Even while dropshipping has been around since the beginning of retail, it has recently had a comeback due to the recent economic crisis.
This article will discuss dropshipping on Amazon, including its pros and cons and best practices for the year 2022.
What Are the Differences Between Dropshipping, Retail Arbitrage, and Private Labeling?
Just for kicks, let’s compare how dropshipping stacks up against retail arbitrage and private labeling, two more common ecommerce strategies.
Buying things at a discount from a store and reselling them for a profit is known as retail arbitrage or “Amazon arbitrage” if you plan to sell on Amazon. At some point in time, you will be in possession of inventory under this plan, which you will likely amass during large-scale clearance sales or deep-discount seasonal campaigns at major retailers.
Private labeling refers to the practice of reselling things that have already been manufactured by a third party (often in China) but are sold under a different name.
Dropshipping on Amazon: What Does It Mean?
Amazon dropshipping is similar to the traditional dropshipping approach, with the exception that the items are also sold on the Amazon marketplace.
Numerous drop shippers use Amazon as their primary sales platform due to the site’s massive customer base and abundance of preexisting traffic. Additionally, if you run your own e-commerce site or a Shopify store, Amazon may be included as a sales channel.
Dropshipping on Amazon might be more challenging than on Shopify or eBay.
How to do Dropshipping on Amazon?
So, how does one get started with dropshipping on Amazon? The following are the four primary steps:
Create an Amazon.com Account
Creating a Seller Central account on Amazon is a simple process. Everything you need to know to set up shop as an Amazon seller is included in our comprehensive guide.
When creating an Amazon Seller account, you’ll need your name, email address, billing information, and tax information.
Importantly, if you plan on selling more than 40 things, you’ll need to upgrade to a Professional Account, which costs $39.99 per month but only charges $0.99 per item sold with a free Individual Account.
Research your product
The next step is deciding on a product line or industry sector to focus on for your online storefront. In a while, we’ll talk about some of the resources available to you to help you choose successful goods to sell on Amazon.
To help you get started, here are some fundamental guidelines:
- Discover seasonal niches with consistent demand.
- Irregular products that are either practical or unique are the best.
- Drop shipping is more cost-effective than storing things that require a lot of upkeep.
- Products with a strong visual appeal and aggressive social media marketing potential
- Don’t use Amazon Prime; if an item is sold through that service, it’s already being sold by an FBA-registered seller, who is extremely difficult to compete with.
Find your supplier
Here are a few tried-and-true approaches to finding dropshipping partners:
- Try a Google search. It takes a lot of time to search the internet for suppliers, but most of them have websites you can contact them through. Keep in mind that you need a drop ship provider, not sourcing tools or agents that connect you to suppliers. Sign-up forms to become a dropship retailer are often available on company websites, and retailers may also find contact information there. There should be warning signs if there are no contact details.
- Personally going to business conventions. Face-to-face meetings with potential suppliers are a great way to kick off a drop-shipping business, although they do need more work than a simple internet search. Trade exhibitions are convenient since they allow you to evaluate several potential vendors simultaneously.
- Dropshipping directories. A third choice is to acquire, for a fee, a list of verified wholesalers who are interested in partnering with wholesalers or drop shippers.
- Always do your due diligence in investigating potential suppliers. Of course, seeing wholesale suppliers in person is optimal, but you may also conduct some research online. Be careful to inquire about inventory management, fulfillment procedures, and payment options, among other things.
- It’s also recommended that you sign a dropshipping agreement with your supplier of choice. This is helpful in case Amazon ever requests a proof from the wholesaler that you are indeed allowed to dropship their items.
- Small companies may benefit from MyDepot, an online tool that helps them locate the items they need at competitive costs and with reliable on-time delivery. Experts in product procurement, sales, and distribution make up their in-house staff. The logistics of manufacturing and shipping are simplified with MyDepot’s assistance.
Promote your products
The final action is to upload a product listing to Amazon and begin selling. Integrate Amazon as a sales channel if you’re promoting the product on a stand-alone eCommerce store or a Shopify site.
Brand development should be a continual focus as well. Once you have mastered Amazon, you may more easily shift to longer-term business strategies like private labeling.
Dropshipping on Amazon: The Ups and Downs
Like any other Amazon business strategy, dropshipping has its perks and pitfalls.
The most notable benefit of working with Amazon is that you get to benefit from the extensive resources of a well-established industry leader. With a 40% share of the market, Amazon provides plenty of potential customers, making it simple to capitalize on the site’s preexisting interest in your product.
The worst part is the intense level of competitiveness. Given the simplicity of dropshipping, there is no doubt that many others will be offering the same goods for sale. To thrive, dropshippers will need to offer things in large quantities at low prices, which might lead to a price war.
Dropshipping on Amazon presents its own unique challenges, and the marketplace has a number of guidelines sellers should follow.
It might serve as a valuable addition to your private-label product line. It’s a safe approach to test the waters of online trade and can pave the way to a more long-term strategy.
My Depot is a reliable wholesale supplier for dropshipping companies. For more information, you can contact us.