Amazon is the largest e-commerce retail platform in the United States with customers all over Europe and Canada. It had over 150 million users in 2019 and 125 billion in revenue sales in 2020. The numbers seem to be up for Amazon that 89% of customers are confident purchasing on Amazon. The statistic that many miss out on is the number of sales made by dropshippers on Amazon. A 2011 survey claimed that at least 34% of all the sales on Amazon were dropshippers. If the numbers hold up, a slice of the pie drop shipper takes home selling on amazon something north of 40 billion.
If such impressive numbers can be established dropshipping on Amazon then there is definitely a lot of money to be made on Amazon if everything is done right. There are however a few challenges and questions you have to ponder along the way before settling for Amazon dropshipping. Amazon dropshipping is not entirely free and one has to part with $0.99 per unit sold on Amazon for an individual account or a $39.99 blanket fee for a professional account irrespective of the number of units sold.
When you are done with the cut above you have to contend with a referral fee. The fee can range from 8% to 15% depending on the product category. The fee implies that one has to target good seller margins should they even hope to make a killing on Amazon. Have lower margins and you are toast as the sales cost will keep you out of the market.
Amazon allows merchants to dropship products on their platform as long as they follow a few guidelines that may be tough for new dropshippers. The Merchants are required to be:
● always be the seller on record
● Identify themselves on all invoices, packing slips, external packaging, and any other information included or provided with the product hence the supplier or manufacturer must never be mentioned
● Are responsible for accepting and processing all customer returns
● must comply with all of Amazon’s Terms of Service
The fees and rules that one has to comply with make it an uphill climb to have a profitable business dropshipping on Amazon. However, it is all possible and commonplace to make profits dropshipping on Amazon if you take necessary steps to remain competitive and sustainable. You can ensure your success on Amazon by:
82% of all Amazon sales happen at the buy box with mobile sales having an even higher percentage. If there was just one secret to success selling on Amazon is winning the buy box, unfortunately not all merchants are eligible to win the buy box. The Buy Box is a white box on the right side of the Amazon product detail page, where customers can add items for purchase to their cart.
Qualifying for the buy box first requires the seller to have a high seller rating. The most ideal rating is anything above 95%. Secondly, you need to demonstrate efficiency by ensuring that products you sell ship quickly ideally anything less than a fortnight. Finally, you should have a low shipping cost compared to most other offers, have low refund rates, fast response time, and a high feedback score.
Dropshipping has one fatal flaw that you are not ultimately in charge of the product development and design. Adding salt to injury the same product you sell on amazon may have different sellers who are sourcing it from the same supplier. Rather than suk on your lack of any real competitive advantage, you can take time to build your brand so you seem superior. A great example that is often cited is the stainless steel tumblers where despite YETI selling for $40 they are still able to outcompete RTIC who sell at $20 as many buyers are willing to buy brands and cannot notice the similarity of the product.
YourYour customer is the most important factor in the success of a dropshipping business on Amazon. You have to aim to build a good relationship through customer service and good branding. Aim for great reviews as they may help you attain the buyer box but also get customers.
Good product reviews increase your chances of appearing on organic searches which may reduce your advertisement costs. A good rating can boost your earning potential on amazon and also increase the customer’s trust in your products which generates more sales.
While on the topic of organic search it is imperative that you get your keyword in order. You cannot generate sales if your customers cannot find you online. Optimize your pages for search engines. There are multiple tools to help you with keyword research such as Merchant Words, Jungle Scout, and Amazon’s Helium 10. Good keyword research helps you rank organically and target the right customers who are in need of your products. Optimize titles to focus on user intent with the most relevant keyword rather than keyword stuffing.
Dropshipping can essentially be defined as marketing products and getting a cut of the sale. The rules of dropshipping still apply to an Amazon listing should you hope to drive traffic to the product listing. You can opt for a paid advertisement called the Amazon Pay-per-click(PPC) that helps your product rank higher on amazon for selecting keywords.
If you do not have a budget to splash on Amazon then you can consider promoting your product outside Amazon. The most common methods at your disposal are blogging, social media marketing, and email marketing with some methods being very affordable. You can also offer coupons and discounts to help drive traffic to your listing. The more you promote your product the more it can stand out from the competition on Amazon.
Dropshipping on Amazon is its own ball game. Wrong pricing and you are out of the game completely. If you have prices too low without considering Amazon fees then you make losses, you price too high and there is a seller who will undercut you. Try to get a dropship supplier with a free or low shipping fee to keep your cost to the minimum so you can have a competitive price.
Amazon dropshipping is a gold mine with so many customers at your disposal. You have to learn to stay relevant to the competition to be ahead of the game. You can always order samples in advance to get a feel of the deal your customers will have from your dropshipper while diversifying your dropshipping away from amazon to enjoy profit from Amazon and your own dropshipping store.