New Trend in E-commerce: Dropshipping in Amazon

In the dynamic landscape of e-commerce, businesses are constantly evolving to meet the demands of modern consumers. One such trend gaining significant traction is dropshipping within Amazon's expansive marketplace. Dropshipping offers entrepreneurs a low-risk, high-reward business model where merchants can sell various products without needing upfront inventory investment or complex logistics.

What Is Amazon?

Founded by Jeff Bezos in 1994, the company's first name was "Cadabra",  but Bezos changed it to "Amazon" after the world's largest river, reflecting his vision of creating a vast and diverse marketplace. Amazon has grown from an obscure online bookshop to one of the world's most well-known enterprises, and becoming a leader in e-commerce.  Amazon is the largest online retailer globally by market capitalization and revenue, with a significant share of the e-commerce market, competitive pricing, and a customer-centric approach.

Except for its mostly well-known e-commerce, Amazon also operates multiple business segments. This includes entertainment (Amazon Prime Video), consumer electronics (Kindle, Echo devices), and groceries (Amazon Fresh, Whole Foods Market).

Amazon's initial business plan was to create an "everything store", aiming to offer a vast selection of online products, which has largely been realized today.

Why Dropshipping on Amazon Is Worth a Shot?

Amazon has millions of active customers worldwide, providing a ready-made platform to reach broad traffic without extensive marketing efforts. This makes it a perfectly suitable platform for dropshipping business since dropshippers don’t have their own brand and inventory resources.

Dropshipping Is Legal and Lucrative

Online dropshipping is legal in most countries and areas, including the United States, Europe, and many others. Legitimate e-commerce platforms like Amazon provide a legal and accessible avenue for dropshippers to sell products online. As long as the products are legal and the business complies with relevant laws and regulations, there is no inherent legal issue with using e-commerce for dropshipping.

With proper pricing strategies and cost management, it's very possible to maintain a healthy operation status, the profit margins in dropshipping can be much higher than traditional business items.

Amazon Fits Dropshipping Well

The most outstanding feature of Amazon is its abundant resources. It already has millions of active users who visit the platform regularly to browse and purchase products. This high volume of traffic means dropshippers have the opportunity to connect with a vast number of potential customers who are actively looking for their products. Moreover, Amazon has a massive global customer base, which provides dropshippers with access to millions of potential buyers worldwide.

For beginners, Amazon provides comprehensive seller backing, including e-commerce learning resources, seller forums, and considerate customer service. New dropshippers without much experience in the e-commerce business can access guidance, troubleshoot issues, and stay informed about platform updates, enhancing their ability to succeed on Amazon.

Moreover, Amazon outfits diverse marketing and advertising tools for dropshippers (Sponsored Products, Sponsored Brands, etc.). These tools help sellers increase visibility for their products within Amazon's marketplace so that it’s more convenient and effective compared with other platforms, driving targeted traffic and potentially increasing sales.

How to Dropship on Amazon in 6 Steps

Want to draw a dropshipping business on Amazon right now? Here are the detailed steps for your reference:

Step 1: Apply an Amazon Online Store

• Visit the Amazon Seller Central website.
• Click on "Get Started" to apply for an online store. To verify your identity, email account and a valid contact number are needed.
• Once your account is set up, you need to complete the seller profile. In this step, you have to provide information about your business details, including legal business name, address, contact information, and tax identity information.

Step 2: Choose Qualified Suppliers

Choosing qualified suppliers is crucial for the success of your dropshipping business.

In recent years, AliExpress has been the most commonly used supplier selection platform, as it is easy to operate and convenient for transactions. It is highly recommended for newcomers to use.

Here are some tips to help you identify whether suppliers are reliable and reputable :

Firstly, you need to pay attention to the supplier's ratings and feedback on AliExpress. You'd better look for suppliers with high ratings (4 stars and above with positive reviews) and read through customers' feedback to gauge the supplier's reliability, communication, and product quality.

If its ratings and feedback are good, then you should check the supplier's transaction history on AliExpress. Suppliers with a longer history and a higher number of transactions generally indicate more experience and reliability.

And don’t forget to verify if the supplier complies with any industry standards or certifications relevant to the products you plan to sell. This makes sure that the products in your online store meet the basic quality and safety standards.

If the condition allows, don't forget to compare multiple suppliers on AliExpress for the same or similar products. This allows you to assess pricing, shipping terms, and overall reliability to make an informed decision.

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Step 3: Optimize Amazon Store

The most basic part is optimizing your product listings with keywords, high-quality images, and compelling descriptions. This is the most important and direct way to attract customers.

Besides, enhancing product reviews and ratings matters a lot. You’d better get in contact with buyers to encourage customers to leave reviews and feedback.

Using Amazon Seller Central's analytics tools is highly recommended to monitor performance metrics such as traffic, conversion rates, sales trends, and customer demographics. So that you can identify areas for improvement based on data insights and adjust your optimization strategies accordingly.

