How to Sell on Amazon without Inventory: A Seller's Guide

Intro

Before I wrote this blog post, I did a bit of research and looked at the Google SERPs (or search results pages) and found that a lot of the information is very misleading and in some cases wrong when it comes to selling on Amazon without inventory.

And while it_ is_ within Amazon's Terms of Service to sell via dropshipping, you need to jump through quite a few hoops to ensure the end customer gets the best possible experience and you don't get your account shut down by Amazon.

So, let's dive in and find out how you can get started selling on Amazon today, with zero inventory!

How to sell without inventory?

If you are looking to make money online without a lot of upfront investment, there are a couple of methods to choose from. I'll dive into each one under separate headings.

First up let's talk about Dropshipping

Dropshipping: Eliminate the need for inventory

So in a nutshell, dropshipping is this.

1. The customer goes onto a website with the intent to buy, in this case, the Amazon.com site. Let's imagine they want to buy a new Apple smart watch.

2. Next the customer goes through the checkout process, and you as the seller get a notification from Amazon you've made a sale.

Now, if you are an experienced seller and use some automation software, your supplier will also get a notification of a new order - this is not strictly needed when you are just starting out.

3. Your supplier is sent all of the customer information (either by you manually, or by your software) as well as the order details including the colour and size of Apple watch they have bought.

In the backend of your Amazon Seller account you’ll be able to see all of your orders like this.

4. Next, your supplier sends the Apple watch in the mail to the customer, and you sit back and start counting your money. Well, sort of.

Amazon now requires orders to be tracked in some way, so you will also be able to to track the delivery of the order online.

Sounds easy right?

Dropshipping: A simplified version

Image Source: https://retalon.com/blog/dropship-vs-direct-ship-how-to-decide-in-2023

Amazon TOS: Seller of Record

So what does this mean?

Basically you must be the seller on all paperwork, as well as all of the information on the actual sales page on the Amazon website.

The reason being, Amazon does not want any confusion if there is ever a problem with the order - the buck will stop with you if you are the Seller of Record, NOT with your supplier.

Speak with your supplier first and establish whether they will be happy with you being named as the Seller of Record to get things going.

Packaging

You need to ensure all packing is plain and does not have any supplier branding or any other information.

Again, this is to avoid confusion. The customer will be expecting Amazon branded boxes and if your supplier sends a box with their branding all over it, you may run into some issues.

Dropshipping on Amazon: Do’s and don'ts

Amazon has quite a few rules if you want to use this approach of dropshipping. You can find a brief overview here

• You (not your supplier) need to be the identifiable seller on invoices, packing slips and other paperwork.
• You are responsible for processing any returns from customers
• You must not use your suppliers information on any packaging or Amazon.com product descriptions

Other things I would recommend are:

• Ensure your customer is aware of shipping times for your products.

• Maintain a good relationship with your supplier.

• Try to get real data on stock levels and have a contingency in place for making sales and not being able to fulfil orders.

• Try to work with a supplier who has worked with Amazon before so they know the rules.

• Try to work with a supplier that can ship in a timely manner.

• Use the ‘Buy Shipping’ options within your Amazon seller account

And try to avoid doing this:

• Do not start listing products on Amazon without doing your research on the brand you are selling, and the supplier who is providing the product.
• Do not start with suppliers based overseas - while this is possible, start off slow and work with suppliers based in the same country as you are selling.
• Do not start with huge brands like Nike – oftentimes these brands are ‘gated’ on Amazon and you need approval before you can begin selling them.

Where can I find suppliers for Amazon dropshipping?

There are two places to do some research to find suppliers for your dropship business.

Shopify

There are over 4 million Shopify stores out there. And while many will already have existing Amazon stores, there will be a load who do not have any presence on Amazon.

You will have to do a bit of homework to find a supplier on Shopify - if it was easy though everyone would be doing it.

Try to establish relationships through outreach - the more creative you can get with your cold email strategy the better

AliExpress

One of the most well-known platforms for dropshipping, primarily because of its vast product range and global shipping. Many tools and plugins can integrate AliExpress with different eCommerce platforms to streamline the dropshipping process.

SaleHoo

This is a directory of wholesale companies and dropship suppliers. They vet the suppliers, ensuring that you're connecting with reliable companies.

Doba

A comprehensive dropshipping platform where you can choose products from various suppliers and manage them from a single dashboard.

Oberlo

Specifically designed for Shopify, this platform connects store owners with suppliers and automates much of the dropshipping process. While it's exclusive to Shopify, it's worth mentioning due to its popularity and ease of use.

