Amazon dropshipping involves selling products on Amazon without holding inventory, with suppliers shipping directly to customers when orders are placed. This model offers unique advantages and challenges that require specific strategies for success. How Dropshipping Works: The dropshipping process begins with identifying profitable products that are available from suppliers who offer dropshipping services. You create Amazon listings for these products, setting prices that provide acceptable profit margins. When customers place orders on Amazon, you receive notifications through seller central. You then place corresponding orders with your suppliers, providing customer shipping information. The suppliers ship products directly to your customers. Customer service and returns are handled through Amazon's systems, but you're responsible for coordinating with suppliers when issues arise. Key Advantages: Low startup costs represent the primary advantage of dropshipping, as you don't need to invest in inventory before making sales. This allows you to start with minimal capital and test products before committing. Product testing capabilities enable you to experiment with different products and niches without inventory risk. Scalability potential exists because you're not limited by inventory investment or storage capacity. Location independence allows you to operate from anywhere with internet access. Understanding the Challenges: Lower profit margins are typical in dropshipping due to competition and lack of bulk purchasing power. Margins often range from 10-25%. Inventory control limitations mean you depend on suppliers for stock availability and fulfillment reliability. Competition intensity is often higher because barriers to entry are low. Policy compliance requires careful attention to Amazon's dropshipping policies.