Step 4: Promote Products

Internal advertising includes many methods, the most direct one is setting up Amazon PPC (pay-per-click) campaigns to promote individual products within Amazon's search results. In this way, your product page can have more traffic. And running time-limited promotions such as Buy One, Get One (BOGO) offers, bundle deals, or seasonal discounts is also welcomed by dropshippers since it’s easy to operate.

Using Amazon's Promotions Manager can help you create and manage promotional offers that appear on your product listings:

External traffic campaigns mean driving external traffic to your Amazon listings through digital marketing channels such as Google Ads, Facebook Ads, content marketing, and influencer collaborations. After these campaigns use Amazon Attribution to track and measure the performance and effectiveness of external marketing campaigns.

Build an email list of past customers and subscribers and regularly send promotional emails featuring your Amazon products. Highlight special offers, new arrivals, and product updates to encourage repeat purchases and attract new customers.

Step5: Orders Fulfillment

There are 2 fulfillment methods you can choose:

The first one is Amazon's FBA service, which aims to help sellers keep stocks in the platform's own fulfillment centers. When an order is placed, Amazon picks, packs, ships, and handles customer service for these orders. This option is convenient as it eliminates the need for you to handle shipping and customer inquiries directly.

The second way is Merchant Fulfilled(MF). With MF, you fulfill orders directly from your inventory. You are responsible for packing, shipping, and handling customer service inquiries. This method gives you more control over the fulfillment process but requires you to manage logistics and inventory storage.

Orders can be viewed in the Manage Orders section, where you can see order details, shipping addresses, and payment status. By this means, you can keep track of incoming orders through Amazon Seller Central and manage them timely

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Step 6: Improve Customer Service

Customer service is crucial for running a successful online Amazon store. Here are some necessary points:

Clear Communication & Prompt Responses

Firstly, you need to respond to customer inquiries and messages promptly, ideally within 24 hours and keep customers informed about their orders, shipping status, and any delays that may occur.

To avoid disputes, your return, refund, and exchange policies on your product listings and store policies page have to be more than clear. You’d better make the return process as smooth as possible for customers by providing clear instructions and promptly processing refunds or replacements. This could help you to enhance customer satisfaction.

Setting up a specialized customer service department to address customer concerns and issues professionally and promptly is helpful.

Quality Assurance

To avoid misunderstanding, providing accurate and detailed product information to avoid misunderstandings is the most important. And you have to ensure the products you sell meet or exceed customer expectations in terms of quality.

In addition, you need to pay attention to packaging to ensure products arrive in good condition and reflect positively on your brand. This matters a lot because a lower refund rate contributes to a higher store rating on Amazon.

Proactive Customer Support

Successful dropshippers always proactively address common customer concerns or questions in your product listings or FAQs(FAQ is a page on Amazon, which means "frequently asked questions", where common problems and confusions are reported).

To assist customers in using or maintaining your products, providing related helpful guides or tutorials, which could boost your customers' satisfaction with the products and seller's service is also a must. Also, it can help you to stimulate customers to give your products a good comment and repurchase your products.

Pros and Cons of Dropshipping on Amazon

When considering dropshipping on Amazon, it's essential to weigh the advantages and disadvantages to make an informed decision. Here’s a closer look at the pros and cons:

• Low Startup Costs: Dropshipping eliminates the need for upfront inventory investment. You can start your business with minimal capital, as you only purchase products after a sale is made.
• Access to a Large Customer Base: Amazon’s vast marketplace offers access to millions of active shoppers. This built-in audience can significantly increase your visibility and potential sales without extensive marketing efforts.
• Ease of Management: With dropshipping, you don’t have to worry about handling inventory, packaging, or shipping logistics. This allows you to focus on marketing and growing your business.
• Diverse Product Selection: You can offer a wide range of products without the constraints of physical inventory. This flexibility lets you quickly adapt to market trends and customer preferences.
• Scalability: As your business grows, you can easily scale operations without the need for additional warehouse space or staff. Your dropshipping suppliers typically handle increased order volumes seamlessly.

• Dependence on Suppliers: Your business relies heavily on your suppliers’ reliability and quality. Issues like stock shortages, shipping delays, or poor product quality can negatively affect your reputation and customer satisfaction.
• Limited Control Over Branding: As a dropshipper, you may have limited control over branding and packaging. This can make it challenging to create a unique brand identity, which is crucial for customer loyalty.
• Policy Compliance: Amazon has strict policies regarding product listings, returns, and customer service. Non-compliance can result in penalties, including account suspension, which can hurt your business.
• Increased Competition: The popularity of dropshipping on Amazon means you're likely to face stiff competition. Standing out in a crowded marketplace requires effective marketing strategies and exceptional customer service.

Conclusion

Dropshipping in Amazon can be both a challenging endeavor and viable opportunity. It allows dropshippers access to a vast array of products and gains loads of potential customers without the need for warehouse space or inventory management. If you want to engage in e-commerce with limited funds and experience, this is a sensible choice.

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