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September 29, 2023
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Dropping on Amazon. Part 1. Pros and cons of dropshipping

Pros and cons of dropshipping

Dropping on Amazon. Part 1. Pros and cons of dropshipping

We get a lot of questions related to dropshipping on Amazon. Therefore, we decided to publish a series of articles and videos on this topic called "Dropshipping on Amazon for Dummies" (#DropshippingAmazon).

Each article will summarize everything that was said in the video.

So here we go. In the first article, we'll talk about the pros and cons of dropshipping on Amazon.

Let's define dropshipping as the sale of goods by an intermediary to a buyer, with the goods being delivered to the buyer by the manufacturer or supplier.

For example, you found an item on eBay for $20, but you put it on Amazon for $40. When the buyer buys this product from you, you in turn buy it on eBay, but specify the shipping address is not your own, but the one provided to you by the buyer. As a result, you will earn 20$ minus Amazon's commission.

It's a simple business model. Find a cheaper product and put it on Amazon for a higher price. At the same time, you, as a middleman, do not own the goods and may never even see them.

Dropshipping is a very popular model of making money online. Most dropshippers from the CIS and Asia use this basic scheme. In Europe they work with a more complicated model: they create their own website, promote it, and when a sale takes place - they buy the goods on Amazon, eBay or another site; delivery is again provided by the owner of the goods.

Dropshipping has many pros:

  • Minimum start-up capital. You only spend money after you've been paid.
  • It's easy to start. You don't need a warehouse, a business plan or packaging. You just need to place the goods on one of the sites.
  • It's easy to grow a business. There's nothing stopping you from adding lots of new products to Amazon and other marketplaces.
  • No location. This business model allows you to work from anywhere in the world where there is an internet connection.

But there are downsides to this model:

  • Amazon bans selling items that will be delivered by another seller. That is effectively Amazon versus traditional dropshipping. If amazon discovers that you are violating the rules, your account will be banned and most likely permanently.
  • Low margin. Don't forget the competition. You will not be able to price the same product higher than your competitors.
  • You don't control the warehouses. There may be a situation when a customer has bought something from you, but the supplier no longer has the item in stock.
  • A lot of chores. To earn you need to sell a few or many products. That is, you need to post descriptions and photos, answer customer questions about each product.
  • You have no control over the seller. The seller can send a substandard one and you will be responsible for it. The seller can put a check with the real cost of the goods and as a result the buyer will write you a bad review, or again there is a threat of a ban. In addition, you have no control over the delivery time.

So, now you know the pros and cons of dropshipping with amazon. Despite the disadvantages, a lot of people around the world are successfully working on this model. Besides, dropshipping is also good because it is convenient to start an online business with it. You will be able to gain valuable experience working with amazon and other sites. The knowledge gained and capital earned can be used by selling your own goods. Or you can further develop your dropshipping business by posting more and more new products and hiring helpers for your team.

In the following articles and videos we will talk about how to start earning on dropshipping, how to quickly find profitable products for sale, how to secure your business and much more.

We enjoy sharing our experiences and discussing amazon business in our group on Facebook.

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