In recent years, many sellers have become enamored with Amazon dropshipping. This process is convenient for many sellers, as you don’t have to pay for warehouse space and get to utilize your Amazon storefront and Amazon Advertising to drive sales — at a high profit margin.
But what is Amazon Dropshipping? How does it work? And can you drop ship from Vendor Central? The Amazon experts at Blue Wheel share their insights on this business model.
What is Amazon Dropshipping?
Amazon dropshipping is when the fulfillment process is outsourced to a supplier, who then procures, stores, and ships products to your customer. Your brand is customer-facing, and your supplier hands the back-end solutions.
How does Dropshipping Work?
Dropshipping is really a simple process — and your customer will never know all that happens on the back-end.
When your customer places an order for your product on Amazon.com, you’ll receive the order, and the customer will receive an order confirmation. You will then forward that order on to your drop ship partner, who will then fulfill and ship the order. Your customer receives a shipping notification and then their order!
What are the Benefits of Amazon Dropshipping?
Low Starting Investment
Because you don’t need to purchase or store inventory in advance, drop shipping has a low starting investment. Your drop shipping partner will handle all aspects of inventory and warehousing, so you can start drop shipping with a low investment!
No Inventory on Hand
Because your drop shipping partner will house the products until they’re ready to ship, you don’t need to invest in your own warehouse space or pay Amazon’s warehouse storage fees. This leads to cost savings for you!
Ability to Test New Products
Drop shipping is a great model to test new product launches and see what resonates with Amazon shoppers. And, because the starting investment is low, there’s less risk involved with trying new products to see if they work for you!
What are the Challenges of Amazon Dropshipping?
High Level of Competition
Lots of people are starting to drop ship on Amazon, so competition can be high. Additionally, your competitors might be drop shipping the exact same items as you, so you need to differentiate yourself and your brand from them. Some brands might be tempted to price their items lower than their competitors, which can decrease your profit margin.
Because a lot of aspects of the process are outsourced to your drop shipping partner, you have less control over the process overall. Order errors, inventory miscalculations, and shipping delays are just some of the challenges you might face from drop shipping.
Even though your drop shipping partner is handling most of the process, you are still in charge of customer service. This creates some complications when something goes wrong — you have to reach out to your partner to discover what happened, then communicate that to your unsatisfied customer. You also have no control over what happened, but are still responsible for it anyway.
How to Drop Ship on Amazon for Vendor Central
Dropshipping on Amazon is not straightforward within Vendor Central. This is because when you use Vendor Central, Amazon is purchasing products from you, storing them in their warehouse, and shipping them out themselves. But with a drop ship model, your dropshipping partner stores and ships out your item.
If you are set on dropshipping through Vendor Central, you will need to create a Seller Central account to manage your business through there. So, while it’s possible to drop ship within Vendor Central, it certainly complicates the process.
We recommend managing your drop shipping business through Seller Central in order to avoid any complications with Amazon and hidden fees you might incur from them by drop shipping through Vendor Central.
Need help navigating your Vendor Central or Seller Central accounts? Blue Wheel’s team can help. Reach out today!