Dropshipping is one of theonline-business models experiencing the greatest growth on Amazon in recent years. This is a process through which a seller offers products on Amazon and receives a commission from any sales made, though all logistics and post-sales responsibility is managed by Amazon itself (product storage, shipment preparation, collection and payment, returns, incident resolution, etc.).
With Amazon dropshipping you can earn money online without having to make any investment in storage, staff, delivery vehicles or customer service, allowing you to focus on promoting and selling products – as Amazon takes care of the rest.
What is dropshipping on Amazon?
Dropshipping on Amazon is a business model in which Amazon itself takes care of the entire process of preparing and shipping products, as well as storage, the management of payment, returns and post-sales support.
Amazon is an enormous company that stands out for its technological innovation and capacity to operate across the world, making dropshipping on Amazon a very interesting business model for any entrepreneur.
How does Amazon dropshipping work?
There are two options for implementing dropshipping on Amazon, via FBA or through a traditional dropshipping system:
- Fulfillment by Amazon. With this option, the chosen dropshipping supplier sends their products to Amazon to be stored in the platform’s logistics warehouses. Once the sale has been made, Amazon manages the whole process: from preparing the shipment and taking payment, to post-sales service.
- Conventional dropshipping. With this system, Amazon acts as an advertising and sales channel; when a user buys an item, it is the supplier who takes care of making the shipment.
As such, Amazon can either simply act as the sales channel in a dropshipping model, or store the products and take care of the entire logistics process when sellers opt for the special FBA programme.
What are the benefits of dropshipping on Amazon?
The benefits of dropshipping on Amazon are numerous: as a result, many companies and entrepreneurs opt for this online marketplace to create this kind of business.
Some of the most significant benefits of using Amazon for dropshipping include:
1. Reaching a huge number of users
Amazon is one of the most-visited sites in the world. By offering products on the platform, sellers will have access to a gigantic audience, something that can be incredibly difficult to achieve alone. On Amazon, potential customers come from across the globe, as the company operates in almost every country in the world.
2. Offering products to interested users
The users who browse on Amazon have already entered the purchasing process. The majority of people who arrive on the marketplace’s product pages are considering making a purchase.
Dropshipping on Amazon will allow you to offer your products to an audience that is already looking to buy, making it much easier to close the sale.
3. Low investment and costs
By opting for a dropshipping model, all the costs of storage, transport and refunds will be taken care of by your selected supplier, making any investments required on your part very low.
With Amazon, you’ll not only save on these logistics expenses – the effort and costs of your marketing and advertising actions will be reduced, as you’ll have access to Amazon’s enormous platform with its wide reach.
4. Business flexibility
Freeing yourself up from the need to maintain certain stock levels will allow you to diversify your product range. With Amazon dropshipping, you can upload a huge number of different items for sale, as the cost generated will be the same.
You won’t need to focus on a single sector, either, as you can sell items from a range of different areas which may be completely unrelated to each other.
5. Minimal risk
As there are no logistics costs associated with dropshipping, nor any need to invest in products, this business model is very low risk. If you opt to use Amazon dropshipping, the risks are even lower, thanks to the features and characteristics of this platform.
Amazon has a fantastic reputation across the world, which you can play to your advantage. Users of this platform have total trust in Amazon: if they see a product or item they’re interested in, they won’t hesitate to purchase it, as they know that Amazon is behind the sale and will protect their purchase.
What are the disadvantages of dropshipping on Amazon?
There are also a few downsides to using this business model on Amazon, which we recommend taking into consideration before making any decisions.
- Tighter sales margins. If you opt to use Amazon for dropshipping, your sales margins will reduce, as you’ll need to add on Amazon’s commissions to those charged by the supplier.
- High competition. There is a huge amount of competition on Amazon, as thousands of users or sellers offer the same products. Standing out on Amazon can often be difficult.
How to implement dropshipping on Amazon
Next, we’ll offer a few tips on how to get the most out of dropshipping with Amazon.
Amazon is a large e-commerce site, or marketplace, with a huge number of sellers. To make significant profits from dropshipping, you’ll need a high volume of sales.
When you opt to implement a dropshipping business model on Amazon, you’ll need to establish marketing strategies that aim to considerably increase sales, or look for high-value products to earn more money from each sale.
Opt for Amazon affiliates
The Amazon affiliates programme offers you to the chance to implement a different type of dropshipping. For this, you’ll create your own e-commerce site on which to promote Amazon’s products. When a user decides to buy and clicks on the purchase button, they’ll be redirected to the Amazon sales page via a special link – through which you’ll receive a commission if the sale is completed.
You’ll be responsible for advertising in this model, with Amazon only acting as the dropshipping supplier.
Ship all your products to Amazon
With the FBA programme, Amazon offers its own logistics warehouses for the storage of your products. Using this service is a great idea for your business, leaving all your logistics to Amazon.
This way, you can ship your products directly to Amazon and have them take care of storage and preparation whenever a sale is made. You can also have your dropshipping supplier ship the products directly to Amazon, allowing them to manage the entire logistics process. This way, you can take advantage of the efficiency and agility of Amazon’s logistics for your own benefit (Amazon uses the latest logistics technology and the best warehouse-management systems, such as warehouse automation).
If you’re looking for an online business model that doesn’t require significant investment and which allows you to focus all your efforts on marketing and sales, Amazon dropshipping is a great option to consider.
With this business model, you can generate profits working comfortably from home, without the responsibility or stress of having to make shipments, manage stock, prepare orders or solve shipping issues for customers.