I have to confess… I am an Amazon drop shipper and I love it. Sometimes I feel as though I am an Amazon drop shipping secret agent, alone amongst a pack of Amazon FBA wolves.
Everybody who doesn't drop ship has their own opinion of what is real and what isn't real in the drop ship community. However, in the world of Amazon drop shipping there is nothing more frustrating and more laughable than when those who don't drop ship spread misinformation as if it were fact.
As Mark Twain says:
It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.
So in this article I want to touch on the 10 myths that you will hear about Amazon drop shipping that people think they know, but just ain't so.
Myth #1. Amazon Doesn't Like Drop Shippers
It's not surprising that a lot of people think that Amazon doesn't like people who drop ship on their platform. Most of their third-party sellers do things such as retail arbitrage, online arbitrage, or private label. All of those are done using Amazon FBA for the most part. Very few people I know have ever done merchant fulfilled on Amazon. (On a side note, if you have no idea what Amazon FBA versus merchant fulfilled is: Amazon FBA lets you pack up a whole bunch of stuff into one or more boxes and send it off to Amazon for them to fulfill, and merchant fulfilled means that you have to fulfill every order yourself.)
Since so few people do Amazon merchant fulfilled to begin with, to also add in the idea that you will be drop shipping all orders to customers when they buy ads another layer of mystery. Rather than actually see whether or not this is allowed on Amazon, most people just throw up their hands and assume that Amazon doesn't allow it.
Well, I hate to break it to you but Amazon LOVES people who drop ship on their platform.
And why wouldn't they? Drop shipping has been around for a lot longer than you think. In fact, it's older than the Internet itself.
So if Amazon was so hateful of drop shippers on their platform they would be missing out on a huge chunk of revenue. The last thing that they want to do is alienate people who drop ship on their platform.
One glaring and obvious example of this is that if you look at the Amazon drop shipping policy you'll notice that it is one of the shortest terms and conditions pages they have.
Here's what they say:
Drop shipping, or allowing a third party to fulfill orders to customers on your behalf, is generally acceptable. If you intend to fulfill orders using a drop shipper, you must always:
- Be the seller of record of your products;
- Identify yourself as the seller of your products on all packing slips and other information included or provided in connection with them;
- Be responsible for accepting and processing customer returns of your products; and
- Comply with all other terms of your seller agreement and applicable Amazon policies.
Examples of drop shipping that is not permitted:
- Purchasing products from another online retailer and having that retailer ship directly to customers; or
- Shipping orders with packing slips, invoices, or other information indicating a seller name or contact information other than your own.
Failure to comply with these requirements may result in the suspension or removal of your selling privileges.
Myth #2 You Can Drop Ship from Retail Stores to Amazon Customers
Now I mentioned in myth number one that Amazon loves drop shippers… Well that's not entirely true. Not too long ago Amazon made a change to their drop shipping policy. Essentially as you can see in myth one they want you to be the seller of record. What does "seller record" mean? I'm glad you asked…
In 2016 Amazon laid the hammer down on people who were going to retail stores, finding products, and then drop shipping those products when they sold. What was happening was that when customers got their products they also got the receipt from the retail store. They may have spent $100 on a new pair of shoes they thought they bought from Amazon but they would get their shoes along with the receipt that showed that the seller originally paid $30.
If you paid hundred dollars for something that you realize you could have got somewhere else for $30, wouldn't you be best?
Well Amazon was getting tired of having to handle the customer service for all of these fools. So they decided that anyone who was going to try and drop ship retail items were going to have to stop immediately.
That said, Amazon also encouraged the use of true drop shipping on their platform by encouraging people to become the seller of record for their products that they were listing. What that essentially means is that you become an authorized dealer for those products just like any other retail store. That means that you work with the manufacturer or distributor to sell the product on Amazon. The benefit is that you could now sell a product that you could replenish over and over again.
So no… You can't drop ship retail items on Amazon anymore.
Myth #3 You Can Use Amazon Prime to Drop Ship with Free Shipping to People on eBay Etc...
When I first started researching how to drop ship on Amazon I would always come across forum posts, courses, and blog posts talking about how awesome it is to drop ship from Amazon to other marketplaces such as eBay with your Amazon prime account.
This is a big no-no…
Why would you ever want to risk your personal Amazon prime account in order to make a few bucks? Amazon's terms of service clearly states that you are not allowed to use your Amazon prime account in order to get free shipping when drop shipping to other marketplaces.
Don't do this.
Myth #4 Getting Suppliers to Sell You Products at Wholesale Cost is Hard
There's a reason why most people use Amazon FBA and why most people who sell on Amazon prefer to do things such as retail arbitrage or online arbitrage and that is because they think that finding suppliers for wholesale or wholesale drop shipping on Amazon is hard.
Nothing could be further from the truth.
Sure, you have to talk to a lot of people, send a few emails, maybe make a few calls, but in the big scheme of things generally if you contact between 10 and 20 suppliers usually between 1 – 5 will say yes.
I used to do a lot of sales calls back in the day when I was selling restaurant franchise opportunities and normally it would take about 100 calls in order to get 1 or 2 paying customers. So if I can get one customer for every 10 emails I send out… Pshh… I could do that all day long baby.
