Yep, very first step in to really research your market and identify your primary competition within that market. That's your benchmark that you have to hit to be competitive. So look at their services, shipping times, customer service, even the level of their branding and so on, they things matter to customers, it's not just about the price always.
That said, most e-commerce purchases does end up with price playing a big role in the purchasing decision, especially on a site like Amazon that attracts bargain hunters. So you always have to make sure your on point with your price or you'll struggle to compete at all.
The thing with dropshipping is, it has lots of benefits, but competitive price usually isn't one of them. What many find is that they are out gunned on price and assume the supplier is simply too expensive, but what they don't take into consideration is what supply model the competition is using.
If you're going to go up against a seller buying in large wholesale volume then they'll always be able to out gun you on price, dropshipping margins can never compete with wholesale margins. Then you have factors like wholesale suppliers using Amazon and other platform top sell direct at their wholesale price, that makes it even difficult for wholesale buyers to compete.
Throw in on top market techniques like loss leaders, where sellers are listing at below cost to attract traffic, then you get a bit of a picture of how complicated a market like this can be to deal in. Everyone is playing to a different set of rules to each other, that's a really important point to remember.
In regards to contacting the supplier, never take an advertised price on a website for granted. Most dropshippers will be selling retail also, so the price on the website will usually reflect the their retail price. You need to contact them in regards to the dropshipping price to get an accurate price.
No, you're absolutely right, nothing is ever as easy as some make it seem. That said, Amazon has it's own funny little listing quirks that others like eBay don't have. So with Amazon, it usually comes down to what you are listing as to what sort of drama is involved, where as an eBay or similar are far more straight forward.
I'm not an Amazon expert, so I'm not the best person to really give you any good pointers in listing there unfortunately, but many of our members do list there, so hopefully some of them can throw some advice your way on that topic.
As far as the process. Let's assume that you've done your research and identified a product and found a supplier to purchase from that will give you a margin at a competitive price.
1. Contact the supplier to open an account
2. One account access is granted, list the product (making sure your maths is correct on costs)
3. Customer processes a sale on the item and pays you.
4. You then in-act the transaction with your supplier, making your payment
5. Supplier ships to your customer
Two important points in the breakdown are number one, make sure you have enough available funds if you are using a new PayPal account, you have to assume it will get locked and your customer's funds will be trapped until the hold is lifted.
Second, make sure your maths are accurate, including things like listing fees, seller fees, transaction fees and any other fee that you may have within your chain. That's the only way you're going to get an accurate view of true profit margin. An under calculation on costs can end up costing you money.