Amazon Shipping: 10 Tips for Drop Shipping Success
Whether you’re training someone in the strategy of chess, or in this case, the e-commerce technique of drop shipping success for fulfillment – there are tricks that usually work if someone is willing to learn. Let’s look at these techniques that support your drop shipping efforts best:
Don’t Attempt to Compete Solely on Price.
The most common beginners’ error in e-commerce is competing only for cost. If the only aspect that sets you apart from other sellers is your price, you will not get much business. When price is the only selling point, the minute someone beats you, you end up losing the price war. The only companies that can keep up a “lowest price” strategy are e-commerce monopolies with the buying power of Walmart. They’re able to get the absolute best whole pricing on any particular product simply by purchasing huge amounts at once.
Does cost matter? Yes. Is it all that matters? Definitely not. If price was the only factor, Walmart would monopolize the entire retail sector. Instead of offering something for a lesser cost, try to offer more and justify a higher cost. Whether it’s a service, deal, promotion, free shipping, or anything else, there are plenty of ways to command a higher cost without much risk of losing the sale.
Don’t Sell the Same Items as Everyone Else.
The fastest way to fail in e-commerce is to attempt selling the same hot products as every other seller. When a high number of businesses and individual sellers sell the same merchandise, competition drives prices down. The only companies making a profit now are those who receive large discounts for buying in huge numbers. Even then, the profit margins are very slim.
As you will see in the following section, picking a niche market is a sustainable strategy. As well as developing the wisdom and expertise in that particular market.
Do Focus on Niche Products.
Among the greatest advantages of using a drop-ship is the freedom it gives you to experiment with selling assorted merchandise. In a traditional retail operation where products are bought up front and in bulk, retailers are not going to risk buying inventory unless they are certain they will be able to sell it in a short time period. That’s why you will often have trouble locating specialized merchandise on the shelves at Walmart.
What about online sellers who drop ship? Online retailers who use drop shipping suppliers aren’t buying inventory up front and only pay for the products after they sell. They don’t have to worry about the same risk. It’s possible for you to list an automatic shrimp-peeling machine on your e-commerce platform. If it does not sell, the only thing you lose is the little time spent listing it. As a result, online merchants who drop ship can offer various products that big-box retailers are not trying to sell because they are too risky.
Do Cash in on Seasonal Objects / Goods.
Seasonal goods can be a significant cash cow for online retailers who drop ship because typical retailers do not generally carry enough of it for fear of overstocking. They do not need to have leftover Christmas items in the summer and money tied up in inventory that is not selling. This means there is a huge opportunity for online retailers who drop ship since they do not care about overstocking – they are not carrying inventory in the first place.
Do Offer Merchandise Bundles.
An important merchandising strategy is bundling related products and offering them as a package deal. This holds true for drop-ship retailers because bundling can reduce shipping costs if all of the products are coming from the same place. If you see that a specific product is selling well, but you do not have a great margin on it, look around at what people might need with that product.
Joe Volpe, Paralegal at Rosenbaum Famularo, PC: Update on Bundling
If you are planning on selling bundled products be sure to review Amazon’s ASIN Creation Policy to ensure you are selling proper variations. All bundles must be in their original manufacturer packaging, since it is against Amazon’s policy to bundle products on your own. This holds true even if the products are IP Protected private label branded items.
Example: Bundling two three-packs to create a single package of six is not allowed unless you contact the manufacturer directly to have them do so when the products are created. This is taken directly from Amazon’s policy page, see below:
Drop Shipping as a primary Business Model:
If you solely rely on Drop Shipping to sell on Amazon, there are small easy ways to protect your account health and avoid a suspension. The first and most important is to purchase a limited quantity of 1 item for each ASIN you plan on listing on. Although this goes against the principal reason one drop ships, having 1 item for each ASIN will expedite the review process for sellers when an Amazon authenticity check comes about. When sellers are listed on an ASIN without having any sales Amazon tends to question this inactivity by requesting invoices from that seller. If you are drop shipping and do not have any proof of purchase to provide Amazon with in the limited amount of time they require you to, your account is most likely going to get suspended.
Drop Shipping Performance Notification:
The language you are most likely going to see when Amazon is looking into your account for Drop Shipping is: “…you are listing product that may infringe on the rights of others or may be inauthentic.” These notifications are usually ASIN specific and provide a 7 to 14-day time period for the seller to provide invoices before their account is suspended. This is not to say that accounts do not sometimes receive instant suspension notifications or shorter time periods to provide their proof of purchase.
Why does Amazon suspend for Drop Shipping?
As most sellers know or come to know, Amazon is obsessed with customer satisfaction. They are willing to sacrifice Millions in revenue from a single seller in order to ensure their buyers are happy one hundred percent of the time. If buyers are always happy then the million-dollar seller mentioned above will be easy to replace, but this begs the question: how does this relate to drop shipping?
The Answer is simple, a major part of customer satisfaction deals with buying authentic products. Amazon wants their buyers to have the confidence that every time they click to purchase a product it is real, and the supply chain can be traced back to the manufacturer. So, for drop shipping, if the product was never purchased how can one prove that the product is real if it was never purchased? For Amazon’s purpose, only invoices can show Amazon that the products are real. This notion also ties into the 2 types of drop shipping, one that is allowable and one that is not. Amazon’s Drop Shipping policy is allowable only if the seller first inspects the inventory before the products are sent to customers. If you allow this third party you are purchasing from to ship directly to customers then you are putting your account at a higher risk of suspension since you cannot say that you physically examined the product for condition and authenticity.