Can You Drop Ship On Amazon? Everything You Need To Know
Drop shipping is a fulfillment strategy where the retailer doesn’t store inventory, but instead directly sends orders from customers to third-party suppliers to have those products shipped directly to the customer. This article covers everything you need to know about drop shipping on Amazon.
Readers ask us this question quite often, so we decided to answer it once and for all: Can you drop ship on Amazon? The short answer is yes, but there are limitations and requirements that you must meet in order to do so successfully. Read on for more information.
What is drop shipping?
Before we get into the nitty-gritty of drop shipping on Amazon, we want to make sure we’re all on the same page with the basics. Drop shipping is a fulfillment method in which a retailer places an order with a supplier (the drop shipper) to ship items to their customers, who have purchased those items, without having to store or manage those products themselves.
Drop shippers often source products from their own suppliers or purchase them from wholesale suppliers, which offers the drop shipper economies of scale that smaller retailers might not be able to take advantage of. This allows the drop shipper to sell products at a lower price than the retailer would otherwise be able to charge, since the retailer isn't responsible for sourcing or paying for those products.
Can you drop ship on Amazon?
Yes, you can, but there are limitations and requirements you must meet in order to do so successfully. To start, you must be a professional seller or have a business with a valid Tax ID number. There are two ways to go about drop shipping on Amazon: using a drop shipper or setting up an Amazon Fulfillment account. Drop shipping through a third-party service is the most common option, and the one we’ll be focusing on in this article.
Amazon’s drop shipping program allows sellers to purchase products from third-party sellers and have them ship those products directly to their customers. However, the program does have some limitations. For example, sellers can only drop ship oversize or heavy items. In addition, to participate in the program, sellers must purchase their items through Amazon’s wholesale portal.
How to become an Amazon drop shipper
- Know what you’re selling - The first step to becoming a drop shipper on Amazon is to know what products you want to sell. This can be anything from toys to home and garden supplies to health and beauty products. The selection of products is vast, and you will likely find something that you can profitably sell.
- Source your products - The second step in becoming a drop shipper is sourcing your products. There are two main ways to go about this. You can purchase products from wholesalers, resellers, or liquidators, and then resell them on Amazon for a profit. Alternatively, you can purchase products from manufacturers directly and drop ship them to Amazon’s customers, who have placed an order for that item.
- Set up your Amazon account - The last step in becoming a drop shipper on Amazon is setting up your Amazon account. This is a simple process, and you can start by clicking the “sell” button on Amazon’s homepage.
- Choose a business model - Another step that happens once you’ve set up your account is deciding on a business model. There are many different ways to make money on Amazon as a drop shipper, and the first step is deciding which one(s) will work best for your business.
- Start sourcing products - Once you’ve sourced your products and set up your account, it’s time to start selling. You can start by sourcing products to sell, or you can wait until customers place orders and then buy the items from a third-party seller.
Limitations of Amazon’s drop shipping program
- Choosing products - One of the main limitations of Amazon’s drop shipping program is that it’s not easy to find products that are both profitable and are also Amazon Prime-eligible. Since Prime members are Amazon’s most valuable customers, it’s important that you only drop ship Prime-eligible products.
- The Amazon Fulfillment program - Another limitation is that you can only drop ship products through the Amazon Fulfillment program if you have an Amazon Prime account. If you don’t have a Prime account, you can still sell products on Amazon by buying them from a wholesaler or reseller and then storing them at an Amazon warehouse.
- Prime fees - Another important factor to keep in mind is that Amazon charges fees for using their Fulfillment program. These fees will vary depending on the type of products you’re drop shipping, but they can add up quickly if you sell a lot of items.
- Potential customer issues - Finally, Amazon customers may have issues with the fact that they’re not buying directly from the retailer, which can affect your reputation and sales.
Pros of drop shipping on Amazon
- No upfront cost - Perhaps the biggest pro of drop shipping on Amazon is that there is no upfront cost to get started. This is because you aren’t purchasing the products from your supplier and then reselling them; you’re letting your supplier sell their products directly to Amazon and then have Amazon ship them to their customers.
- No investment in inventory - Another huge benefit of drop shipping is that you don’t have to invest in inventory upfront. This means that you won’t lose money if a product doesn’t sell well.
- No storage issues - If you sell products that are light in weight and small in size, you won’t have to worry about storage space. This is because the supplier is shipping their products directly to Amazon’s customers.
- No shipping costs - You won’t have to deal with shipping costs when drop shipping on Amazon.
- No fulfillment responsibilities - Another big pro of drop shipping on Amazon is that you don’t have to worry about fulfilling orders.
- Keep all the profits - Another big pro of drop shipping on Amazon is that you keep all of the profits that you make.
- Strong seller rating - One thing to keep in mind is that Amazon is strict about the performance of their Fulfillment program. This means that you don’t want to let your seller rating slip.
- Stay out of debt - Another pro of drop shipping on Amazon is that you won’t have to get into debt to start your business.
Cons of drop shipping on Amazon
- Less control over your inventory - One of the biggest cons of drop shipping on Amazon is that you don’t have as much control over your inventory as sellers who fulfill their orders directly. This is because you’re letting Amazon ship your products directly to their customers.
- Potential for poor customer service - Another con of drop shipping on Amazon is that you won’t be able to provide the same level of customer service as a seller who fulfills their orders. This is because you’re letting Amazon ship your products directly to their customers.
- Difficulty finding profitable products - Another con of drop shipping on Amazon is that it can be difficult to find profitable products. This is because you have to consider all of the fees that Amazon charges.
- Low profit margin - One other thing to keep in mind is that the profit margins for drop shippers are typically lower than for sellers who fulfill their orders directly. This is because you have to account for all of the Amazon fees.
- Difficulty managing inventory - Another con of drop shipping on Amazon is that it can be difficult to manage your inventory when you’re not in control of it.
Drop shipping on Amazon can be a profitable business model and way to scale your online store, but it’s important to be aware of its limitations. Before you get started, make sure that you understand what you’re getting into so that you can grow your business successfully.
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