Direct shipping on Amazon is a sales channel that can yield significant profits for entrepreneurs. But how does direct shipping on Amazon work exactly, and how can you make it profitable for your online business?
What is direct shipping on Amazon?
Direct shipping on Amazon is a business model that allows sellers to list products on Amazon without having to hold inventory. When a sale is made, the seller purchases the product from a third-party supplier who ships it directly to the customer. Does Amazon allow direct shipping?
Does Amazon allow direct shipping?
Yes, Amazon allows you to use direct shipping on its marketplace, as long as you follow these rules: you must be the sole seller of the products. Your business name must appear as the seller on packing slips and invoices and any other information related to the products. All information identifying the third-party seller must be removed before shipping orders to customers to avoid confusion. You must be responsible for accepting and processing returns. You must comply with all terms of your seller agreement and Amazon’s direct shipping policy.
What are the costs of direct shipping on Amazon?
Direct shipping fees on Amazon vary by product type, but they typically range from 8% to 15%. If you operate on thin margins when shipping Amazon products, it may impact your profits.
Product categories that have the lowest referral fee rates include household goods, consumer electronics, tools, and automotive products.
However, since Amazon charges a percentage of the total price, the actual fee amount can vary significantly depending on the total product cost. For all types of products, Amazon takes a minimum fee of $0.30.
To sell on Amazon, you will also need to choose and purchase a selling plan. The individual plan on Amazon costs $0.99 per unit sold, while the professional plan costs $39.99 per month, regardless of how many products you sell.
Is direct shipping on Amazon profitable?
There are many advantages to direct shipping on Amazon, and it can be profitable. The average direct shipping margin ranges from 10% to 30% (but remember that Amazon will take referral fees on sales).
This means that if your margins are around 30%, you will receive 15% to 20% after selling a product via direct shipping on Amazon.
Your margins may be higher if you win the Amazon buy box, but this is a highly competitive process and not something to rely on.
Advantages and disadvantages of direct shipping on Amazon
Advantages of direct shipping on Amazon
The benefits of selling products on Amazon resemble those of other large online marketplaces. Here are four advantages of direct shipping on Amazon:
- Reliable suppliers for direct shipping on Amazon
- More exposure
- No need for external marketing or SEO
Amazon buys products in bulk, primarily from European suppliers, and keeps these products in its warehouses until they are shipped. Thanks to these core quality commitments, new sellers can effectively promote good products to a global audience.
Amazon gives you immediate access to a large audience as well as over 30 product categories to choose from. You can sell products in many different categories for direct shipping, meaning you can reach highly targeted markets.
While you may want to promote your products on Amazon, you don’t need to worry about bringing traffic to your product line through expensive external marketing campaigns or SEO efforts.
Disadvantages of direct shipping on Amazon
- Sales data exposure
- Communications
- Limited interactions with customers
- No customization
- Upfront investment
A requirement of using Amazon’s platform is that the company can see all of your sales data, from the best-selling items to your total sales. Amazon has historically been accused of using this data to optimize sales opportunities and enhance its own market share, ultimately hurting other merchants selling through its marketplace.
You may face difficulties in building long-term relationships with your customers when dropshipping on Amazon. By design, Amazon focuses on helping suppliers sell products rather than building brand loyalty. Be prepared for restrictions on how you market your business, display your products, and communicate with customers.
Amazon restricts various features when it comes to customization. Everything you do in terms of branding, user interface, experience, and marketing is under Amazon’s control.
To meet Amazon’s fulfillment requirements, you will need to have products from the supplier in stock. This means you will need to invest money upfront in order to start dropshipping on Amazon.
How to start dropshipping on Amazon in 6 steps
- Create an Amazon seller account
- Get approval in your product category (if necessary)
- Log in to your Shopify store
- Link your Amazon account to Shopify
- Create Amazon product listings
- Promote your products on Amazon
To sell products on Amazon, you need to create an Amazon seller account. Go to sellercentral.amazon.com to sign up. You will be asked to provide details about your business, so gather information about: a business email address, an internationally chargeable credit card, a government ID, tax information, phone number, and a bank account to receive sales.
Sellers on Amazon are required to get approval for certain product categories. Artifacts, music, and watches are common categories that require approval before setting up your Amazon store. Read an overview of the product categories you can sell.
If you do not have a Shopify store, sign up to start dropshipping on Amazon through Shopify.
Once you have created your Amazon account and requested any necessary approvals, link your Amazon store to Shopify using the Amazon integration app from the Shopify app store.
Your dropshipping products do not automatically show up on Amazon after adding the integration app. To manage your dropshipping listings on Amazon using Shopify, you have three options: link your Shopify listings to your Amazon listings using the integration app, link an existing Amazon listing to your Shopify store, or create a new listing for a new product on Amazon.
Although the available marketing options on the platform are limited, there are many ways to promote products on Amazon. Run Sponsored Products ads if you have a marketing budget. Optimize your listings using SEO techniques. Use social media to promote your Amazon links.
