Amazon dropshipping: selling items through the platform
There is a popular belief that one of the possible ways of using Amazon for dropshipping is turning it into a sales channel. Basically, it means opening an Amazon store within the platform and becoming one of the numerous Amazon sellers.
For a number of reasons, this option might seem quite appealing for a newcomer:
The procedure is quite simple from the technical point of view. Indeed, you don’t have to create and set up a separate website.
You get the opportunity to reach an incredible amount of people. According to the data from Statista, the average monthly number of Amazon’s websites’ visitors was 200 million users in 2018.
You operate through a well-reputed platform that has gained recognition all over the world. Therefore, your store visitors will have no concerns about the reliability of your business.
Still, even though sell on Amazon is a good idea for online entrepreneurs in general, it is totally unsuitable for dropshipping.
Why you can’t legally dropship on Amazon
Amazon has several requirements that make it totally impossible to do ‘classical’ dropshipping through the platform. If you’re selling something through Amazon, then:
You are not allowed to make purchases from other online retailers and ask these retailers to send the order directly to the initial customer
You can not send your buyer a package that contains invoices, stickers, or other elements indicating a seller’s name or contact information that is different from your own personal details
There is a curious ‘loophope’ in this system: you may try marking your order as a gift. The packing slip will be hidden in a separate envelope in order not to let the recipient view the gift’s price – and this might seem to be a chance to cover the original seller’s identity.
But, these options are not normally available for the items sold in Amazon Global Store, and for some other products as well. What’s worse, you can only learn about this on checkout. Therefore, it’s not a really good idea to fulfil orders anyway and simply hope this strategy will work every time.
Amazon still claims that it allows selling items through the dropshipping business model – but basically, it simply means that you can use the service of Fulfillment by Amazon. In other words, you can physically store your products in Amazon’s fulfillment centers. The dedicated personnel will assemble the packages, provide the packaging services, and arrange the packages’ shipping to the necessary addresses.
How To Be Successful With Amazon Dropshipping
While Amazon dropshipping is an easy business model to start, it’s difficult to master if you want to make significant money online.
Because your margins are so low, you can only make significant profit at scale.
Bottom line, you need to sell a bunch of different products, drive down your costs and make sure that your Amazon listings are dynamically price optimized.
Meanwhile, you also have to make sure that your inventory counts and product descriptions are always accurate to prevent your Amazon account from getting banned.
As result, you can’t do any of this by hand and you have to rely on software to manage operations.
Here’s what you need to automate in order to even have a chance of making a profit.
- Purchase Order Creation – When an order comes in, you have to automatically send it to your supplier for fulfillment
- Repricing – Because Amazon prices fluctuate constantly, you have to make sure you own the buy box. Otherwise, you won’t make any sales.
- Inventory Listing Management – When you go out of stock, you have to make sure to deactivate your listing to prevent unfulfillable sales.
- Product Data Syncing – The products being shipped by your supplier must EXACTLY match your Amazon product listing. Any change in packaging or product version needs to be accounted for
- Order Tracking – Your supplier must electronically provide shipping and tracking information which you must send to Amazon right away. This process must be completely automated to handle the volume of orders you will receive.
Basically, every area of your Amazon dropshipping business needs to talk to each other. Amazon dropshipping success is a low margin volume game with very high risks.
You can make money with this business model only if you scale and any mistake can mean losing your entire business overnight.
