Is Amazon Dropshipping a Profitable Business Model?

Reading Time: 8 minutes

What does ‘ Amazon Dropshipping ‘ mean for you?

Our readers and followers often ask: why do we just talk about AliExpress? What about other famous markets such as eBay or Amazon?

Our article today is therefore dedicated to the opportunities and limits of Amazon dropshipping. Let us figure out whether you can use this platform successfully for your business!

In our experience, this is somewhat confusing concept, since people often use it to describe two distinctly different business models:

Open a shop on Amazon and selling article

Open an independent dropshipping shop and fill it with imported Amazon items

Let’s look at these options and discuss them separately.

Items are sold on the platform

One way of Amazon’s use for dropshipping is to open a shop within the platform and become one of many Amazon sellers.

This option might seem very attractive for a newcomer for a number of reasons:

  • Technically speaking, the process is quite simple (you don’t need to create and build a separate website)
  • You have the chance to reach an incredible number of people (according to statistics, the average monthly number of visitors to Amazon websites in December 2017 was 197 million)
  • You operate via a well-known platform that has been recognized all around the world (there are no concerns for your business reliability)

However, after closer examination, it is shown that while an Amazon store might be a good solution for online trading, it is totally inappropriate for dropshipping.

Why can’t you legally dropshipping Amazon?

Amazon has several requirements, which make it absolutely difficult to “classical” dropshipping through the platform.

  • You cannot shop from other online retailers and ask the retailers to send the order directly to the original customer
  • You cannot send your purchaser a package which contains facts, stickers or other information on a seller’s name or contact information other than that of your personal information.

In this system there is a curious loophole: you may try to mark your order as a gift. In this case the packing slip is hidden, as the platform states, in a separate envelope to avoid the recipient’s view of the price of the gift–and this may seem an opportunity to cover the identity of the original seller. But for the items sold in the Amazon Global Store and for some other products these options aren’t normally available–worse, you only can find out about this at checkout. Therefore, it is not a good idea to just hope that this strategy works every time.

Interestingly, Amazon still states that it allows you to sell items using the dropshipping business model–but it simply means you can use the Fulfillment Service from Amazon. In other words, your products may be stored physically in the completion centers of Amazon, and the dedicated personnel assemble the packages, supply the packaging services and arrange the shipping of the packages at the required address.

As you can see, it is definitely not a business model that matches the description of dropshipping, but a simple outsourcing of several business functions and most importantly, it calls on you to preserve and maintain stock of products previously purchased or self-manufactured.

Moreover, even if you own the items sold in your store physically and use the Amazon fulfillment service, you as the store owner must be:

  • Officially recognized as the seller of your products record (in short, you must legally have the right to receive payments from your buyers, meaning no one but you are responsible for making refunds if necessary – plus you are also responsible for calculating and paying taxes).
  • Complete responsibility for acceptance and processing of product returns if required
  • Identified on all invoices and package elements as the product seller
  • Fully comply with the sales policies of Amazon which oblige you to pay a monthly subscription tax and a referral fee for each item sold, plus some restrictions on products for sale and countries acceptable for sales.

What’s the conclusion?“If you want to do classic dropshipping and have the original supplier arranging all the product-related issues, it’s not legally possible to use an Amazon-based store as a marketplace.”

Use the platform as your source of supply

Now let us find out whether it is good to use Amazon as a source of supply for your shop.

As the owner of the recipient business, you do not just want to make your supplier reliable. You must also be sure that this particular retailer has low priced items (the lower the initial cost of the supplier, the higher your potential profit) and prefer suppliers that offer global shipping options.

It’s not always possible in the case of Amazon.

The above two examples show the same product that is sold on Amazon and AliExpress. As you can see, the price difference is obvious: the item on AliExpress is 4.5 times cheaper than its competitor in Amazon. This is a crucial difference for you, as a shop owner: your profit depends on the initial cost of the product, so choosing the more expensive is unwise.

As far as delivery coverage is concerned, Amazon is also not the best choice. As you can read in Amazon shipping limits, not all Amazon products can be shipped to any location around the world. Amazon Global is recommended for finding the products with more favorable shipping conditions, but it is mentioned that even these goods can only be shipped to “over 100 countries.” Since 195 countries are in the world, Amazon is depriving you of the chance to reach at least a third of the world’s geographic areas, which is a sad fact -exploration of these developed markets is one of the most promising strategies in 2018 for the growth of your shipping business. And while you are not really keen to serve these specific markets and prefer to target more “common” regions instead, AmazonGlobal has still an unpleasant feature that could cause some difficulties: the product lines, shipping costs and fees are different for every specific delivery address. It’s certainly not convenient at all. (And I’m not even saying that only more than 30 million AmazonGlobal products are available: compare it with the 100 + million AliExpress products).

Another limitation of Amazon is the lack of branding. You can usually negotiate with AliExpress sellers to gain brand recognition by requesting your prepayment promo materials in the package–it certainly will costs you a little extra, but sometimes it’s worth it. It’s really difficult to do the same for Amazon, in particular when your supplier uses Amazon’s Fulfillment service and doesn’t personally participate in the packaging process.

As we have already stated, Amazon sellers may only specify their own names for packages: no indication of others participating in the pre-submission process must be given.

You may recall the same loophole we already talked about, and try to make your order a gift. You might think it’s a good idea to’ hack the system’ and use this opportunity to build your own branded packages, but not as it works: Amazon has its own gift wraps, bags and boxes ‘ suitable’ for the product, and it’s not possible to arrange a custom design. Plus on checkout, you may find that the item’ cannot be wrapped in its unusual size, weight or shape,’ so it will be in its original packaging or in a textile bag.

