What Every Dropshipper Should Know About Dropshipping on Amazon?

March 12, 2020
Written by Ken Zhou
Dropshipping on Amazon

Dropshipping on Amazon is one of the ways to sell on the marketplace. Other methods include Amazon FBA wholesaling (Fulfillment by Amazon). Each method has its own merits and drawbacks. All of them are united in their need for an effective marketing strategy and transparent coordination among all parties involved to succeed.

If you are an entrepreneur, deciding on the best method for profitable selling can get tricky. In fact, like many people, you might even think that dropshipping on Amazon FBA is extremely easy. Well, as it turns out, these two methods are not exactly alike. And wholesaling is another option anyone planning to set up an online store should also look into.

Dropshipping vs. Wholesaling

When it comes to choosing the best method for selling on Amazon, knowing the advantages each option offers is the first step. The best dropshippers for Amazon can attest to the following benefits of dropshipping:

  • More affordable start-up expenses

Unlike private label and wholesaling, you do not need to have an inventory to start selling. Your supplier will be in charge of holding and managing inventory. What is more, they will also be responsible for shipping the products to your customers. For every product you sell, a portion of your proceeds goes to the amount you paid for the product plus the cost of shipping if any.

  • Fast and easy business set-up

The fact that you no longer have to deal with inventory and storage already relieves you of more than half the burden of setting up the business. You only have to find a reliable supplier. After that, you need to get your online store ready and devise an effective marketing strategy—and you are prepared to sell.

  • Hands-off operation privilege

You will never run out of options when it comes to apps and plugins that will help you run your business. Besides Amazon dropshipping tools, there is Amazon dropshipping software that you can use any time. All these technological devices combined allow you to run a fully automated online business.

Is Amazon dropshipping profitable? Yes. But so is wholesaling and private label. It all boils down to your budget, resources, and of course, personal preference. With wholesaling, you buy products in bulk from your supplier. Then, you have the option to either resell the goods to another retailer or sell them yourself. The advantages of this method are:

  • You will be selling via a scalable business model and have the opportunity to sell or resell popular or well-established brands, which carry a vast selection of products.
  • Because you will be working with reputable brandsyou no longer have to invest much in promoting brand awareness. These brands usually have a solid customer base with a loyal following.
  • You work with a fixed profit margin and have the chance to control your expenses while better managing your inventory and shipping costs.

About Dropshipping and FBA

Entrepreneurs who want to appeal to a vast customer base might find themselves better off by signing up for an FBA account. Once you become a certified FBA seller, you automatically become eligible for receiving the benefits of this program. Among them are warehousing and shipping goods to your customers.

At first, especially to the unknowledgeable sellers, FBA and dropshipping seem identical. Nope. There are significant differences between these two models, and it all has to do with each one’s potential to increase sales.

To help you arrive at an informed decision and better understand how you can maximize these two options, take note of the following advantages of FBA over dropshipping:

  • You can look forward to having a higher profit margin. What is more, like wholesaling, you can scale your business. Amazon does not only pack and ship the products, but it also handles customer service and support.
  • Unlike drop shipping (where you can only focus on several customers at a time), FBA exposes you to a vast customer base. You can sell more specifically to Prime members who have high purchasing power.
  • Say goodbye to fielding customer inquiries, complaints, and other issues. With FBA, Amazon’s team of customer service representatives will coordinate with your customers on your behalf.

A Quick Guide to Start Dropshipping on Amazon

The process of dropshipping on Amazon 2019 is not that different from 2020. Do you need help getting started on the right foot? Then, take note of this mini Amazon dropshipping course on how to get started as a dropshipper on the platform.

  1. Open your seller account. If you do not have one yet, go to sellercentral.amazon.com and choose between an individual or a professional account.
  2. Look for the right product to sell on Amazon. At best, go for items that are in-demand but have low competition. If you are a beginner, the ideal categories are sports and outdoors, patio, garden, home, and various types of housewares.
  3. Once you have decided on the best items you want to sell, look them up to check if they are available. Sites like Aliexpress offer a wide range of products that you can provide at your store. There are many suppliers on the site that you can connect with.
  4. Now that you already have a supplier and a product, the next step is making your product listing. To do this, follow this step-by-step process:

4.1 On your Seller Central account, click on Inventory.
4.2 Click on Add a Product.
4.3 As soon as the Product Screen emerges, click on Create a Product Listing.
4.4 Now, select a Product Category.
4.5 Start filling out the information about the product listing.

Note: Determining the price of your product requires taking not only the cost of the product into account but also the fees you need to pay on Amazon. Professional sellers are obliged to pay a referral fee of 8 to 15%. Individual sellers, on the other hand, need to pay $1 for each confirmed sale.

On Succeeding via Dropshipping on Amazon

Success as a drop shipper is not as elusive as what most people think. Although it reduces your chances of winning the Buy Box, you can still earn a decent profit, which you can use to expand your business. As a dropshipper, you can employ a few strategies to help boost your sales while providing total customer satisfaction. Among them are:

  • Work with a respectable supplier with a proven track record for providing excellent customer service
  • Actively request for feedback from your customers to help improve your seller feedback ratings
  • Use the hybrid approach, which entails stocking your best-selling products on FBA

Succeed as an Amazon seller through the expert assistance of our account managers. Feel free to inquire about our account management services via our FREE CONSULTATION. Email Jayce at [email protected] now.

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