Dropshipping is the process of selling a product without having the responsibility of carrying inventory or shipping appurtenances.

This interesting business model has increased in popularity over the terminal five years as you tin run into by this Google Trends graph.

You tin dropship on Amazon or using your own ecommerce store.

Before we dive into how dropshipping on Amazon works, permit's touch on dropshipping using your ain store.

Here'south how it works — you list products on your site without holding whatever physical inventory. And then when you lot receive an order, you contact your supplier who ships the item(s) direct to the consumer. And that'due south it!

Sounds like shooting fish in a barrel, doesn't it? Dropshipping on Amazon is a bit trickier.

Dropshipping on Amazon

Amazon is one of the world'south biggest ecommerce sites with sales of $280 billion in 2019. Once yous've been approved for an Amazon seller account, you'll be able to get-go selling on the platform.

Is dropshipping allowed on Amazon?

Dropshipping on Amazon (or allowing a 3rd-party to fulfil orders) is by and large acceptable as long equally you comply with Amazon's requirements.

You must:

  • Exist the seller of tape of your products;
  • Identify yourself every bit the seller of your products on all packing slips and other information included or provided in connection with them;
  • Remove whatsoever packing slips, invoices, external packaging, or other information identifying a tertiary-party drop shipper prior to shipping the society;
  • Be responsible for accepting and processing customer returns of your products; and
  • Comply with all other terms of your seller agreement and applicative Amazon policies.

Examples of dropshipping that are not permitted:

  • Purchasing products from another online retailer and having that retailer ship directly to customers; or
  • Shipping orders with packing slips, invoices, or other information indicating a seller name or contact information other than your ain.

Note, failure to comply with these requirements may upshot in the removal of your selling privileges.

Dropshipping Using Amazon FBA

Dropshipping on Amazon should be done through Amazon's Fulfilled by Amazon (FBA) programme.

With FBA, Amazon will pick, pack and transport your orders for you. They volition too provide tracking information to the customer and take care of any related customer service, including returns.

However, this comes at a cost! What yous pay Amazon volition depend on what product y'all sell and the time of the year. If your goods remain in Amazon'south warehouse for more than vi months, y'all may also be required to pay long-term storage fees.

To help y'all calculate your costs and acquirement, you can use an Amazon fee calculator.

If yous are an FBA seller, your production listings will land "Sold by [seller name] and Fulfilled past Amazon." One of the benefits of using the FBA fulfilment method is that y'all'll be eligible to offer Prime shipping to customers and your chance of winning the Buy Box will increase.

Fifty-fifty though Amazon doesn't permit traditional dropshipping methods in that location are plenty of sellers who notwithstanding practice it. If yous meet a listing where the shipping time is marked 7-14 days then information technology's probable this is beingness purchased from a dropshipper in China or elsewhere.

Pros and Cons of Dropshipping on Amazon

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Some sellers enjoy the benefits of Amazon dropshipping such as non needing a warehouse and lower overheads. Even so, it tin create issues and profit margins can be thin.

Allow'southward look closer at the pros and cons of dropshipping on Amazon.

Pros

The biggest do good is that you're dealing with a hugely recognisable global brand. Amazon is a household name with over 310 million active users.

Because Amazon is and then big, you don't need to focus so much on getting buyers in front of your products with advertising, marketing, SEO, relationship building and problem-solving. You tin can use Amazon ads to drive traffic and sales simply if you optimise your listings, you can benefit from organic traffic also.

Related: seven Ways to Optimise Your Amazon Product Listings

Assuming you lot're using FBA, another reward is that you don't have to worry about holding any inventory—yous'll have that all forwarded to Amazon's warehouses already. With FBA, Amazon takes care of shipping and client service so the merely affair yous have to worry nigh is your listings and their fees.

Cons

Amazon's dropshipping policy states "purchasing products from another online retailer and having that retailer ship directly to customers" is not permitted.

This makes it difficult for sellers who want to play by the rules to create a profitable dropshipping business on the market place. As most of the profit you brand from a sale of a product goes to the supplier, once yous gene in your seller fees, you're left with very fiddling profit.

Amazon customers have loftier expectations. If you experience issues with orders, this can result in negative feedback or worse, an account interruption or closure.

Related: What to Practise If Your Amazon Account Gets Suspended

Inventory availability notwithstanding matters, even if you don't technically don't stock inventory yourself. Products are nonetheless coming from somewhere and your buyer doesn't care where. All they care about it that when they click 'buy', they'll get that detail—pronto.

Dropshippers should accept open lines of advice with their supplier(s) so that if they're low in stock on a certain production, they can quickly tell you lot so you can adapt your listings accordingly.

Video: Step-By-Step Guide to Dropshipping on Amazon

Dropshipping from Amazon to eBay

Dropshipping from Amazon to eBay commonly ways a seller selling a product on eBay at a higher margin than it is listed on Amazon for. The profit they make is the divergence between the selling prices on Amazon and eBay, minus fees.

What normally happens in these scenarios is the buyer (who bought the product from eBay) volition receive the product in Amazon packaging. This could lead to a poor customer experience if they realise they could take saved money by buying the product straight from Amazon.

The Amazon seller might besides be unhappy virtually beingness used as a dropship supplier without their permission. When 1 seller discovered someone was selling his exclusive items on eBay at a highly inflated price, he wasn't happy.

This is what he did side by side. He purchased the item on eBay and raised his price on Amazon. The eBay dropshipper was and so forced to cancel his order and the buyer left him negative feedback.

Although it's not illegal to partake in this dropshipping from Amazon to eBay, many people experience at that place is an upstanding event here. There is besides the take chances of something going wrong and the profit margins are low.

Therefore, if you're aiming to build a reputable dropshipping concern information technology's all-time to stay away from this model.

Does Amazon allow yous to dropship to eBay?

Amazon considers arbitrage sellers as customers. They are likely to be loftier-book sellers with many different aircraft addresses. That said, Amazon does state that customers are not permitted to use Amazon Prime to fulfil eBay orders.

"Prime members are not permitted to purchase products for the purpose of resale, rental, or to transport to their customers or potential customers using Prime benefits."

Other Dropshipping Options

If yous don't want to dropship solely on Amazon you lot could look at using your own ecommerce store or eBay.

eBay allows dropshipping on their site but you lot must guarantee buyers will receive their purchases within 30 days of the listing ending. eBay even states that "you lot aren't obliged to state in your listings that an detail is coming directly from the supplier."

However, recently they have started to have steps towards limiting the practice by restricting seller accounts they suspect are dropshipping from Amazon to eBay. This may exist due to the fact that this method helps to promote Amazon (through its branded packaging) and gives the eBay buyer the perception that Amazon has lower prices.

Dropshipping using your own ecommerce store is more hands-on but offers yous more freedom. Whilst you won't accept to pay third-party fees, you won't do good from the huge amounts of free marketing and traffic. However, yous will have total control over the blueprint of your website and be able to build your brand.

Final Thoughts

Dropshipping isn't for anybody. It requires a certain kind of personality and temperament to be successful at dropshipping on Amazon.

Personally, I'1000 not a massive fan of the dropshipping model as I feel information technology lacks originality, can be time-consuming and offers a lack of command. Contrary to popular belief, information technology'due south not a get rich quick scheme as nearly of your profits will go to the supplier.

However, many sellers like the business model and see information technology as an easy way to make some actress greenbacks. Some sellers successfully use dropshipping as a method of market research to test out new products.

Whether you're dropshipping, doing retail arbitrage or private label on Amazon, it's vital to continue your products competitively priced within your set parameters. That'southward where our company, Repricer, comes in.

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