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While inventory is an essential ingredient of a successful eCommerce business, this is just one school of thought. With the rapid development of technology, it is now possible to sell products online without the need to manage inventory.
Some ecommerce entrepreneurs explain their lack of inventory due to having no system in place. But do you know why they still manage to rake in massive profits? They embrace the concept of dropshipping.
In dropshipping, the business owner lists products for sale on their online store but does not keep them in stock. Instead, when a customer orders, the business owner purchases the item from a third-party supplier, who then ships it directly to the customer.
The world’s largest ecommerce platform, Amazon, offers you the opportunity to do dropshipping. While it is true that Amazon isn’t primarily a dropshipping platform, it has features that allow you to sell products that directly ship from the supplier to the customer each time an order comes in.
But how do you do it? In this Merch Jar guide, we’ll walk you through the steps to sell on Amazon without keeping an inventory, including some best practices you can implement.
Let’s get started.
Simply put, we've helped several businesses on Amazon automate their Amazon ads, enabling them to succeed in their dropshipping ventures.
Our hands-on experience in automating Amazon ads has allowed dropshipping businesses to focus more on their core operations while we handle their ad optimizations. Merch Jar’s tools ensure businesses meet their advertising goals, whether increasing brand awareness, driving sales, or managing ad spend efficiently.
By leveraging Merch Jar, you can automate your ad campaigns, ensuring optimal performance and better results without needing constant manual adjustments. This hands-free approach to ad management is perfect for dropshippers who want to scale their operations on Amazon without getting bogged down by the complexities of ad optimization.
Aside from convenience, there are plenty of other benefits when you sell on Amazon without inventory.
Low Initial Investment: One of the most significant benefits of selling on Amazon without inventory is low initial investment. Traditional retail businesses that manage a great deal of inventory require some serious capital for inventory purchases. With dropshipping, you don't need to invest in stock upfront. Instead, you only purchase products from suppliers after customers have placed orders. This minimizes financial risk and allows you to start your own business even with limited funds.
Reduced Overhead Costs: Another benefit is reduced overhead costs. Managing inventory is costly. You’d have to think of expenses for warehousing, labor for handling and shipping products, and insurance. Dropshipping eliminates these expenses, as the supplier manages inventory storage and fulfillment. Reducing overhead costs can significantly improve profit margins, allowing sellers to focus on other critical aspects of their business, such as marketing and customer service.
Wide Product Selection: Dropshipping, which does not require you to pre-purchase inventory, offers your customers a wide range of products. This incredible flexibility also enables you to adapt to changing market trends and consumer preferences. You can easily add new products to your Amazon store or remove underperforming ones without the financial burden of unsold stock. This agility will help your business remain competitive.
Scalability: Dropshipping also facilitates easy scalability. Since the supplier handles product fulfillment, you can expand your product offerings and handle increased order volumes without the complexities associated with traditional inventory management. This scalability is particularly advantageous for businesses experiencing rapid growth, enabling them to focus on marketing and customer engagement rather than logistical challenges.
Location Independence: Selling products on Amazon without inventory empowers you to work from virtually anywhere, as long as you have a stable internet connection. You don't need a physical storefront or a warehouse to manage your business remotely, providing flexibility and contributing to a better work-life balance. This makes it a great side hustle.
When you want to sell on Amazon without inventory, the first step is to look for the right products to buy and sell on the platform. Since Amazon has also become an in-demand platform for dropshipping, navigating the site is easy. But remember, you should also consider details such as product demand, profit margins, and market competition.
To illustrate the importance of finding the right products to sell, look at Isaac Smith, an architect-turned-drop-shipping-magnate. He found the perfect product that eventually led to a breakthrough: a pedicure chair that turned a profit of $1,000 from just a single sale.
The next step is searching for your suppliers. Here’s a pro tip from successful Amazon sellers: look for the most trustworthy suppliers who offer the lowest prices.
To find these people, you must commit to the research yourself or refer to lists from professional companies. The choice is yours. You can manually research from directories, online marketplaces, and industry-specific platforms with suppliers and then compare. Alternatively, you can collaborate with suppliers from your network and through recommendations from others. Read forums and find communities discussing this topic. They’ll most likely drop some names of suppliers.
