Introduction
Amazon is the leader in the e-commerce sector. It’s the world’s largest online retailer, and it’s growing every day. In fact, Amazon accounted for 44% of all e-commerce sales back in 2018 (and that was before they acquired Whole Foods).
So if you want to start an online business, why not do so through one of the most trusted names in retail? With a dropshipping business on Amazon, you’ll be able to sell products without having to worry about warehousing or fulfillment—Amazon or your supplier does the shipping for you!
The Basics of Amazon Drop Shipping
Drop-shipping is a retail fulfillment method in which the retailer doesn’t keep stock on hand, but instead relies on a third party supplier to deliver products directly to customers.
Drop shipping allows businesses to sell a wider variety of products without having to invest in inventory, and allows them to make money on these sales at lower margins than they would if they were storing physical products.
You can either choose retail dropshipping or wholesale dropshipping. In recent years however, Amazon has become much more strict on retail dropshippers and they are typically frowned upon. Amazon wants to limit consumer confusion and thus protects their marketplace with numerous policies, some of which have become more strict like Amazon’s Drop-shipping Policy.
For some, the benefits of retail dropshipping outweigh the risks. For example, with this model you don’t have to pay for inventory until it sells—which means that if something doesn’t sell right away, you’re not stuck with it! It’s merely listed in your Inventory.
Amazon FBA vs. Dropshipping on Amazon
What if you want to sell products on Amazon without having them shipped directly to customers? In this case, it’s best to use a dropshipping business model with FBA. With FBA, you can purchase inventory from third-party suppliers and sell directly through Amazon as an online retailer.
FBA can be more expensive than dropshipping because there are shipping costs involved with sending items out and there may be higher fees associated with finding suppliers who will give you decent margins. With FBA, you’re also buying in bulk so you need more startup capital.
Dropshipping on Amazon: The Bottom Line
Dropshipping on Amazon is an excellent way to get started in e-commerce because it’s easy to set up, and you don’t have to worry about warehousing inventory or maintaining a physical store. If you want to try out dropshipping but don’t want to commit the time or resources necessary for an FBA business, then this might be a good option for you.
With that said, there are limitations. By solely drop-shipping using the retail arbitrage (RA) method, you risk Amazon temporarily deactivating your seller account. If you are risk-averse, this may not be the best option. There are pros and cons to starting out with a dropshipping store.
If this sounds like something that could work for you, then we encourage you to give it a shot! And if not…we highly recommend starting with the Amazon FBA business model. There are plenty of ways to make money selling on Amazon! Just make sure to conduct ample product research before ordering inventory in bulk for your FBA business.
Conclusion
If you’re looking to start an ecommerce business, then Amazon is a great place to start. There are plenty of reasons why dropshipping on Amazon can be more profitable than selling products directly from your own website. The main one being that there are no upfront costs—you don’t need any inventory or storage space because all orders are fulfilled by either a retailer such as Walmart, a third-party 3PL company (for example, Deliverr), or fulfilled by Amazon FBA (Fulfilled By Amazon). The benefits don’t stop there. You’ll also get access to all the tools needed for success in this industry such as Amazon’s PPC platform (Sponsored Ads), customer service support 24/7/365 (including live chat), and more.
