Is Amazon Dropshipping the Best Method for Your Online Business?

March 16, 2020
Written by Nicasio Co III
Amazon Dropshipping

The entire process of carrying inventory and shipping products can get troublesome. Given all the details you need to process—not to mention the workforce required—for ensuring that every process goes smoothly, this should not come as a surprise. Good thing, you can always resort to Amazon dropshipping or an Amazon FBA wholesale services.

How Does Dropshipping Work?

When you dropship your products, you can sell them without being responsible for carrying them or shipping them to your customers. There are drop shipping firms you can tap at the ready. These companies specialize in rendering this type of service. However, despite the similarity in their services, the rates of each firm may vary accordingly.

To better understand how this process can work to your advantage, take note of the following details:

  • As a retail fulfillment technique, dropshipping relieves sellers of the hassles of keeping their products in stock. Sellers who use this model buy them from a third-party that will be responsible for sending them to the customer’s location.
  • The third-party is either a wholesaler or manufacturer. It takes charge of stocking, handling, and shipping the goods. What the seller does is fulfill orders by communicating with their preferred third-party provider. Therefore, you play the role of the middleman, taking charge of the entire transaction process, and ensuring that your provider delivers the required goods to your customers on time.

The Pros and Cons

Starting a business via the dropshipping model does not require investing vast sums of money. But do not let this fact mislead you into thinking that the whole activity is nothing but a walk in the park. Like every other process, it has its own merits and challenges.

The Pros

  • No need to lose sleep over inventory issues

Inventory management involves balancing stock, so you always have enough to cover demands, but not too much that you end up losing money. With dropshipping, all these issues are on your supplier’s shoulders. For you, this advantage means less risk and work involved. To top it off, you do not have to worry about building or finding warehouses plus hiring people to operate them.

  • Forget about investing large sums of money

Overall, the majority of your business expenses go to the price of goods, advertising, and website. Aside from not having to spend on building or leasing warehouses, you also do not have to buy products in advance. You only buy them when your customers order them.

  • Hassle-free product testing

One of the significant advantages of dropshipping is having the opportunity to test products. You will have no trouble running advertisements on any of your offerings. This way, you will be able to determine which one converts best. Should some of them prove to be unpopular with your customers, you can take them out without worries. Having no inventory to manage means you do not have to lose much money when you decide to take out a low performing product. You only have to spend on advertising.

So, the next time you want to buy an inventory, you already have a good grasp of the kinds or types of products that would yield more profits. With this, you will also have an idea about the ideal number of SKUs that you should have.

The Cons

  • Less money invested, fewer returns expected

If you think you get to profit more from dropshipping because you do not have to manage a store or stock your inventory, think again. A more significant portion of every unit you sell goes to your supplier.

  • Low overhead but high competition

The fact that you do not have to invest in production or storage translates to low overhead expenses. It would have been great if you were the first and only one who came up with this idea. Unfortunately, dropshipping is not a novel concept.

Many sellers like you may have been practicing it for quite some time now. Worse, your supplier may be supplying them with the same products as well.

  • You have no hand in the quality control

As soon as you have communicated the details of each order to your supplier, they will take charge of sending it to your customers. Therefore, you do not get to inspect each unit before it is shipped.

If your customers are satisfied, perfect. Otherwise, you will have to field complaints and inquiries and process everything communicating back and forth between your customers and supplier.

But dissatisfied customers ranting about purchases that failed to meet expectations is not the only issue you will have to deal with. Delayed shipment is another problem, and again being in the frontline, you will be responsible for communicating with the customer in question and following it up with your supplier.

Essential Details about the Amazon Dropshipping Guide

Amazon dropshipping is the only method that dropshippers can use if they want to sell on the platform. The marketplace has explicitly mentioned in its policy that it does not allow sellers to buy products from other retailers and ship the goods through them. To give you an overview of how this process can work to your advantage, read on.

How can I go about dropshipping my products on Amazon?

If you want to be among the group of merchants considered as the best dropshippers for Amazon, you are obliged to observe these rules. Doing so allows you to drop ship products legally, as you will be complying with Amazon’s policy.

  1. Buy goods from suppliers and manufacturers only, not other retailers.
  2. See to it that only your information, not the third party’s, appears on the packaging of every product you send to customers.

How does dropshipping on Amazon work?

Before you can get an answer to the question “Is Amazon dropshipping profitable?” you need to know how to go about the whole process first. After learning the steps and mastering them, then you can start contemplating on profitability and the best Amazon dropshipping products you can include in your offerings.

Step 1:
The customer browses through the products you have listed on Amazon, picks the items he likes, and places orders.

Step 2:
You finalize the transaction and confirm all the needed details with your customer.

Step 3:
You contact your supplier to buy the products your customer has ordered and provide the customer’s details (the address where products should be shipped and other critical data required).

Step 4:
Your supplier gets the order, packs it, updates its inventory records, and then ships the products to your customer’s location.

This Is Just the Beginning

Now that you have an idea of how dropshipping works, your next concern will be how to start dropshipping on the platform and reviewing the nitty-gritty details of the process. Stay in the loop by learning more about this topic on “What Every Dropshipper Should Know About Dropshipping on Amazon”

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