How to choose a dropshipping supplier
You will have a key competitive advantage over other sellers in dropshipping on Amazon in terms of pricing, and in addition to minimizing your profit margins as much as possible, the best way to compete with sellers in the same category is to partner with the right dropshipping supplier. Here’s what to look for in a dropshipping supplier:
- The supplier offers dropshipping on Amazon for sellers in your location.
- They produce a range of products in your category with comparable or superior quality to competitors.
- There are no red flags in customer service or consistently bad reviews.
- Low fees per order that won’t affect your profit margins.
- The dropshipping supplier is successfully used by other sellers.
- The supplier can compete with average shipping times in your category.
- They offer live customer support for dropshipping sellers.
- They have detailed dropshipping dashboards containing information about sales and average order values.
Due to the popularity of dropshipping in recent years, the number of fake or malicious dropshipping supplier services has increased. Follow the latest beginner guides on dropshipping to avoid wholesale suppliers that charge unnecessary fees.
Best
Direct Shipping Programs on Amazon
The tools on this list are designed to help you get started with direct shipping on Amazon:
- MerchantWords: This program checks the search volume and data for product keywords.
- Sellery: This program suggests real-time repricing to win the buy box and increase sales.
- FeedCheck: This program monitors customer reviews to help you respond quickly across Amazon and other sales channels.
- Seller Tools: This program helps automate your direct shipping store on Amazon. It includes a keyword manager, click-byte ad management tool, and product research tools.
How to Run a Direct Shipping Business on Amazon with No Money
Most direct shipping sellers need to spend money to build their businesses, investing in assets like an online store, content creation, advertising, marketing, or management software. However, it is possible to start direct shipping on Amazon without spending a single dollar. Here’s how to do it:
- Choose the Individual Seller Plan
- Choose Direct Shipping Suppliers with No Upfront Costs
- Create Your Own Content
- Leverage Organic Marketing Channels
Unlike Amazon’s Professional Seller Plan, which is a paid subscription, the individual plan bills you when you sell an item – you won’t incur a bill until you make a sale.
Most reliable direct shipping suppliers will not charge upfront fees to do business with you. This means you won’t have to pay the shipping supplier until you make a sale and receive payment from the customer.
Write your own product descriptions and reviews, take pictures of your product, and create videos showcasing the product using your phone.
Creating your own marketing content undoubtedly takes time, and depending on your writing and production skills, it may be difficult to replicate the quality of professional copy and images.
However, by paying close attention to your competitors’ content and doing deep research on your target customers, you can create effective content that highlights the key features of your products and explains why your customers would benefit from purchasing them.
Organic marketing channels are one of the most accessible ways to promote your products without spending money on advertising.
Social media platforms like Facebook, Instagram, and TikTok are powerful tools for increasing awareness of your products – if your content can combine entertainment and promotion. Spend some time following the latest trends and adding your personal touch to popular memes.
Search engine marketing strategies include optimizing your content to rank better in search results. By including relevant keywords in your product descriptions and making your content as helpful as possible, you can appear more often in search results on Amazon and Google.
Running a Direct Shipping Business on Amazon with Your Own Online Store
The alternative to shipping Amazon products through third-party marketplaces is to start your own online store to showcase and promote your products.
Using your own store can be a more successful direct shipping business model in the long run, as it gives you greater control over customer service and flexibility in marketing and branding. Advantages of direct shipping with your own store:
Advantages of Direct Shipping with Your Own Store
- Greater Control
- Easy Design
- Mobile Ready
- No
- Third-party fees
- Building a real business
- More shipping and supplier options
When building your own online store, you can create a shopping environment tailored to selling your products. You can customize the look and design and create optimized custom product pages to fit your customers and niche.
With store-building platforms like Shopify, there’s no barrier to designing and operating your own store. Once your site is ready and running, you can easily add additional features that increase your conversion rate.
Selling on Amazon and other online marketplaces via mobile can be cumbersome. If you choose to build your own store using a hosted e-commerce platform, your site will be responsive, meaning it will adapt to different devices and screen sizes.
With your own store, you won’t have to pay Amazon referral fees, which will significantly improve your profit margins.
By creating an independent store, you are building a long-term business with a distinctive personality. This allows you to continue pursuing repeat business and gain a loyal customer base that will spread the word about your site.
When running a dropshipping business on your own site, you can establish relationships with various suppliers like AliExpress and AliBaba. Foreign suppliers can compete with local manufacturers using fast shipping services to get your products to customers quicker.
Disadvantages of dropshipping with your own store
- No free traffic
With your own site, you will be responsible for bringing in traffic through marketing, social media, search engine optimization, and paid advertising.
Other ways to sell on Amazon
If you want to have a seller presence on Amazon but feel that the dropshipping business model is not right for you, there are other options. Two common methods of selling on Amazon besides dropshipping are affiliate marketing and Fulfilled by Amazon.
Amazon affiliate marketing
The Amazon Affiliate program, known as Amazon Associates, is a free and popular alternative to dropshipping. Amazon affiliates promote products sold on Amazon through their own websites, ads, or social media posts.
When a visitor to their website or a social media user clicks on an affiliate link, they are taken to Amazon to purchase the product. Affiliates earn a commission every time they successfully persuade a customer to buy a product through their affiliate link.
