Although there is still a place for physical stores and shopping malls, consumers are increasingly turning to online shopping for everything from clothes to luxury items to groceries. During the COVID crisis, same-store sales for online retailers rose 129% year over year, and the trend will continue.
To capitalize on this trend, Amazon dropshipping is often considered as a reliable source of side income. The investment for this type of business is minimal, and the rewards can be substantial. There is no need to rent a physical shop, pay for overhead such as lighting and heat, select inventory, and hope customers will want to buy it. Dropshipping is an easy way to run a store.
What Is Dropshipping?
Dropshipping involves opening a store on an eCommerce platform, selling items directly to customers, buying the items from a supplier, and shipping the purchase to the customer. This means that the merchant does not need to stock inventory or handle the supply chain.
Dropshipping is an ideal option for those who have a knack for marketing, retail, and customer service but do not want to deal with figuring out inventory and deliveries. Dropshipping involves a strong sense of pricing strategy for maximum profits. With dropshipping, it is easier to order low-cost goods and sell them at a significantly higher price.
Becoming an Amazon Seller
Opening an Amazon store gives the merchant access to one of the largest retail markets. It is possible to sell from a company website as well, but the advantages provided by Amazon can’t be ignored.
Setting up a store on Amazon is inexpensive, simple, and there is plenty of guidance to assist new sellers. Individual and professional plans are available. Changing plans and scaling up is always possible.
At Seller Central on Amazon, tools track sales, provide business reports, and give a clear customer metrics view. List items individually or with the Professional plan. Merchants can upload listings in bulk. Amazon tools simplify product listings, obtaining a product number, and uploading images.
One of the chief advantages of dropshipping on Amazon is that merchants can use Amazon as their partner for shipping. The customer makes the order, and through the FBA or Fulfillment by Amazon program, Amazon will send the item directly to the customer.
What Are the Advantages of Dropshipping?
For independent thinkers who have marketing skills and are focused on branding, dropshipping can be a profitable alternative to freelancing or traditional retail because:
- There is no need to deal with an inventory
- It is possible to test products
- Shipping and delivery are outsourced
- Freedom to set prices
Maintaining an inventory requires significant guesswork, and failures can be costly. Dropshippers are not forced to have fire sales to peddle unwanted merchandise. Dropshippers order precisely what customers want item by item. As long as the supplier has it in stock, everything is fine. If not, the merchant can find it with another supplier. The digital shelf provides flexibility and freedom.
Dropshipping lets merchants test to see which products are in demand and which aren’t. If only a few customers want an item, it can simply be delisted, which does not cost anything. Merchants outsource shipping and delivery, which lets them focus on branding and customer service. Finally, dropshipping, unlike affiliate work, lets merchants set their prices to maximize profits.
The Pros and Cons of Becoming an Amazon Seller
As with any other type of job, becoming a seller on Amazon has pros and cons. Here are some pros to consider:
- Huge market
- User-friendly set-up and plans
- No need to look for a supplier
- Virtually no overhead
Amazon sellers have access to millions of consumers. It is undoubtedly one of the world’s leading retailers, and Amazon tops the ranking in most searches. The retail giant also makes it easy and inexpensive to set up a store where you can easily upload listings, images, and product descriptions.
With Amazon’s FBA program, shipping and delivery are taken care of. All a seller deals with is deciding what to sell, how to price it, and how to market it.
Here are some cons to think about:
- Stiff competition
- Challenging to get brand recognition
- High fees
- Customers are Amazon’s, not the Merchant’s
The advantage of a large market has a significant downside - there are also a plethora of sellers. Amazon isn’t just a popular place to buy, but it is also a popular place to sell. Getting recognized on a gigantic platform is an uphill battle.
Selling on Amazon involves fees, sometimes 10-15%. There may be times that sellers feel they are working for Amazon because the customers they bring to their online store aren’t their customers but are Amazon’s.
The retail giant has most of the information about who is visiting your store and customer metrics, some of which are shared with sellers, but the bottom line is Amazon owns the data.
Does Dropshipping on Amazon Provide Significant Side Income?
The old expression, “Don’t quit your day job,” may apply to dropshipping on Amazon, but you can add the word “yet.” People do make money as Amazon sellers, or else no one would do it.
There are many success stories. However, it takes patience, time, and brand building skills to get noticed on such a vast platform. Amazon dropshipping can be a stepping stone before going it alone. Building a brand website and attracting customers provides valuable customer data and relationships. Amazon is a great place to start as a retailer while developing brand awareness.