Dropshipping: What does it mean?
- Let’s start by briefly reiterating the basics of dropshipping before we get into Amazon dropshipping.
- Dropshipping refers to the selling of a product without having to ship the goods or carry inventory.
- Product manufacturing, inventory management and shipment to customers are the responsibility of the product manufacturer.
- Dropshipping is the job of a person who manages an online shop. You will take orders from customers, place those orders with suppliers, and handle customer service.
What is Amazon?
Amazon is the largest ecommerce website in the world. Because it allows retailers to sell products on Amazon, it gained popularity.
Amazon is an additional channel that allows brands and manufacturers to sell their products.
Once you have been approved for an Amazon seller account you will be able start selling on Amazon. Keep in mind, not all products and brands are approved.
What is Amazon Dropshipping?
- How do you dropship on Amazon? Dropshipping on Amazon is possible through the Fulfilled by Amazon program.
- This program allows you to ship your products directly to Amazon, where they will ship the inventory to your customers.
- Amazon’s fast shipping speeds make this program a great option for customers who want to get their products sooner. We have learned one thing from the 21st Century: Customers love quick delivery times.
Related: Dropshipping Delivery Time Management
Is it legal to dropship on Amazon?
Amazon allows merchants to dropship products on their platform, provided they follow a few rules.
Your products will be sold by you.
All packing slips, and any other information that may be attached to them, should identify you as the seller of your product.
Accept and process customer returns.
Respect all terms and conditions of your seller agreement, as well as any applicable Amazon policies.
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Dropshipping is prohibited in these examples:
- You can order products online from an alternative retailer and have them shipped directly to your customers.
- Shipments orders should include packing slips, invoices or any other information that indicates a seller’s name or contact information.
- Learn more about dropshipping with Amazon by visiting their website.
What is the cost to dropship on Amazon?
Dropshipping on Amazon requires that everyone sign up to become a seller through Amazon’s website. The Individual plan is $0.99 per unit, while the Professional plan is $39.99 regardless of how many products you sell.
Dropshipping fees charged by Amazon vary depending on the product, but they are generally between 10% and 15%. For those with small profit margins, this might not be possible. Find out more about Amazon’s commission fees.
Is Amazon Dropshipping Profitable
You can. Dropshippers typically sell products at a 10%-30% margin. Dropshipping via Amazon will result in a 15% reduction in their top-line revenues.
Your net margin after selling products on Amazon at a 30% margin will be 15% if you sell at that margin. This is quite reasonable, especially considering the large audience you can reach.
Note: Although your Amazon dropshipping margins may be higher if the Amazon Buy Box is won, it’s still highly competitive and should not be something that you place too much emphasis on.
What are the benefits of Amazon Dropshippers?
This section of our guide will show you some of the advantages of Amazon dropshipping.
- There is no warehouse cost
Dropshipping on Amazon is a great way to save money. Amazon sellers may choose to ship their products FBA (Fulfilled By Amazon). FBA allows sellers to ship their products directly to Amazon, and Amazon will send the products to them.
- Amazon Suppliers
Amazon purchases products in bulk from many European suppliers. This supply is then stored in Amazon’s warehouses and ready for customers to receive. Amazon also offers customer service and returns in many languages.
Amazon allows suppliers, even small businesses, to grow rapidly and expand internationally. Amazon suppliers also have access to account managers who can help them to guide their business in a strategic way to maximize profits over the long-term.
- Sell to a large audience
Amazon boasts 300 million users. Amazon can be a great sales channel. You can attract new customers by selling the right product at a fair price.
The ability to reach new customers that your store would not have otherwise is another benefit. This will allow you to reach new customers and expand your customer base. You never know who you might find interested.
- Multiple categories you can target
- Amazon offers over 30 categories you can target.
- You may choose to sell in one, three, five or all of these niches.
- There are many niches and categories you can serve with the right products and trusted suppliers.
- You can, for example, sell in both the Electronics and Tools & Home Improvement categories simultaneously. There’s no reason to stop you serving multiple customers.