Here’s your checklist of what you should look for in a supplier:
Then, you must also learn how to negotiate with your chosen supplier.
Ryan Grant is one of the many people who aced this step. In an interview with CNBC, Grant shared his experience and said he started his dropshipping business on Amazon by researching suppliers for various products. He mentioned that he initially used retail arbitrage, buying discounted products and reselling them at a higher price, but later shifted to dropshipping by finding reliable suppliers.
Another step when selling on Amazon without inventory is overseeing the labeling and shipping of the products. Some suppliers offer shipping the products directly to your customers under your business name, making sure they follow Amazon’s dropshipping policies. This step also ensures that the packaging and shipping labels accurately reflect your branding and overall business identity.
One example of a business that provides proper product labeling for its dropshipping operation on Amazon is Tacklife, which sells tools and home improvement products. They have been noted for their attention to detail in labeling their products correctly and according to their branding to comply with Amazon's requirements and maintain customer satisfaction.
To carry out this step, it is essential to communicate with your suppliers. Provide them with your company logo, shipping address, and all specific packaging requirements. Don’t forget to remain proactive with your customers by keeping them updated on the status of their packages.
After you’ve chosen your supplier and decided which products you’ll sell, it’s time to list them on Amazon. There are two principal options for adding products to the platform: creating a new listing or adding the product to an existing one.
Once your products are live, be sure to advertise them—and yes, on the platform itself. Amazon advertising is powerful. Statistics show that, on average, Amazon ads tend to return 20 percent more on a brand’s investment.
However, placing ads on Amazon isn’t as easy as A-B-C. There are complexities, and those who opt for the traditional setup may truly stressed.
Don’t let this stress hinder your success. Today, there are intelligent Amazon ad automation platforms like Merch Jar that can help you boost your profits. You won’t have to spend so much time running these ads.
Merch Jar has features that allow you to optimize your bids in real-time, manage your keywords well, perform bulk actions, and so much more. Let our tool handle all the complexities of running and managing Amazon ads so you can focus on what matters most.
Managing dropshipping orders requires you to stay hands-on as you coordinate between your online store, supplier, and Amazon. Once a customer places an order on Amazon, it is forwarded to your supplier, who delivers and ships the product directly. Thus, you must maintain clear communication with your suppliers, closely monitor inventory levels to avoid running low, and provide excellent customer service.
Your responsibility doesn’t end when the warehouse releases the product to your customer. Your customer expects the process to be as fast as possible, so proactive communication is important. While Amazon provides tracking details to customers, it’s still vital that you keep your lines open. If your customer has concerns, they will tell you via the platform’s messaging service. You must also be able to take care of possible returns or exchanges.
Natural Apiary, a brand specializing in beekeeping equipment and products on Amazon, is well-known for its excellent customer service. They actively engage with customer inquiries, provide detailed product information, and promptly resolve issues.
Before you start selling on Amazon via dropshipping, familiarize yourself with these essential best practices.
Think of compelling product titles, detailed descriptions, and high-quality images while ensuring they’re optimized for search engines. This will help potential customers find your products easily.
Remain vigilant about stock availability and supplier performance. Implement systems or tools to track inventory in real-time and ensure your suppliers maintain consistent stock levels to prevent the dreaded out-of-stock scenarios.
Promote your Amazon ads through the platform’s Sponsored Products feature. This pay-per-click (PPC) advertising tool can boost your product's visibility, drive traffic, and potentially increase sales without holding inventory.
Another good practice when selling on Amazon without inventory is automating your ads. Merch Jar is a popular tool for managing and optimizing Amazon advertising campaigns. It can effortlessly manage bids, provide high-performing keywords, and analyze performance data in one place, maximizing your advertising ROI while minimizing manual effort.
Selling on Amazon without purchasing inventory is feasible and highly beneficial for all vendors. Dropshipping offers countless advantages, from low initial investment to being unrestricted geographically. This article has outlined the steps to sell on Amazon without inventory, including finding the right products, negotiating with suppliers, labeling your products correctly, listing your products, and handling customer queries.
Running ads for your products is part of a profitable Amazon dropshipping business. Forget what most sellers are used to. Revolutionize and supercharge your Amazon ads with ease by automating them. Drive sales and boost your ROI with our powerful Amazon advertising PPC automation software.
