Thinking about starting an online business without big upfront costs and inventory hassle? Amazon has you covered. Ad Badger will tell you about dropshipping, Print on Demand, Fulfillment by Amazon (FBA) and Merchant (FBM), and digital products. Learn the pros and cons of each method and how to sell on Amazon without keeping stock. Whether you’re into e-commerce, custom merchandise, or digital products, this guide will help you succeed on Amazon.
In this guide you will learn about:
How to Sell on Amazon Without Inventory
Are you considering selling on Amazon but want to avoid the hassle and cost of managing inventory? Ad Badger is here to guide you through the most effective models for selling products without holding stock.
What’s the difference between traditional selling and selling without inventory on Amazon
In traditional selling, you manage your inventory. This involves purchasing products in advance, storing them, listing them for sale on Amazon, and handling the shipping to customers once a sale is made. This method requires significant upfront investment and storage space.
Selling on Amazon without inventory simplifies this process. Here, you list products that you don’t physically possess. When a customer orders, you purchase the product from a third-party supplier, who then ships it directly to the customer. This model reduces upfront costs and storage needs, making it accessible for many sellers.
Each method has its advantages and challenges. The right choice for you depends on your available resources, risk tolerance, and overall business objectives. Below, we explore the most popular selling methods on Amazon without inventory.
What are the popular methods to sell on Amazon without inventory
Is Dropshipping the Best Way to Start Selling on Amazon Without Inventory
Are you looking for a way to start selling on Amazon without the burden of inventory? Dropshipping might be the perfect solution for you.
This popular business model allows you to list products without holding any stock, making it ideal for those seeking low startup costs.
Here’s how it works: when a customer places an order on your Amazon store, you purchase the product from a third-party supplier or manufacturer who then ships it directly to the customer. Essentially, you’re selling a product without buying it upfront—you only pay for it when you make a sale.
Intrigued by the simplicity? There are important details to consider. Amazon’s policies for dropshipping require you to be the seller of record, ensuring customers don’t receive packing slips, invoices, or external identifiers from third parties. Also, avoid dropshipping from other retailers like Walmart, as this can immediately terminate your seller account.
Do you have a reliable supplier with fast shipping speeds
This is vital since Amazon customers expect quick delivery, often within 1 to 2 days. A supplier who understands and adheres to Amazon’s dropshipping rules can help you meet these expectations.
Dropshipping on Amazon involves three main parties: you, the customer, and the supplier.
Here’s a simple flow: you set up a store on Amazon, the customer places an order, you then order the product from the supplier, provide the supplier with the customer’s shipping details, and the supplier ships the product. Your profit comes from the difference between what the customer pays and what you pay the supplier.
Why is dropshipping so popular?
It offers the advantage of avoiding shipping and storing products, allowing you to sell via multiple channels and even internationally, focusing primarily on customer service. With low capital investment, it can be a gateway to earning passive income.
However, there are challenges. You’ll have less control over product quality and the supply chain, face lower profit margins, and deal with high competition. Managing customer inquiries effectively can make or break your business.
Is Print-on-Demand the Right Strategy for Selling on Amazon?
Another effective way to sell on Amazon without inventory is through the print-on-demand model, specifically using Amazon Merch on Demand. This service lets you create and sell custom-designed apparel, such as t-shirts and sweatshirts, without buying inventory upfront.
How does it work?
Sellers upload their designs, choose the product type, and set the price. Your shirts are then listed on Amazon with Prime shipping. When a customer orders an item, Amazon prints the design on the product and ships it, earning you a commission on each sale. Sounds exciting, right?
Merch on Demand can be an excellent opportunity to earn extra income. Even if you’re not a designer, you can hire affordable designers from platforms like Fiverr.com to create designs for you.
Merch by Amazon offers several benefits:
- No capital investment.
- Access to Amazon’s customer base.
- The Prime badge on your products.
However, some downsides exist, such as limited product variety and occasional gatekeeping through invitation requests.
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What is Fulfillment by Amazon (FBA)?
Fulfillment by Amazon (FBA) is a service through which sellers send their products to Amazon’s fulfillment centers, and Amazon takes care of logistics, including packaging and shipping.
To start, you need to subscribe to an Amazon seller account, choosing between an individual plan ($0.99 per sale) or a professional plan ($39.99 per month).
After creating listings that comply with Amazon’s requirements and specifying FBA for inventory management, you send your inventory to Amazon’s fulfillment centers. Amazon then handles storage, packing, shipping, and customer service, including returns.
