Dropshipping on Amazon is one of the most popular ways entrepreneurs enter the world of eCommerce. While Amazon has strict dropshipping policies, a loophole known as Two-Step Dropshipping has emerged as a strategy some sellers use to scale without handling inventory. But is it smart — or risky?
In this article, we’ll break down:
- What Two-Step Dropshipping is
- How it works on Amazon
- The benefits and risks
- Amazon’s policy on this method
- Whether it’s worth trying in 2025
🔄 What is Two-Step Dropshipping on Amazon?
Two-step dropshipping is a modified method of traditional dropshipping. Rather than buying directly from a retailer and shipping to an Amazon customer (which violates Amazon’s dropshipping policy), the seller adds an intermediary step to try and stay compliant.
Here’s how it works:
- Step 1: A customer places an order on your Amazon store.
- Step 2: You buy the product from a third-party retailer or supplier and ship it to your address or prep center.
- Step 3: You then repackage the product (removing all branding, invoices, and logos) and ship it to the customer under your business name, appearing as the original seller.
✅ Why Some Sellers Use This Strategy
- Lower Upfront Cost: You don’t need to buy inventory until the order is placed.
- No Warehousing Needed: No need to rent space or pay FBA storage fees.
- Scalability: Sellers can list a wide variety of products with minimal investment.
🚨 The Risks of Two-Step Dropshipping
While it may sound like a clever workaround, it comes with serious risks:
⚠️ 1. Violates Amazon’s Strict Dropshipping Policy
Amazon requires you to be the seller of record — meaning you must appear as the only seller on packing slips, invoices, and shipping labels. Using products from other retailers like Walmart, Costco, or Target can still get you flagged, even with the two-step method.
⚠️ 2. Tracking & Delivery Delays
Multiple steps mean more room for shipping delays or tracking issues, which can hurt your seller metrics.
⚠️ 3. Account Suspension
Amazon can suspend or permanently ban your account if it finds out you’re using third-party retailers — especially if they detect retail packaging, invoices, or mismatched tracking.
📜 Amazon’s Official Dropshipping Policy (Summary)
Amazon allows dropshipping only if:
- You are the seller of record for your products.
- You identify yourself as the seller on all packing slips, invoices, and external packaging.
- You are responsible for accepting and processing returns.
- You do not purchase products from another retailer and have that retailer ship directly to customers.
In short: Retail arbitrage or two-step dropshipping using big box stores is not permitted under Amazon’s rules.
🧠 Is Two-Step Dropshipping Worth It in 2025?
It might work short-term, but the risk far outweighs the reward. Amazon’s algorithms and enforcement teams are better than ever, and sellers who rely on this method often get suspended or banned.
If you want to build a long-term business, you’re better off:
- Using wholesale suppliers or private label manufacturers
- Enrolling in Amazon FBA
- Building a brand with real supply chain visibility