Dropshipping is briefly defined as “stockless sales” or “stockless e-commerce”. In this business model, the products sold are ordered online from the supplier. In other words, the product is delivered directly from the supplier to the customer. Amazon is also an ideal platform for dropshipping.
Amazon Dropshipping
Dropshipping with Amazon is a popular business model for many sellers. Thousands of sellers earn income this way by dropshipping on Amazon. In this business model, it is possible to sell a product only through suppliers without producing it and keeping it in stock. The product listed on Amazon is available to millions of potential customers. Even if dropshipping is not available, there are also options such as Amazon Fulfillment or Amazon FBA and Amazon FMA on this largest e-commerce platform.
Selling on Amazon requires processes such as acting as an intermediary, directing product traffic and forwarding orders to suppliers. An automatic system can also be used for this purpose. It is necessary to communicate frequently with suppliers, ensure that orders are delivered on time and that all other e-commerce processes proceed smoothly.
Advantages of Selling on Amazon
There are several important reasons to sell on Amazon. First of all, the popularity of this online marketplace around the world is an indisputable fact. It is among the most popular online shopping sites in the world. Amazon also allows sellers to sell on their platform. Many Amazon sellers do this without their customers' knowledge.
However, there are some rules that sellers must follow in order to be a successful seller on Amazon. Accordingly, parcels packed by third parties cannot be sent to customers. In case of any dropshipping return or complaint, the seller, not the supplier, is responsible for this situation.
If so, it is useful to know the positive and negative aspects of Amazon Dropshipping.
Positive Aspects of Amazon Dropshipping
Low Startup Costs; The biggest advantage of dropshipping is that the initial costs are low or very low. You do not have any inventory costs to create stock (usually the most important cost for an e-commerce business). It is also worth mentioning that when doing dropshipping on Amazon, the cost of the first product you sell is transferred to your account after 45 days, and subsequent payments are reflected in the seller's account one week after the product is delivered to the customer.
For this reason, Amazon Dropshipping business should never be started without any capital.
- Low Risk: Due to the nature of the dropshipping business, since product supply begins after the sale is made, you need to accurately track the products that your supplier has sold out. If you do this follow-up correctly and on time, the risk you take will be extremely low.
- Efficiency: Your solution partners carry out the supply, packaging and transportation of the products for you. Thus, you have no operation and logistics costs.
In summary, choosing the Dropshipping business model will provide you with convenience and efficiency. Thus, you can easily manage your business from anywhere in the world.
Downsides of Amazon Dropshipping
- High Competition: Since there are not many obstacles in entering the dropshipping business, many entrepreneurs decide to do dropshipping. For this reason, intense competitive conditions can make it more difficult to separate yourself from the crowd. In order to cope with competitors in this intensely competitive environment, it is necessary to constantly consider factors such as product, support and price.
- Low Profit Rate: One of the biggest disadvantages of Dropshipping is that it is a business model with low profit margin. This will make it very difficult for you to compete in advertising. However, despite the low profit margin, many sellers do business with the logic of earning money thanks to the intense customer demand of the Amazon marketplace.
It will be necessary to sell a lot of products to make a good overall profit with low margins. Therefore, choosing methods such as content creation, differentiation in service and so on should be a responsibility that should not be overlooked for every seller.
- Stock Management: One of the other disadvantages of the dropshipping business is backordering. Since you do not have your own stock, the product may be out of stock at the time you order shipping from the manufacturer. This will cause problems such as extended delivery time or a refund.
Amazon Suspend
Amazon may suspend your seller or buyer accounts and send you a warning if certain rules are not followed. It is necessary to write a defense text for these warnings in a timely and effective manner.
If the defense is accepted, Amazon allows the seller to resell. Suspend is a natural process that can occur even on a well-functioning account for many different reasons. The important thing is to take the correct steps in case of Suspend. One of the most effective ways to get rid of suspension situations is to form an llc in Usa. Amazon takes a more serious approach to accounts opened with a professional type and an Usan LLC company. Thanks to the advantage of being an llc, authority accounts are not easily suspended compared to individual accounts.
Conclusion
As with every business model and every type of commerce, there is always risk in the Amazon dropshipping business. Amazon work requires effort, disciplined work, continuity and follow-up. People who do not take this job seriously and think casually generally cannot succeed on Amazon. If you want to make a significant amount of profit thanks to the Amazon business model, you must do your job carefully and in a disciplined manner. There is also the budget side of the matter. Although the entry costs may seem very low, you need to consider some monthly payments for some software and a professional type store.
