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Amazon dropshipping facility

An eSellers Guide to Making the Most of Amazon Dropshipping

Richard ClaytonRichard Clayton
September 6, 2016

Image credit: wawritto / Shutterstock.com

If you’re considering going into eCommerce or are looking for ways to scale an existing commerce business, Amazon dropshipping may the right avenue for you. Keeping reading our Amazon FBA guide to learn how it can work for your business.

What is Dropshipping?

Amazon dropshipping or Amazon FBA (Fulfilled by Amazon) is a way for those who sell or want to sell on Amazon to use Amazon to fulfill their orders. As an Amazon FBA member, Amazon will handle all aspects of storing, packaging and mailing your orders placed on their website.

How it Works

As an Amazon FBA seller, you will be able to focus on building your business and attracting customers instead of processing and fulfilling orders. You purchase your products for sale and then ship those products to Amazon for storage in one of their warehouses.

From there, you can list your products on Amazon’s marketplace, and Amazon will handle all of the processing and fulfillment of those orders. The orders are packaged and shipped from Amazon’s warehouse and sent to your customers. Amazon takes a fee associated with handling fulfillment as well as shipping and handling.

The Benefits of Amazon Dropshipping

There are many great reasons to sell products via dropshipping with Amazon, especially during the holiday season. Of those many reasons there are three that make Amazon FBA worth it:

1. The ability to have Amazon store, package, and ship your goods means it is much easier to scale your business. If you run your e-commerce store or sell on eBay, and don’t use any fulfillment service, then you’re responsible for this entire process yourself. Packaging and shipping products takes up a significant amount of your time. With only so many hours in a day, you’re limited in how much you can sell if you’re not hiring help or using a fulfillment service. Amazon FBA eliminates those problems since you can send in as much product as you like to Amazon’s warehouses, freeing you from the labor of packaging and shipping products.

2. Selling on Amazon gives you access to millions of people who use Amazon daily. Being a trusted seller on Amazon means you have a built-in audience for the goods you are selling. While it is not “If you list it, they will come”, with the proper advertising it can be much easier to make sales and reach your target customer than if you were dealing with your e-commerce store because of the built-in trust customers have for Amazon.

3. Having your goods fulfilled by Amazon means your customers enjoy all the benefits of Amazon shipping. Your products are Prime-eligible, and Amazon customers who pay for Prime can get two-day shipping on Prime-eligible products. Being Prime-eligible means customers are much more likely to choose to purchase from you than an Amazon seller whose products aren’t eligible for Prime because they don’t use Amazon’s fulfillment service. In addition, customers will have access to Amazon customer service and return policies, which are stellar.

Learn how eSellers can get paid by Amazon with Payoneer »

How to Get Started

Create an Amazon Seller Account: If you don’t already have one, go ahead and set up a professional Amazon seller’s account. With Amazon dropshipping, you pay as you go – meaning your fees are determined by how many items you store and how many orders you receive. Once in your Seller Central account, add the “Fulfillment by Amazon” option to your seller account to get started.

Create the listing for your product(s): Your product listing is everything and can make or break your Amazon dropshipping business. Make sure you follow Amazon best practices for creating a product listing. Optimize your listing for search engines and Amazon’s marketplace. Have a well thought out product description and high-quality images to accompany your product.

Market. Market. Market: Even with Amazon’s massive built-in audience, your target customers aren’t going to magically find your listing if you don’t advertise it. Facebook ads are an excellent starting place to drive targeted traffic to your Amazon listing. Social media, content marketing, and PPC ads are other options to use to drive targeted, highly-motivated customers to your Amazon listing.

Prepare and ship your products to Amazon: Amazon has very descriptive guidelines about how to prepare your products for storage and shipment by Amazon. Once your products are ready, ship them to one of Amazon’s designated storage facilities.

That’s it! That’s all you need to do to get started.

Cons of Amazon Dropshipping

Stale inventory: If you ship products to Amazon’s warehouses and they don’t sell, you’re still paying rent on those products. Product that doesn’t move is a problem for any warehouse operation, but can be particularly problematic when you don’t control the warehouse and can’t easily remove the products to try and sell elsewhere.

Mixed-up inventory: Amazon often keeps similar products together even if they are sold by different sellers. The pooling of inventory means your customer may get a lower quality or wrong product from another seller and not the one you sent into Amazon. If it turns into a major problem, you could potentially get your account suspended for quality control reasons if customers are always complaining they aren’t getting the items they bought.

Shipping products to Amazon: Shipping your goods to Amazon isn’t as simple as boxing them up and shipping them via UPS. Amazon has a complicated ASIN/UPC system that has to be followed to the letter if you want your products sold on their marketplace. Products are also often going to different warehouses, so you will have multiple products to label and multiple locations to which to ship them. They do offer a service where they will label your products for you for $0.20 a product. It may be worth the added expense if you have hundreds or thousands or products to sell.

Amazon dropshipping offers new and established e-commerce sellers another avenue to build their business. While selling on Amazon is highly competitive,  it can be a very lucrative endeavor.

Learn how eSellers can get paid by Amazon with Payoneer »

The content provided in this article including any information relating to pricing, fees, and other charges is accurate and valid only as of the date it was published. In addition, changes in applicable regulations, policies, market conditions, or other relevant factors may impact the accuracy of the mentioned pricing and fees and other associated details. Accordingly, it is further clarified that any information regarding pricing, fees and other charges is subject to changes, and it is your responsibility to ensure you are viewing the most up to date content applicable to you. Payoneer will provide the most up to date and accurate information relating to pricing and fees as part of the account registration process. Registered customers can view this information via their online account.

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