Smart entrepreneurs would like to try their hand at Amazon dropshipping to share in the huge profits that the retail giant is generating. In 2019, Amazon sales stood at $280 billion while there were more than 300 million active users on this global ecommerce nexus.
The Fulfilled by Amazon program gives you all that you need to start your dropshipping business on Amazon. The retail giant will take care of all shipping, inventory handling and storage so that you can save more while doing less.
The major benefit of Amazon dropshipping is that shipping times are one of the very fastest while being economical. Other platforms and logistics services may also ship within 24 hours but for that they charge a premium which can add substantial costs and eat into your profits. But Amazon offers highly competitive rates which is why it is the hot favorite with online entrepreneurs.
To sell online successfully, you have to offer the fastest shipping times. Customers want nothing short of same day delivery. Hence, Amazon dropshipping is the answer to offering fast fulfillment that will satisfy your customers.
Amazon Dropshipping Costs
When you sign up as an Amazon Seller (to start dropshipping) you will have to choose between the Individual Plan which costs $0.99 per item sold and the Professional Plan which costs just $39.99 per month irrespective of how many items you sell.
You may have noticed that with the Professional Plan, you can sell a lot of items while incurring just $39.99 per month. That is good value for money.
Also bear in mind that you will have to pay dropshipping fees for each item sold. The rate depends on product type and normally ranges from 10% to 15%.
Is Amazon Dropshipping Worth it?
Depending on your profit margin, it may be. Dropshippers usually apply a profit margin between 10% and 30%. If your profit margin is 30% and the dropshipping fee is 15% then you get a profit margin of 15%.
If you are able to sell more items then this profit margin may be reasonable. And dont forget that you will access to a global audience.
You can gain better dropshipping margins with the Amazon Buy Box. However, winning the Buy Box is easier said than done because just about every other seller is vying for it. As you learn the tricks of the trade, you could make your strategy for taking over the Buy Box to boost profit margins and revenue.
Amazon Dropshipping Benefits
- No warehouse costs
- Plenty of suppliers
- Large audience to target
- Many product categories
Amazon Dropshipping Tips and Tricks
Here are the Amazon dropshipping tips and tricks that you can use to make money.
Win the Buy Box
As mentioned previously, competition for the Buy Box is very high. Hence, it will be hard to target especially when you are a beginner.
But the Buy Box is the place to be since this is where much of the sales revenue comes from.
To improve your chances of winning the Buy Box, you must first establish a 95% seller rating. Second, you must ship your items quickly so that customers return for more. Third, your shipping costs should be less compared to other sellers.
You will also need to take care of other factors like getting a high feedback score, speedy customer response times and low refund rates. Taking care of all these factors can at some point help you win the Buy Box.
Diversify to Grow Your Brand
You need to look further beyond just Amazon. Other platforms can also prove to be lucrative. Increasing your sales channels is necessary since competition is intense on Amazon. With more sales channels, you will be able to earn more.
For example, you can take advantage of Shopify to add Facebook Shops, Facebook Messenger and Instagram to promote your brand and make you money.
As you build brand recognition, more people will start buying from you. So if your brand becomes popular with Shopify, then customers who recognize your brand will want to buy from you on Amazon.
You should aim for nothing short of a 95% seller rating. With such a high seller rating, you stand a better chance of keeping up with your competitors and winning customer confidence. You can also take over the Buy Box with such a stellar rating.
The seller rating is perhaps the first thing that customers see before they decide to buy from you. So make sure its great.
Optimize your product pages so that they can rank higher on Amazon search results. This is similar to how you optimize your blogs and webpages for keywords to appear on the top of Google search results.
Merchant Words and other such tools can help pinpoint potentially viable keywords. When running Amazon Ads, you can available tools to find keywords that you can optimize your product pages with for better Amazon search ranking.
Competitive product pricing is imperative for selling more items. You want to keep your prices low enough so that customers will buy from you. But you must also have enough profit to pay for Amazon shipping fees.
Hence, your profit margin should strike the right balance to attract customers and yield reasonable profits.
To motivate more shoppers to buy from you, take advantage of coupon discounts. Of course, you will also have to ensure that you can make enough money, so you will have to size your coupons discounts accordingly.
Pay attention to product titles since this is what customers first see. Their decision to read your product page depends on how good the product title is.
One way to make product titles is to think ahead. Think of user intent and possible product applications. Include it in the product title to entice shoppers.
By using some of the tips and tricks mentioned above, you can make more money via Amazon dropshipping.