Dropshipping is an online selling method where a store doesn't keep any inventory. When a client purchases a product, the store asks one of its suppliers to ship the item directly to the customer. For example, customer A purchases a frying pan for $40 on online store B. Online store B purchases the same frying pan for $25 on their supplier's website.
Online store B makes a profit of $40 minus $25 minus shipping fees.
The big advantage of this method is that you don't have to keep any stock. Most of the logistics are taken care of by your supplier.
When you dropship on amazon, you simply list products on your Amazon seller account with the FBM programme and wait to get an order. Once a customer places an order on your Amazon store, you pay your supplier who then ships the product you sold directly to your customer.
Is Dropshipping allowed on Amazon?
Here is the official Amazon policy regarding Dropshipping:
In a nutshell, Dropshipping on Amazon from another retailer is not allowed.
But Dropshipping from a supplier is allowed.
That being said, many sellers use Walmart, Argos and other retailers to Dropship successfully on Amazon. The reason being that setting up such a Dropshipping system is extremely simple and low risk (if you do it correctly).
Most Dropshippers make 4 figures in sales from their second month of selling.
3 types of retailers
In order to minimise risk when you Dropshipping from retailers, it is essential to know the 3 types of online retailers.
Retailers that add invoices in their packages. It is NOT recommended to Dropship from such websites, because your customer will receive an invoice showing a price which is lower than the price they paid for.
However, you can do a hybrid of Dropshipping and Retail Arbitrage where you go pick up the product yourself when you get an order.
Retailers with no invoices in their packages but who print their name on the shipping boxes. In general it is fine to dropship from such retailers. The percentage of clients who complain about having received a package with a different retailer's name is very low. And should this happen, there are ways to mitigate the consequences.
Retailers with no invoices and plain boxes. These are the best sites to dropship from because the end customer gets a package with no invoice and a generic cardboard shipping box.
Want to learn more about Dropshipping on Amazon? Watch the following video!
Where to start?
There is no secret. The best way to build your e-commerce empire is to take action, right now. I'm sure you have things lying around your house that you don't need (books, gifts that you never opened etc.). Send them to Amazon and start getting used to the process.
You will not go from $0 to $2000 per month overnight, so proceed step by step. Start by trying to earn $100 in profits every month, then scale up little by little by reinvesting your profits and soon enough you will replace your full-time job income with Amazon.