Commission rates vary depending on the product category, but most range from 3% to 5%. To become an Amazon affiliate, first check if your website or social media account meets the eligibility criteria.
Fulfilled by Amazon (FBA)
Amazon also has its own fulfillment centers, known as Fulfilled by Amazon.
With this model, you send your products to Amazon’s fulfillment centers. Amazon takes care of storing, packing, and shipping the products to customers. They also handle customer service and order returns.
While this saves a lot of time and effort, Fulfilled by Amazon comes with various fees, including storage fees and fulfillment fees (see the link above).
Fulfilled by Amazon vs. dropshipping
Fulfilled by Amazon and dropshipping on Amazon are both fulfillment models that allow you to display and sell products without needing to hold inventory. The difference between Fulfilled by Amazon and dropshipping is that with Fulfilled by Amazon, Amazon will store, pack, and ship the products, while with dropshipping, a third-party supplier manages the inventory and fulfills the orders.
Grow your dropshipping business today with Shopify
Dropshipping on Amazon can be a great way to increase sales for your business, whether you’re experienced or just starting. If you choose to incorporate this model into your Shopify store, there are many tools available to help you with fulfillment, shipping, pricing, and marketing – also make sure to check out some of the best dropshipping tips.
Are you ready to start your first business? Start your free trial of Shopify – no credit card required.
Frequently Asked Questions about dropshipping on Amazon
Is dropshipping on Amazon profitable?
Yes, dropshipping can be a profitable business. Many entrepreneurs make good profits through dropshipping on Amazon. However, it’s important to remember that dropshipping is a competitive industry, and success will depend on how well you can identify a profitable niche, source good products, and market your business.
Is
Is dropshipping on Amazon legal?
Yes, dropshipping on Amazon is legal. However, Amazon has specific policies that dropshipping must adhere to. These policies include being the sole seller of the products and being responsible for accepting and processing customer returns.
Is dropshipping from Amazon to eBay allowed?
Dropshipping is allowed on eBay. However, it is not permitted to list an item on eBay and then purchase the item from Amazon and ship it directly to the customer. In other words, while dropshipping can have a presence on both Amazon and eBay, you cannot use Amazon to fulfill eBay orders.
How much money do I need to start dropshipping on Amazon?
The amount of money you need to start dropshipping on Amazon depends on the type of product you sell and the services you use. Generally, you will need to purchase inventory and pay for shipping costs and related fees, as well as any fees associated with your Amazon seller account. Additionally, you might need to purchase marketing or advertising services to boost sales.
Is fulfilling by Amazon worth the dropshipping?
It depends on your specific goals. Some people find that fulfilling by Amazon is a successful business model that allows them to start and grow their own business without significant capital costs. Others may find that the costs associated with using fulfilling by Amazon outweigh the benefits. Ultimately, it is up to you to decide whether fulfilling by Amazon is worth it for your business.
Can I dropship on Amazon for free?
No, dropshipping is not free on Amazon. Although Amazon allows dropshipping, it requires you to have an Amazon seller account, which comes with its own set of fees. The cost of the individual seller plan on Amazon is $0.99 per unit sold, while the professional seller plan costs $39.99 per month, regardless of how many products you sell. Additionally, you may also have to pay other costs such as referral fees, closing fees, and high-volume listing fees, depending on the nature of your business.
Source: https://www.shopify.com/blog/amazon-dropshipping
.lwrp .lwrp-list-row-container{
display: flex;
justify-content: space-between;
}
.lwrp .lwrp-list-row-container .lwrp-list-item{
width: calc(12% – 20px);
}
.lwrp .lwrp-list-item:not(.lwrp-no-posts-message-item){
}
.lwrp .lwrp-list-item img{
max-width: 100%;
height: auto;
object-fit: cover;
aspect-ratio: 1 / 1;
}
.lwrp .lwrp-list-item.lwrp-empty-list-item{
background: initial !important;
}
.lwrp .lwrp-list-item .lwrp-list-link .lwrp-list-link-title-text,
.lwrp .lwrp-list-item .lwrp-list-no-posts-message{
}@media screen and (max-width: 480px) {
.lwrp.link-whisper-related-posts{
}
.lwrp .lwrp-title{
}.lwrp .lwrp-description{
}
.lwrp .lwrp-list-multi-container{
flex-direction: column;
}
.lwrp .lwrp-list-multi-container ul.lwrp-list{
margin-top: 0px;
margin-bottom: 0px;
padding-top: 0px;
padding-bottom: 0px;
}
.lwrp .lwrp-list-double,
.lwrp .lwrp-list-triple{
width: 100%;
}
.lwrp .lwrp-list-row-container{
justify-content: initial;
flex-direction: column;
}
.lwrp .lwrp-list-row-container .lwrp-list-item{
width: 100%;
}
.lwrp .lwrp-list-item:not(.lwrp-no-posts-message-item){
}
.lwrp .lwrp-list-item .lwrp-list-link .lwrp-list-link-title-text,
.lwrp .lwrp-list-item .lwrp-list-no-posts-message{
};
}
Leave a Reply