What is Dropshipping on Amazon?
Dropshipping on Amazon allows you to sell products in Amazon without shipping the goods or carrying inventory. Even more important, you can also have the freedom to sell the product on your desired price. You sell the products. On the other hand, the manufacturer of the will be responsible for the inventory and shipping goods to the customers.
How Amazon Dropshipping works?
If you want to prevent the common mistakes of a startup in Dropshipping, you must know how Dropshipping works. First of all, you must identify your product and the product supplier. You must contact your potential supplier to talk about your requirements. After you make an agreement, the supplier will now process your orders and directly deliver it to your customers.
To better understand Dropshipping, you must follow these steps.
- Identify your product and start searching for a suitable supplier.
- Сonnect with your chosen supplier and discuss the details of cooperation: whether the supplier works with dropshippers or not, he packs the goods according to the requirements of Amazon or not, whether he controls the quality of the goods before sending and other details.
- After the supplier is found, list your products at Amazon and promote it. Your markup for the goods will be your profit for the completed order.
- When a buyer wants to buy your product, he places an order. You (and not the supplier) are the seller of the goods and are fully responsible for the fulfillment of the order.
- You will forward the order of your customer to the supplier. He will already have your payment details. You make a payment for the order to the supplier without the markup. You also give the supplier an address for delivering the order to the customer.
- After the supplier receives payment for the goods, he packs it according to the requirements of Amazon and sends the order to the customer.
- The package comes from the supplier; however, the paperwork states that it comes from you. It includes your important information, and the information of the supplier is not revealed.
An important feature of dropshipping is that in order to sell a product, you do not need to buy it in advance. But you must make sure to have funds so that the order of your customers will be packed and shipped to your customer in a timely manner.
Advantages of Dropshipping on Amazon
You may now know it, but Dropshipping in Amazon can offer you amazing benefits. These are summed up in the following.
- You’re not responsible for the inventory.
If you start to be a dropshipper, you are free from carrying inventory. With this, there is less work on the transactions. You don’t have to worry about the warehouse cost. You can also save more because you no longer need to pay for the warehouse for inventory purposes.
- Low cost of starting a business.
If you choose a dropshipping business model, you can expect a low startup cost. You spend money only after the client has paid you. You buy goods in the right quantity, do not invest your own money in the goods.
- You can cooperate with reliable suppliers of Amazon.
It cannot be denied that Amazon is one of the most trusted shopping platforms in today’s generation. Well, starting your Amazon Dropshipping business can offer you peace of mind since you are dealing with a trustworthy supplier. With the help of Amazon suppliers, you can grow your business in a fast and successful way.
- You can easily grow your business.
Nothing prevents you from adding lots of new products, quickly adding today's popular products.
- You can enhance your skills.
If you want to have a successful Dropshipping business in Amazon, you must have the skills in administrative tasks, marketing, and customer service. If you acquire these skills, then you have more chances of attaining success in the business. Your marketing skills can help you to get the attention of more potential customers. As a dropshipper, you must know how to process the orders, expenses, and pay taxes. Moreover, your customer service skills can help you to maintain good relationships with your customers.
- You can test the products easily.
Before you sell a product, you can test the products easily. If some items are not top sellers, you can eliminate it to your store in an easy manner. You are free to choose the products that you are going to sell.
- You do not care about the delivery.
The supplier is responsible for packaging, delivery of goods.
- A huge amount of audience.
Amazon has over 300 million active users. So, if you use the sales channel of Amazon, you can expect to have a significant return for your business. If you sell the right products at the right price, you can attract more potential customers.
Disadvantages of Dropshipping on Amazon
Apart from its benefits, you must also know the cons of Dropshipping in Amazon. Restrictions are set by Amazon, which can avoid the dropshippers to sell on the platform. So, you are only allowed to dropship through their FBA program. Other disadvantages of Dropshipping are:
Dropshipping has low margin, so you must be competitive enough to make the best of your Dropshipping business. You will not be able to set a price lower than other sellers.
- You don’t have the control on warehouses.
You don’t have the freedom of controlling warehouses, so you can’t personally check the products that are ordered by your customers. It is possible that a customer has bought something from you, and the supplier no longer has this product in stock.
- You must have a large number of different products.
You need more products that require posting a photo and description to answer the questions of customers about each product. It takes effort, so you must be patient and dedicated in your Dropshipping business.
- You have no control over the supplier.
The supplier may send goods of poor quality, and you will be responsible for this. The supplier can put a check with the real price of the goods and as a result the buyer will write you a bad review. In addition, you do not control the delivery time.
Nowadays, some people are taking advantage from aspiring dropshippers. So, you must check the background of your supplier to avoid regrets in the end.
- You risk losing customers.
All information about your customers will be available to the supplier. Nothing prevents him from starting selling his product directly, bypassing you.
Another situation is also possible: your client has found the same product, but it is cheaper at another supplier. Then the customer can cancel the order or simply not pick it up. And you will incur losses.
Why is it important to find a reliable supplier of goods?
It is crucial to find a trustworthy supplier of goods to get a big return from your Dropshipping business. It is necessary to ensure that your money, time, and effort invested for your Dropshipping business are all worth it. There are also fraudsters that can fool you, so you must be alert about it.
A good supplier is very important for the success of your business. If your supplier delivers poor quality products and doesn’t comply with the rules of packaging, you as a seller can suffer until you experience a full closure of your account. Thus, your reputation is under risk if you have a poor supplier. With this, you must only choose the most reliable and experienced supplier to make your business successful.
How many products must be sold to get real profit?
If you want to get the real profit with your Amazon Dropshipping business, it is necessary to invest with hundreds of products. The margin of Dropshipping is lower than other business models.
How Amazon refers to Dropshipping (Drop Shipping Policy)?
Dropshipping is allowable. However, you must follow the Drop Shipping Policy.
- You must be a seller of products on invoices, external packaging, packing slips, and other details related to them.
- You must adhere to the terms of the agreement and applicable policies of Amazon.
If you want to know more about what Amazon thinks about this, look here.
Seller Performance Team: What is it?
Seller Performance Team deals with violations of Amazon’s vendor policy. This is a whole department whose employees keep track of metrics for accounts on Amazon. They monitor the activity of the seller, the degree of customer satisfaction and analyze many indicators:
- The number of canceled orders;
- The number of returns;
- On time delivery;
- The correctness of delivery tracking data;
- The speed of response to customer requests (answers to questions);
- Customer satisfaction with vendor support and other indicators.
In case of systematic violation of the rules, Seller Performance Team has the right to block your account. It is possible to challenge this decision in rare cases.
Amazon Performance Team can make you feel threatened. Thus, it can delay your Dropshipping business due to account suspension. So, if you want to contact the Seller Performance Team, you must send an Amazon Performance email. You must also remember not to submit to the Seller Performance Team since it can be counted against the revised appeal.
Through the Amazon Performance Team email, you can have the chance to cancel the suspension of your account. With this, you can enjoy the benefits of Dropshipping business again.
Meanwhile, you must also know about the techniques in Dropshipping in Amazon. It is essential to know if you are selling the right products to avoid wasting your time and effort. You must be aware of the allowed and restricted products to be sold on Amazon.
It is also essential to have an Amazon seller account. You can go to the Amazon seller dashboard login and have a professional account. With this account, you can pay subscription monthly and other additional fees. You can also be familiar with the Amazon Dropshipping tools as you continue on your business. Some of these tools include Merchant Words, Feedcheck, Sellery, Shopify, Feedback Express, as well as Amazon Volume Listing Tools.
Do you want to get the best results from your Amazon Dropshipping business? Then, you must apply the tips mentioned in this article.