You want to see how easy it is to find and get suppliers for Amazon, I created a very easy and short checklist showing you the exact steps that my staff uses to find great product ideas and how to contact suppliers behind those great products.
Myth #5 If You Can't Ship at Amazon Prime Speeds Customers Won't Buy
All of the customers who buy from my Amazon store know that they're going to be waiting a while to get their product. Why would they do that when they can just go and buy from someone else who could ship superfast?
Well, the answer is simple… Nobody else is selling that product.
This is one of the big misconceptions with drop shipping on Amazon… Most people are used to finding one or 2 products that are selling well and they put all of their time and effort into getting as much profit from them as possible. Well, when you drop ship and you get new suppliers you get their entire pricelist. That means if your supplier has thousands of products, you can sell thousands of their products.
You'll find that when you are working with most suppliers the vast majority of their dealers do not buy in bulk. And if they do buy in bulk then it is usually only a few products from their pricelist.
If nobody is buying all of their products in bulk, that means not all of their products are being sent into Amazon FBA.
The majority of my competition have long lead times when it comes to shipping products. You never know how long your supplier is going to take to ship so it's wise to make sure you leave yourself enough room or else you might get dinged on your seller metrics.
All that being said, you don't need to ship fast in order to profit from Amazon.
Myth #6 Your Supplier Can't Ship Fast So You are Going to Get Get Late Shipment Violations
Every once in a while I'll get someone emailing me about how they want to drop ship on Amazon but their hesitation is that they don't know whether or not they are supplier can ship fast enough. Well, there is an easy solution to that.
Don't promise your customers that you will ship your items fast.
Every supplier that you get is going to be different. Some will ship fast, some will ship slowly, but that doesn't mean that you don't have control over the situation.
Amazon allows you to adjust the production time on your products. If your product takes 15 days to ship, put in 15 days as the production time.
If your product takes 4 days to ship, put in 4 days as a production time.
Does it take 8 days to ship? Well… You know what I'm going to say…
It's not rocket surgery.
Myth #7 Drop Shipping Amazon Sellers Are More Likely to Get Suspended for Poor Metrics
Another big roadblock for people who are thinking about Amazon drop shipping is the myth that they are going to be putting their account at risk of suspension because of all the scary things that could happen.
Um… Have you noticed over the last year or so that the majority of Amazon suspensions were people who were doing retail or online arbitrage? Yeah… Who's really putting their account at risk?
Since I've been Amazon drop shipping I have had more five-star reviews than I ever did doing Amazon FBA. Sure you run into some crazy customers from time to time, but most of the time you can call them, or message them and get them on your side rather than trusting Amazon customer support.
Honestly, from what I've seen you have to be really bad at customer support, and basic business operations in order to get suspended from Amazon when your drop shipping.
People are usually scared of things such as not having inventory in stock, shipping the wrong item, etc.… But most of these can be fixed with just some good communication with your customer. Heck one of my five-star reviews came from a refund that I gave one of my customers who was frustrated with their product. I made it super easy for them and they loved it.
If you are too scared to take action, and are scared of all of the possible things that could happen to your account (even though they haven't happened yet)… Good that means less competition for me.
Myth #8 Amazon Doesn't Pay You for 2 Weeks So You'll Need to Fork Up a Lot of Cash When Things Sell
If you are worried about Amazon holding onto your money for 2 weeks. Grow up, learn basic business skills such as leveraging, and get a credit card.
Myth #9 If My Supplier Runs Out of Stock I'm Toast!
Everyone who is so timid about Amazon drop shipping brings up probably the most popular myth there is… And that is that if my supplier runs out of inventory my account is going to be suspended.
That's it… It's over… The world is imploding!
Dude, it's not that bad. Over the last few years that I've been drop shipping I've had a handful of occasions where the product has been out of stock. The question that you need to ask yourself is how would you handle this situation?
The worst thing that you can do is simply go to your Amazon account and cancel the order. That would not only pass off the customer but it also ruins your metrics right off the bat.
Trust me young padawan there are many ways around this problem… Let me give you a few. The first thing that you can do is contact the customer and let them know that the item is out of stock and if there are other variations of the product such as color, size, or if there is a premium version of the product you can offer that to them at the same cost or at a discount.
If there are no other variations, you may want to let them know that the item is going to be late and that you will give them a discount.
Heck if the item doesn't cost that much money, you can even let them know that they will get it for free.
The skies the limit, you just need to smart about it and ultimately if you have to cancel the order, make sure that they are the ones that want to cancel the order so that you can use the "customer canceled" option which does not count against your Amazon drop shipping metrics.
Myth #10 Very Few People are Amazon Drop Shipping and That Proves It Doesn't Doesn't Work
You'd be surprised at how many people are making money with Amazon drop shipping. Over the last few years I've actually grown to know most of my competitors and I see them on a lot of my listings.
Yes, there are not as many drop shippers as there are people who do retail arbitrage, online arbitrage, or private label, but there is a lot. Just about every week I see new people who are becoming my competitors. There's plenty of opportunity as of yet in Amazon drop shipping, so I don't mind too much.