Pros and Cons of FBA
Pros:
- Amazon handles all storage, freeing up space and reducing overhead costs.
- Products fulfilled by Amazon are eligible for Amazon Prime, increasing your visibility and potential sales.
- Amazon’s robust customer service infrastructure handles inquiries and returns, enhancing customer satisfaction.
- Being fulfilled by Amazon adds a layer of trust and reliability to your products.
Cons:
- Sellers must pay storage fees, fulfillment fees, and a seller fee (15% of the product’s selling price), which can add up quickly.
- You need to purchase and hold inventory before sending it to Amazon, requiring initial capital investment.
- Amazon’s packing and labeling requirements are stringent, and failure to comply can result in delays or additional costs.
- Once your inventory is in Amazon’s hands, you have less control over pricing, inventory management, and handling issues.
Understanding FBA’s fee structure is crucial. Storage fees are based on the volume of inventory stored, with higher fees during peak seasons.
Fulfillment fees cover picking, packing, and shipping, while the referral fee is a percentage of the product’s selling price. Long-term storage fees apply to inventory stored for more than six months. Efficient inventory management is vital to avoid excess stock, which can incur long-term storage fees, or stockouts, leading to lost sales and lower search rankings.
FBA offers significant advantages in terms of customer experience. Fast shipping through Amazon Prime, reliable delivery, and easy returns can increase customer satisfaction and repeat business.
FBA also allows you to reach a global audience, as Amazon’s international marketplaces and Prime memberships provide a broad customer base, enhancing your sales potential. The scalability of FBA makes it suitable for businesses looking to grow rapidly, as Amazon’s fulfillment network can handle larger quantities without the need for additional infrastructure on your part.
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Can You Sell Digital Products on Amazon
Yes, you can sell on Amazon even if your items aren’t tangible. The most popular way to sell digital products is through Amazon’s Kindle Direct Publishing (KDP) for eBooks, but this category also includes audiobook downloads, printables, art prints, and music.
Types of Digital Products
- Kindle Direct Publishing (KDP) is the go-to platform for selling eBooks. Familiarize yourself with Amazon’s strict eBook guidelines to ensure your content complies.
- To sell music on Amazon, you can use services like TuneCore. TuneCore charges $9.99 for a single and $34.99 for an album.
How It Works
As an Amazon seller, you can offer digital products like eBooks via KDP or music through TuneCore. Here’s the process:
- Select a niche and define your brand and marketing strategy.
- Choose the appropriate subscription or membership and upload your digital content following the platform’s guidelines.
- Customers purchase and download the items immediately, and you receive funds via the platform’s payment gateways.
What are the pros and cons of selling digital products on Amazon?
The pros of selling digital products on Amazon include immediate access for customers, which eliminates the need for physical shipping and reduces associated costs. Digital products are easily scalable as they can be replicated and distributed without incurring additional production expenses. This scalability is further enhanced by Amazon’s large customer base, providing significant sales potential.
Additionally, creators maintain greater control over their intellectual property and can generate recurring revenue through licensing agreements.
On the downside, digital piracy is a significant challenge, with unauthorized copies potentially being distributed without your control, leading to revenue loss. The market for digital products is highly competitive, making it harder to stand out.
Lastly, digital products require robust technical support to handle downloads, updates, and customer issues, adding a layer of complexity to the business.
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What are Amazon’s Product Policies and Restrictions?
Amazon bans certain items and requires approval for others. Restricted products include specific electronics, dangerous goods, and some branded items. Make sure your product listings are accurate and follow all laws.
Why is Regular Account Management Important?
Regularly managing your Amazon seller account helps monitor sales performance and spot growth opportunities. It improves your product listings’ visibility and appeal, leading to more clicks and sales.
Summary
Selling on Amazon without inventory is a smart way to leverage e-commerce without the hassle of managing stock. Understand market dynamics, follow Amazon’s policies, and optimize your operations to run a successful business. Take advantage of the opportunities Amazon offers for sellers without inventory by using Amazon PPC management tools like Ad Badger for strategic keyword planning to achieve success.
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Special thanks to Michael Tejeda, Bernard Gatheru, Pedro Moreno, Karolina Facchin, Catherine Cardenas, Vanessa Nieto, Nancy Lili Gonzalez, and Michael Erickson Facchin for the production of this blog.
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