such as brand, material, size, colour, packaging and quantity per purchase.

Step 6: Marketing your store

With your products ready for sale, it’s time to look at your marketing strategy. If you have a target audience in mind, you may want to engage in market segmentation to expertly tailor your marketing campaign.

One of the best ways to market your store is to use social media platforms effectively. Social media marketing can drive organic traffic to your online store and even make your products go viral. Every social media platform has a different set of algorithms and trending topics, so do your research before you start content creation. Use a cross-platform content strategy for a competitive advantage over other dropshipping companies. Join online communities to meet your audience where they are. Encourage customers to share their pain points and use the information gathered to provide better customer service. You may even choose to engage affiliate marketers who will drive clicks to your store through content. Make use of these site's marketing tools to analyse your conversions and store traffic, and continue to test and refine your strategy through A/B testing and continuous monitoring. For more tips on growing in an online marketplace, visit our blog 14 Tips to Improve Retail Sales on an Online Marketplace. For a deep dive into the second most visited site in the world, you can visit our blog How to Use YouTube to Grow Your Business in 2024.

Connecting Amazon to your online store

One of the reasons Amazon is so successful is that it offers a variety of ways for third parties to integrate with the platform. This is made possible with Amazon’s Application Program Interface (API) Gateway. If you or your site developer are familiar with APIs, you can visit our APIs Doc to understand which parts of Dropshipzone you can access and how to work with them for seamless integration.

If you’re a Dropshipzone retailer with a Shopify account, you’re in luck! Shopify gives you access to many third-party applications that can connect your Shopify account to Amazon, while our app Sofortig connects your Dropshipzone account to Shopify. All your favourite ecommerce platforms, seamlessly integrated into a single fulfilment pipeline.

Can I use Dropshipzone suppliers’ products to dropship on Amazon?

Yes! You can use Dropshipzone suppliers to dropship on a variety of platforms including Amazon, eBay, Shopify, Woocommerce, Wix and many, many more. With thousands of products ready to sell, the only limit to your store’s growth is your imagination. Use your preferred third-party app or API to link your store, purchase products, prepare your listings and get ready to sell on Amazon.

While Amazon will get all eyes on your dropshipping business, Dropshipzone will put you on the map with our amazing range of products. Our Australian dropshipping suppliers will ensure your local customers get their purchases promptly and efficiently, while our Australia-based customer service team can help you with any problem, day or night. If you're considering starting an online business with a dropshipping model, or if you're considering becoming a dropshipping supplier, you can contact us directly or sign up and start dropshipping today - no hidden fees and subscriptions.

Not sure Amazon is for you? Don't worry, we have you covered no matter where you are. You can set up your own Wix, Wordpress or Shopify store, dropship on eBay, and more. Dropshipzone can take you anywhere.

Amazon Dropshipping in Australia FAQs

How do I find the right products to dropship on Amazon?

Finding the right products to sell can seem daunting, especially with so many options available. Your first step should be engaging in market research in order to better understand your target audience. Next, you’ll want to do some product research to find the latest trending pieces. While categories like fashion and jewellery are evergreen, products like electronics and seasonal decorations may be less consistent.

Is it okay to dropship on Amazon?

Yes, it is perfectly fine and legal to dropship products on Amazon so long as you follow their dropshipping policy. A key policy to remember is that you must be the seller of record, meaning you’re the only seller identified on your products, invoices and receipts.

Is dropshipping legal in Australia?

Yes, dropshipping is legal in Australia. To start a dropshipping business you will need a TFN, ABN, associated business licences and a registered business name. You'll also need to be familiar with what products you can and cannot import into the country and have a basic understanding of Australian Consumer Law.