Amazon Dropshipping
What is dropshipping? Dropshipping is an order fulfillment option that allows eCommerce businesses to outsource procuring, storing, and shipping products to a third party—typically a supplier. The dropshipping model commonly appeals to entrepreneurs seeking efficiency and low overhead, but it can come at a cost. This guide will cover what dropshipping is and explore how this fulfillment method can work. We’ll also look at a few alternative fulfillment models. Wholesalers In a typical product supply chain, wholesalers buy from manufacturers and sell to retailers at a slight markup. They function as middlemen; generally, they do not sell to the end consumers but may provide dropshipping services to retailers. Determine which dropshipping providers could be right for you based on your business model and fulfillment requirements, Fulfillment by Amazon: A dropshipping alternative with added perks Fulfillment by Amazon (FBA) offers similar benefits to dropshipping while giving you more control over your brand experience. You don’t need to sell products in Amazon stores to use FBA—although with an audience of 200 million unique visitors each month, Amazon is a selling channel worth considering. With FBA, you store products in an Amazon fulfillment center, and we: Offer quick delivery with Prime Shipping Manage customer service Take care of returns Notify you when you need to restock products How much control do you want over product quality? Product quality can have a big impact on other aspects of your business such as customer acquisition, brand loyalty, and returns. While you may be able to inspect the quality of products at the start of your dropshipping relationship, you will likely have limited control over the quality of the items you sell on an ongoing basis. If the products fail to meet customer expectations, your business could receive negative customer reviews. Compared to other business models, such as owning a retail store or building your own order fulfillment center, dropshipping has a lower barrier to entry. Unfortunately, this can mean more competition for your business. The playing field can be highly competitive for businesses that use dropshipping. Dropshipping sellers are commonly able to offer products at low prices because they’ve invested so little. If you use dropshipping for your business, you may earn low profit margins. You might be able to overcome some of these issues if you position your business within a niche outside of any hyper-competitive field. Find potentially profitable or less competitive niches through market research, networking, and sales. Or invest in differentiating your brand. Alternatives to dropshipping If dropshipping is not right for your eCommerce business, there are alternatives. Here are a few options if your goal is to outsource fulfillment. As an alternative to dropshipping, some sellers purchase products in bulk, then enlist the help of a third-party fulfillment service to store items.
