One of the most challenging aspects of building an Amazon business is dealing with the logistics of inventory and storage. It’s a lot of work, and the costs involved can be significant. For Amazon sellers that especially dislike this part of the job, you do have another option. You can build a successful eCommerce business without messing with storage, inventory, and fulfillment by using drop shipping.
Sound too good to be true? It's a common selling tactic and as long as you follow the Amazon drop shipping policy, you can absolutely find success with this business model.
Drop shipping is the practice of working with a third-party company that stocks inventory and fulfills orders for you. Your job is to take care of the marketing and customer service: creating product listings, optimizing them, promoting the products, and handling any customer complaints or returns. The drop shipping company you work with takes care of storing and shipping the physical products themselves.
In most cases, drop shipping means the physical items you sell to customers never come into your hands. Your business is the face of the products to any customers that make a purchase and the place they turn if there’s an issue with the order. That’s still an important part of the work of eCommerce, which is why you can still make a profit using drop shipping. But as you’d expect, your portion of the profits will be smaller than if you handled storage and fulfillment yourself.
Drop shipping is a perfectly acceptable tactic to use, but you must follow the Amazon drop shipping policy to the letter. Specifically, that means:
Most of these rules boil down to one main takeaway: your customers should always know that you’re the seller they’re working with. If they place an order with one brand, but it appears to come from another, that’s confusing for them. It could make the purchase feel suspect. To make sure they have a seamless, unified experience, yours should be the only brand they associate with the purchase (other than the Amazon brand itself).
The great thing about drop shipping is that it takes a lot of the work of eCommerce out of your hands. An inconvenient downside of this is that your reputation becomes dependent on the performance of a third-party company. Both Amazon and your customers will absolutely still hold you accountable for any issues with orders or defective products.
In order to keep your reputation intact, you have to keep a close eye on the experience your customers have. Since you aren’t stocking and packaging items directly, the best way to know if there’s a decline in quality is by closely monitoring your product reviews. The more products you sell, the harder it is to do this part manually. You can make it more manageable with a product that simplifies the process for you like FeedbackFive does with product review monitoring and alerting.
Even better, in addition to helping you efficiently monitor your reviews, the software automates the process of encouraging customers to leave reviews to begin with. Getting more reviews gives you a way to access regular feedback. When you don’t ever deal with your products directly, reviews become a useful way to consistently stay on top of how your customers are feeling.
Yes, but you'll definitely want to do your research. Drop shipping is a viable eCommerce business model that can potentially save you a lot of time and trouble. But you have to do it right, or you can face problems that hurt your reputation with customers and your ability to keep selling on the Amazon platform. If you find the right partners and can stay compliant with Amazon policy, this may be a smart move for your business.
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