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Amazon Drop Shipping: Hot Or Not?

by Olga L. Marketing tips
5.0 rating
May 11, 2018 12 minute read
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amazon dropshipping

While assembling our guides, tutorials and reviews dedicated to drop shipping business, we always refer to AliExpress as to the most suitable platform for the products import.

Our readers and followers, however, commonly ask: why are we only talking about AliExpress? What about other renowned marketplaces like eBay or Amazon?

So, our today’s article is dedicated to the possibilities and limitations of Amazon drop shipping. Let’s figure out whether you can successfully use this platform for your business!

How do you understand the ‘Amazon drop shipping’ term?

In our experience, it’s a slightly confusing concept as people commonly use it to describe 2 strikingly different business models:

  • Opening a store on Amazon and selling items through it
  • Opening an independent drop shipping store and filling it with the items imported from Amazon

Let’s examine and discuss these options separately.

Table Of Contents

Amazon drop shipping: selling items through the platform

There is a popular belief that one of the possible ways of using Amazon for drop shipping is opening a store within the platform and becoming one of the numerous Amazon sellers.

For a number of reasons, this option might seem quite appealing for a newcomer:

  • The procedure is quite simple from the technical point of view (you don’t have to create and set up a separate website)
  • You get the opportunity to reach an incredible amount of people (according to the data from Statista, the average monthly number of Amazon’s websites’ visitors was 197 million users in December 2017)
  • You operate through a well-reputed platform that has gained recognition all over the world (your store visitors will have no concerns about the reliability of your business)

Still, on closer examination, it turns out that while an Amazon store might be a good solution for online trade in general, it is totally unsuitable for dropshipping.

Amazon has several requirements that make it totally impossible to do ‘classical’ dropshipping through the platform. If you’re selling something through Amazon, then:

  • You are not allowed to make purchases from other online retailers and ask these retailers to send the order directly to the initial customer
  • You can not send your buyer a package that contains invoices, stickers, or other elements indicating a seller’s name or contact information that is different from your own personal details

There is a curious ‘loophope’ in this system: you may try marking your order as a gift. In this case, as the platform states, the packing slip will be hidden in a separate envelope in order not to let the recipient view the gift’s price –  and this might seem to be a chance to cover the original seller’s identity. But, these options are not normally available for the items sold in Amazon Global Store, and for some other products as well – what’s worse, you can only learn about this on checkout. Therefore, it’s not a really good idea to simply hope this strategy will work every time.

Interestingly enough, Amazon still claims that it allows selling items through the drop shipping business model – but basically, it simply means that you can use the service of Fulfillment by Amazon. In other words, you are allowed to physically store your products in Amazon’s fulfillment centers, and the dedicated personnel will assemble the packages, provide the packaging services, and arrange the packages’ shipping to the necessary addresses.

As you can see, it’s definitely not the business model that would match the description of drop shipping: instead, it’s a simple outsourcing of several business functions, and, what’s most important, it requires you to keep and maintain stocks of previously bought or self-manufactured products.

Plus, even if you physically own the items that are sold in your store, and use the service of Fulfillment by Amazon, you, as the store owner, must be:

What’s the conclusion?

If you want to do classic drop shipping and have the original supplier arranging all the product-related issues, it’s not legally possible to use an Amazon-based store as a marketplace.

Amazon drop shipping: using the platform as your supply source

Now, let’s find out whether it’s a good idea to use Amazon as the supply source for your drop shipping store.

As a drop shipping business owner, you don’t simply want your supplier to be trustworthy: you also need to be sure that this particular seller has low-priced items (the lower is the supplier’s initial price, the higher is your potential profit), and prefer the suppliers that provide worldwide shipping option.

In case of Amazon, it’s not always possible.

The two examples above show an identical product being sold on Amazon and AliExpress. As you can see, the price difference is mind-blowing: the item placed on AliExpress is 4.5 times cheaper than its Amazon competitor. For you, as a dropshipping store owner, this is a crucial difference: your profits depend on the initial product price, which is why opting for the more expensive one is simply unwise.

In terms of delivery coverage, Amazon is not the best possible choice as well. As you can read it in Amazon shipping restrictions, not all the products shown on Amazon can be shipped to any destination on the globe. It is recommended to use AmazonGlobal to find the products with more favorable shipping terms, but, it’s mentioned that even these items can only be shipped to ‘over 100 countries’. Given that there are 195 countries in the worlds, Amazon deprives you of the opportunity to reach at least one third of geographic regions on the globe, which is sad – exploration of these developing markets is considered to be one of the most promising strategies to grow your dropshipping business in 2018. And even if you’re not really interested in serving these particular markets and prefer targeting more ‘common’ regions instead, there’s still an unpleasant feature of AmazonGlobal that might cause some difficulties: available product lines, shipping rates and fees will be different for every particular delivery address. Surely, it is not convenient at all. (And I’m not even mentioning that only 30 million+ products are available on AmazonGlobal: just compare it to the AliExpress’ 100+ million items).