What’s the outcome?

While using Amazon as a supplying platform for your dropshipping business, you’ll face a number of restrictions that put some limits on your product range, geographic scope of the business, and the branding possibilities.”

Not clear ways to take advantage of Amazon dropshipping

Simply put, Amazon is not an ideal place for running or facilitating your dropshipping business. You can still use the platform well and benefit indirectly from its activity.

Here’s how you can help Amazon boost your dropshipping business:

  • Specify the best price strategy

As we have already shown, prices of Amazon products are rather high–but many buyers are still prepared to shop. Therefore, when you import AliExpress products to your store, you have the chance to find out the average price for the same Amazon products. This will give you an idea of the price people are prepared to pay for such items and will allow you to determine the most advantageous price margin on your store offers.

  • Discover the best-selling products

Amazon is an excellent place to find out what is hot and trendy these days: how to scan the platform for the items you buy the most. You know what is popular with Amazon so you can search for the same products or similar products on AliExpress.

Find extra pictures

Perfect product pages are essential for attracting visitors to your store to make a purchase. Many AliExpress product pages still do not have the required quantity of high quality photos, so it might be difficult to find sufficient material to create a nice image gallery. In this situation, you can go to Amazon and search for products that are completely identical. Chances are that you can get some great product photos you didn’t see at AliExpress. If you have a few odd watermark or Amazon logos, you can easily remove the unnecessary details using our Image Editor.

How much profit we could make from Amazon Dropshipping?

There are dropshippers who lose cash and dropshippers who make countless dollars. Sadly, most of business owners and brand-new companies stop working due to some incorrect activities or they simply wind up giving up.

The reason that dropshipping has a truly huge failure rate is that people do not have skin in the video game and they think that it does not need work!

So, it’s extremely simple to quit and dropshipping due to the fact that the low barrier to entry enables a great deal of people to simply dip their toes in the water so you’re not always getting knowledgeable business owners who are actually devoted to prospering.

If you’re thinking about starting with dropshipping, you would either begin on Amazon or produce your own self-hosted dropshipping shop on Shopify.

So, which is the most feasible alternative for you as a total newbie and just how much would it cost you to start? Let’s figure this out together!

As far as just how much Amazon dropshippers make that’s a really unclear concern, its like just how much does a dining establishment make, well some dining establishments lose cash, some make $30,000 a year and others make $3 Million each year.

I would state the large bulk of dropshippers are simply dipping their toes into eCommerce and do not actually provide it a serious effort so the bulk most likely just last a couple of weeks, lose cash, and stop working.

There’s really no constraint for just how much you can possibly make with Amazon dropshipping, the sky is the limit! It’s everything about screening what works and taking advantage of that.

The income and earnings markup actually differ depending upon the specific niche and the items you wind up selling on the platform.

Furthermore, having any costs like marketing will likewise diminish your markups, so it’s worth considering!

How Much Money Required for Amazon Dropshipping?

Amazon makes selling as a drop-shipper relatively sensible. By definition, dropshipping methods you do not require to hold any stock so your just genuine expense is the expense of establishing a seller account on Amazon!

Amazon has 2 seller account alternatives; specific strategies which cost $0.99 cents per unit offered (approximately 40 systems monthly), and expert strategies that cost $39.99/ month to offer endless systems monthly.

You do not require to have a company, you do not require to have an LLC, you can simply register as a specific seller. Nevertheless, a service, a savings account, LLC and company place will contribute to your authoirty on the platform.

It’s crucial to remember that Amazon takes a percent of whatever retail is charged. This is based upon classification of item offered. For example, cellular phone gadgets are 8%, clothes is 17%, and so on!

If a seller really drop-ships, the charge for storage would be based upon any place stock is held. If a seller utilizes Fulfillment by Amazon, a storage charge is based upon physical size and weight.

Nevertheless, it is very important to keep in mind that storage charges significantly increase in Q4 and boost if stock beings in Amazon centers for a prolonged duration.

There is the real expense to ship the item. Many specific people do not have the shipping utilize that Amazon has. However the smaller sized and lighter the item, the lower the shipping expenses tend to be.

Beyond that you require enough to cover your orders till your Paypal or Stripe cash clears. I ‘d state $300 would be a bare minimum to begin to prevent any issues along the way.

Recommended Products for Dropshipping Beginner to Sell on Amazon:

Amazon Dropshipping not dead, still a profitable business model. Almost anything you’ve seen on Amazon! Clothing, books, house items, workplace items, electronic devices. It is simplest to generate income in spaces that are less competitive.

For example, cellular phone cases and dietary supplements are extremely competitive and ought to be prevented. It’s essential to follow the monetary design not your heart.

Selecting an item to sell on Amazon needs a great deal of research study. Unlike eBay or establishing your own dropshipping shop, finding items that you can possibly earn money with will take a lot longer on Amazon.

In theory, you can offer anything that’s not in prime. Extensions like Prime away enable you to do precisely that!

In addition to that, you do not wish to offer items that are offered by an FBA seller or by Amazon either due to the fact that you just can not pay for to take on them!

Lastly, it is simplest to remain in the retail area in between $10 and $100; the volume tends to be there. Storage and shipping expenses will be lower on smaller sized and lighter items and you will have the ability to make a good revenue markup.

Average rating 4.8 / 5. Vote count: 212

No votes so far! Be the first to rate this post.