Is dropshipping hurting your Amazon business?

 

Dropshipping is not your friend

As the fantastic Amazon seller that you are who has found the best suppliers, it’s time to figure out how you’re going to handle your inventory. Will products be sent to you for inspection before sending them to fulfillment centers or shipping to customers (Hint: yes, always)? Have you decided if you will fulfill orders on your own, or send your inventory over to Amazon Fulfillment Centers and let them handle it for you? How are you going to get your merchandise from Point A (the supplier) to Point B (you) to Point C (the customer)?

If your answer is dropshipping, try again.

What is dropshipping?

Glad you asked! Dropshipping is allowing a third-party to fulfill orders to customers on your behalf. But is dropshipping hurting your Amazon business? Let me explain. You, the seller, never see the product. You have no idea what it looks like, if it’s in good condition, if it’s used, or broken. Overall, you have no idea what you just sent to your customer, and Amazon is not a fan of this method. They even have a policy on it, which you can read ​here​​​. You will see within the Amazon policy that dropshipping is acceptable in specific circumstances.

The easiest way to explain how dropshipping is acceptable: Think of a large warehouse store that might have an Amazon account; a customer orders something from that store through Amazon, and the order is fulfilled through a warehouse location that might be geographically closer to the customer. They are the seller of record, and there wouldn’t be 3rd party information attached to the package.

 

How dropshipping is not acceptable

You, the seller, do not have inventory, but you have items listed within your inventory, making both Amazon and your potential customers believe you actually have product. When a customer orders something, you log into the website where you saw this item, order it for the customer, and add their address as the delivery address. The purchase is not sent to you, which causes a break in good faith your customers have with you to send them quality items. Amazon is 100% all about the buyer experience. They expect sellers to be responsible and accountable for all merchandise from the moment it is added to inventory, ordered by the customer, all the way to the customer receiving it (and often beyond the receipt date).

It is essential to keep in mind that adding inventory to your seller account when you don’t have it can lead to an onslaught of other risks that you may not have thought about: Does that item have intellectual property protections? Is it branded or trademarked? Do you have permission from the rights owner to sell it? Always do your research into the products you want to list. Ensure you have the proper authorization to sell those items (just because you can list it on Amazon doesn’t mean you have the permission to sell it!). Amazon also regularly performs authenticity checks on ASINs within your inventory, which means they’ll request invoices, even if you haven’t sold anything. If you don’t have an invoice, how can you prove the item is authentic?

Let’s review

Is dropshipping hurting your Amazon business? Yes. Dropshipping is 99% of the time frowned upon and can give you many more headaches than ease of mind.  It is always better to have your items sent to you to inspect your products’ quality and condition. This also gives you extra assurances that your supplier is legit, and if you want to continue working with them.