Another Amazon limitation is the lack of branding possibility. To gain brand recognition, you can normally negotiate with AliExpress sellers and ask them to include your pre-paid promo materials in the package – surely, it will cost you a bit extra, but sometimes it’s totally worth it. On Amazon, it will be really complicated to do the same, especially if your supplier uses the Fulfillment by Amazon service and doesn’t personally take part in the packaging process.

As we have figured it out above, Amazon sellers are only allowed to specify their own names on the packages: there must be no indication of other persons or companies having participated in the pre-delivery processes.

You might remember the same ‘loophope’ we have already discussed, and try marking your order as a gift. You might think it’s a good idea to ‘hack the system’ and use this opportunity to create your own branded package, but this is not how it works: Amazon provides its own gift wraps, bags and boxes ‘appropriate for the item’, so arranging a custom design is not possible. Plus, on checkout, you might find out that this particular item ‘can’t be wrapped because of its unusual size, weight or shape’, and therefore, it will arrive in its original packaging, or in a textile bag.

What’s the outcome?

While using Amazon as a supplying platform for your drop shipping business, you’ll face a number of restrictions that put some limits on your product range, geographic scope of the business, and the branding possibilities. 

Non-obvious ways to benefit from Amazon drop shipping

So, strictly speaking, Amazon is not a suitable place to run or facilitate your drop shipping business. Still, you can make a good use of the platform, and indirectly benefit from its activity.

Here’s how you can boost your drop shipping business with the help of Amazon:

  • Set the best pricing strategy

As we have already demonstrated it before, prices on Amazon products are quite high – still, lots of buyers are nevertheless ready to make a purchase. Therefore, if you’re importing AliExpress products to your store, you have a great opportunity to research the average price level for the same products featured on Amazon. This way, you’ll get an idea what’s the price that people are ready to pay for such items, and it will let you determine the most beneficial price markup for your store offers.

  • Discover best-selling items

Amazon is a great place to find out what’s hot and trendy these days: here is how you can scan the platform for the most frequently bought items. Knowing what’s popular on Amazon, you can go searching for the same or similar products on AliExpress – they will be a wonderful addition to your store offer.

  • Find extra pictures

Perfect product pages are the key to luring your store visitors into making a purchase and increasing your conversion rate. Still, many AliExpress product pages lack the necessary amount of high quality photos, which is why it might be challenging to find enough material for creating an appealing pictures gallery. In this case, you can go on Amazon and look for absolutely identical products: chances are, you’ll be able to get a couple of great product pictures you haven’t seen on AliExpress. In case they have some odd watermarks or Amazon logos, you can safely use our Image Editor to effortlessly remove the unnecessary details.

As you can see, even though Amazon drop shipping doesn’t stand a chance against the good old AliExpress drop shipping, there are ways to indirectly use the platform for your benefit. Treat Amazon wisely, and make the most of this platform’s potential to seriously improve your business performance!

By Olga L.
Olga is a content creator at AliDropship, and she aims to explain the most complicated drop shipping concepts in the simplest terms possible.
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7 Comments
Fabio May 11, 2018 9:33:13

I agree with what you write. I have a shop on Amazon and we are brand registered and working also on Amazon. I’m applying exactly what you write. I hope to get benefits!

lely joseph May 11, 2018 9:38:51

Hello
There is something you don’t mentioned in the article , the time of delivering with Aliexpress. Nobody want to buy something that will be received on 30 to 60 days . For me , the time of delivering is the biggest problem with dropshipping from China. It’s will be very profitable , to sell the Alyexpress items on Amazon without this problem. As seller, the most important thing is the amount of sales , all others things come as ornementation like branding , and so on. If I can make large profitable sales on a platform , I won’t care about branding.
Please refer me some suppliers that can deliver their products on USA and Europa on 7 -10 days !!

    Yaroslav Nevsky May 11, 2018 10:45:48

    Hello,

    I recommend selecting products that have e-packet shipping option, it almost always free and takes 12-20 days to deliver. If you need a more fast shipping, take products with the stock in the US.

Indra May 18, 2018 2:22:44

Is there a way to change the invoice?
if the package say the original price, it won’t make my customer repeat to buy another product

Fredrick September 17, 2018 10:34:46

Hello, have been in Amazon affiliate program for more than 5 years am not making any sales from it. So reading through the mails you sent me am really interested in Allidropshiping but does not know how to go about it please help me.

Lori Humphrey September 17, 2018 20:48:34

Isn’t it illegal to use the photos from Amazon on your store? It seems to me that you can’t just use any photo you find online without breaking the law. Copyright infringement is a big no-no for me and this seems like it would be just that using photos found on Amazon.

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