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What is Dropshipping?
Dropshipping is the process of selling a product without the responsibility of carrying inventory or shipping the goods. Notably, dropshippers can set their own product prices. The product manufacturer is responsible for manufacturing the product, maintaining inventory and shipping the goods to the customer.
Benefits of Dropshipping
In this Amazon dropshipping guide section you’ll learn some of the benefits of dropshipping that’ll help you understand why and how to dropship on Amazon.
Hold no inventory
The biggest benefit of dropshipping is that the dropshipper doesn’t need to carry any inventory. This is great because it makes the business model less risky for the dropshipper. As there’s no inventory to carry, there is less work involved in the business. In addition, there’s also fewer costs as you don’t need to pay for a warehouse to hold the inventory.
Few skills needed
Few skills are needed to have a successful dropshipping business. A dropshipper needs to be great at marketing, administrative tasks and providing excellent customer service. If a dropshipper can master those three skills they can achieve great success. With great marketing skills they can attract more customers. Since they don’t carry inventory, they can intensify their marketing efforts as they don’t need to worry about inventory or the cost of labour associated with shipping products. Within the realm of administrative tasks the dropshipper will need to process orders, pay for taxes and expenses and more. Lastly, by providing excellent customer service they can maintain positive relationships with the customers who’ve purchased from them.
Easy to start up
Starting a dropshipping business is relatively easy. You can set up a store within a day using Oberlo. All you need to do is choose products from an Oberlo supplier. There are three types of suppliers inside Oberlo: Oberlo Verified suppliers, Oberlo suppliers, and AliExpress. Compared to buying inventory for your store, you don’t need to wait to receive inventory or take product photos. With dropshipping, you can easily import product details such as specifications and images. This saves your business time and money.
Test products easily
Another great benefit of dropshipping is that you can test products easily. Since you don’t carry inventory, you can run ads on products to see which products convert best. If certain items aren’t high performers you can remove them from your store easily. Since you didn’t purchase inventory, there’s no cost, aside from advertising, for a low performing product. In the event that you want to eventually purchase inventory, you’ll also know which products sell well as well as how many SKUs you can sell easily.
Low start-up cost
The dropshipping business model is low cost. First, you only purchase products when a customer places an order. Second, there’s no warehouse needed for inventory. Third, you don’t need to hire extra employees to manage the shipping of products. Next, your main expenses include cost of goods, advertising, and website.
Amazon Dropshipping Guide – Benefits of Amazon Dropshipping
In this Amazon dropshipping guide part, you’ll learn some of the benefits of Amazon dropshipping and how to dropship with Amazon.
No warehouse cost
One of the benefits of Amazon dropshipping is that you don’t need to pay for the cost of a warehouse. Some Amazon sellers choose to make their products FBA (Fulfilled by Amazon). With FBA, sellers ship their products to Amazon and Amazon sends the products out for them.
Amazon Suppliers
Amazon sources suppliers within Europe who they buy products in bulk from. Amazon then holds this supply in their warehouses ready to ship to customers, handling returns and customer service in many different languages for all Amazon suppliers. With Amazon, suppliers, even small businesses, can grow quickly and operate globally. Amazon suppliers receive help from account managers to strategically guide their business to increase profits long-term.
Large audience to sell to
Notably, Amazon has 300 million active users. Thus, having Amazon as a sales channel for your business can mean huge returns. Sell the right product at the right price and you can lure in new customers. Your online store may attract different customers than Amazon. Thus, giving you an opportunity to connect with new customers who don’t fit your target demographics.
Lower ad spend
You have the option to run Amazon ads to gain sales and build a positive reputation on Amazon. However, as a marketplace, you can also benefit from organic traffic. By putting in upfront effort into optimizing your page, you can increase your odds of receiving organic traffic. Also, the cost of Amazon ads is set by you. You can control how much or how little you want to spend on Amazon ads as there’s no minimum requirements.