Wholesale Central

A free directory of wholesalers and dropshippers, covering various product categories.

Trade Shows

Though not an online method, attending industry-specific trade shows can lead to direct connections with manufacturers and suppliers, some of whom might offer dropshipping.

Sending external traffic to Amazon

Amazon absolutely LOVES external traffic - A strategy I have seen employed more and more, is by sending traffic from a “how-to” Youtube video over to Amazon so viewers can go and buy the product directly.

If you don’t already have a Youtube channel, you don’t need a whole lot to get started - just a normal phone with a camera is enough to start. And if you can be yourself and actually help to solve someone's problem, your video will start to get traffic.

Alternatives to dropshipping

Yes, there are a few alternatives to dropshipping - let’s dive into two of them now.

Kindle Direct Publishing

Kindle Direct Publishing (KDP) is Amazon's self-publishing service that allows authors and publishers to independently publish their books directly to the Kindle Store.

You retain control of whatever you publish, can set your own prices, and can make changes to your books at any time. Here are some key features and points about KDP:

How much can I make?

Authors can earn royalties of up to 60% on the sale of their eBooks depending on the pricing and the geographical location of the sale. There are specific guidelines and criteria to meet to qualify for the 60% royalty option - realistically you will get around 50% of the sale price of the book.

Sell Globally

You can choose where to sell your book - and you can sell globally if you want.

KDP Print

In addition to publishing Kindle eBooks, KDP also provides a print-on-demand service for creating paperback versions of books.

Inventory required? No. Passive, also no

Many authors have found success through KDP, from hobbyists to best-selling independent authors.

And while you don’t need to actually buy any inventory, you do need to write the copy for your book and have some sort of idea on the content / niche / or angle to really write a hit.

Once you publish a book though, the income is passive - it’s just that you will have done aloof the work upfront, Very much like any business to be honest.

Can I dropship and do FBA?

In a word, No.

Amazon FBA and dropshipping are two different business models, and you cannot do both because the stock will not really be held in the Amazon warehouse.

Understanding each model

Amazon FBA

In this model, you send your products to Amazon's fulfillment centers. When a customer orders one of your products, Amazon handles storage, packing, shipping, and customer service for these products. You pay storage and fulfillment fees to Amazon.

Dropshipping

As I have outlined above, with dropshipping you list products on your store without actually holding inventory. When a customer orders a product, you purchase it from a third party (often a wholesaler or manufacturer) and have it shipped directly to the customer. You never handle the product yourself.

Using Both

So, you can’t really do both - you have to either choose the FBA model or the dropship model. If you are heading for FBA you will need to buy stock ahead of time and then ship this into the Amazon warehouse.

If you are going to dropship, then you can’t ship into the Amazon warehouse - you will simply ship direct from the supplier or manufacturer straight to the end customer.

Amazon Merch on Demand

Merch by Amazon is a print-on-demand (POD) service that allows content creators to design and sell branded merchandise directly on Amazon without any upfront investment in inventory, printing equipment, or shipping.

It's especially popular among YouTubers, podcasters, brands, and graphic designers. Here's a brief overview:

How It Works

Design Creation: You have to upload your artwork to Amazon and then select which type of merch you want to sell - t-shirts, hoodies, pop sockets and so on.

Printing and Fulfillment: Once a customer orders a product, Amazon prints the design onto the item, handles the transaction, and ships the product directly to the customer.

Royalties: As the creator, you will earn a small royalty on each sale. The royalty is based on the list price set by you minus Amazon's costs for printing, materials, fulfillment, and so on.

Benefits

No Upfront Costs: There are no initial costs or inventory requirements. This removes financial barriers for content creators who want to sell branded merchandise.

Amazon's Reach: By integrating with Amazon, creators can access the platform's vast customer base.

Hands-Off Approach: Amazon handles the printing, shipping, and customer service, allowing you to focus on design and promotion.

Things to consider

Approval: Not everyone can instantly start selling on Merch by Amazon. You have to apply and be approved to join the program. This can sometimes be a pain until your account is approved and you’re ready to get selling.

Content Guidelines: You need to ensure you are within Amazon’s content terms of service at all times. Designs that violate copyright, trademarks, or Amazon's content guidelines can be rejected or lead to account suspension - which you do not want!

Tier System: New sellers often start with a limit on how many designs they can upload. As they make more sales, they can "tier up" and gain the ability to list more designs.

Products Available: Over time, Amazon has expanded the range of products available on Merch. While it started primarily with t-shirts, the service has added other apparel like long-sleeve shirts, sweatshirts, and hoodies, as well as non-apparel products like pop sockets.