Dropshipping on Amazon: The Hidden Compliance Risks Sellers Can’t Afford to Miss
Dropshipping on Amazon: The Hidden Compliance Risks Sellers Can’t Afford to Miss
Dropshipping on Amazon sounds simple: sell a product, pass the order to a supplier, and let them handle the rest. But in practice, most sellers get it wrong – and Amazon has made it very clear they won’t tolerate sloppy execution.
If you’re using dropshipping as your fulfillment model (or considering it), this guide breaks down what actually gets sellers suspended, what Amazon really expects, and how to avoid the most common (and least understood) violations – especially the one that most sellers overlook entirely: unauthorized sharing of customer data.
What Amazon Actually Allows (and Forbids) in Dropshipping
Amazon doesn’t prohibit dropshipping outright – but it strictly limits how you can do it. According to Amazon’s policy:
“If you fulfill orders using a drop shipper, you must always:
- Be the seller of record;
- Identify yourself on all packing slips, invoices, and external packaging;
- Ensure no third-party branding or contact information is included;
- Accept and handle all returns yourself;
- Comply with all terms of your seller agreement and Amazon policies.
Here’s what isn’t allowed (and will get you suspended):
- Shipping orders that include any mention of a third party (e.g. “Walmart,” “AliExpress”).
- Letting a supplier include their own invoice, packing slip, or branding.
- Using retail sites or suppliers without a proper agreement – Amazon considers this retail arbitrage, not dropshipping.
What Gets Most Dropshippers Suspended
Based on thousands of suspension cases we’ve reviewed, here are the top triggers that flag Amazon’s enforcement teams:
Branded or third-party packaging
Your customer opens the box and sees Walmart’s logo – or even a generic invoice not from you. Suspension often happens after just one complaint.
Delayed or missing tracking
You hand off fulfillment to a supplier who ships late or forgets to upload tracking. Amazon holds you accountable – not them.
Listing errors or OOS (out-of-stock) sales
You list an item that’s out of stock at your supplier. When you cancel, Amazon sees it as a poor customer experience – and a fulfillment policy violation.
High defect rates
Late deliveries, returns, and A-to-Z claims spike because you don’t control fulfillment. Amazon sees you as unreliable.
The Fatal Mistake Everyone Overlooks: Data Privacy Violations
This is the real issue that most sellers miss – and it’s arguably the most serious.
Every time you place an order on behalf of a customer using their name, phone number, address, and email, you’re handling Amazon customer data. And when you share that information with a third-party supplier who is not under an authorized agreement with Amazon or with you – you’re violating Amazon’s Data Protection Policy and potentially breaching international data privacy laws.
Amazon explicitly says:
“You may not share Amazon customer data with any third party without Amazon’s express written permission.”
So when you:
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Manually place orders on Walmart.com or AliExpress,
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Email buyer details to a freelancer, or
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Use software to relay buyer addresses to unvetted suppliers…
You’re not just risking poor customer experience. You’re illegally disclosing Amazon customer data. That’s a major policy violation – and it’s one Amazon doesn’t forgive easily.
How to Dropship the Right Way (and Stay Compliant)
If your account is already down, your appeal can’t just say “we won’t do it again.” Amazon wants to know:
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What exactly went wrong?
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What policy was violated?
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What specific steps have you implemented to fix it permanently?
And you must take responsibility. Blaming the supplier or “not knowing” won’t work. We’ve helped hundreds of suspended dropshippers get reinstated by presenting detailed root-cause explanations, proof of supplier changes, and new SOPs for compliance.
This isn’t about writing a letter – it’s about rebuilding Amazon’s trust in you.
Final Word: Dropshipping Isn’t the Problem - Data Misuse Is
Amazon doesn’t hate dropshipping. What it hates is when sellers outsource fulfillment to unreliable vendors, pass off accountability, and compromise customer trust. The most dangerous mistake isn’t a late delivery – it’s leaking customer data to a party Amazon never approved.
If you can’t control your supplier, you don’t control your business.
Want to make sure your dropshipping model is fully compliant – or need help reversing a suspension? We’ve handled over 3,800 complex cases just like yours. Reach out – we’ll help you fix it, the right way.
