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Why DropShipping on Amazon Is 1 bad Idea

Why DropShipping on Amazon Is 1 bad Idea

Still heavily publicized, dropshipping on amazon is promoted as the way to earn an income from home and give up the 9 – 5.

Maybe that mantra may have had some validly- Once– but not any more. First, the purge of suppliers started over 12 mths ago.

And recently, the slashing of commissions for affiliates.

Now it is the turn of the drop shippers to undergo some sort of punishment .

If you have been involved in E-Commerce for some time, you may remember the E-Bay purge of a few years ago, when it removed thousands of sellers from it’s platform.

E-Bay was clamping down on sellers who were recalcitrant in giving refunds. Many sellers claimed, all they were doing was going through a dispute process.

This purge by Amazon is a clamp down on some of the selling practices adopted by some drop shippers, as you will see in the video below.

The Purge of the Suppliers.

This has nothing to do with Covid -19. Amazon began this purge at the beginning of 2019.

It is more to do with money than anything else.

When suppliers sold to Amazon, they were paid up front. In March 2019 Amazon halted large numbers of wholesale orders it had made.

The consensus is that…

The retail giant is encouraging those affected to sell their wares through its marketplace, which will almost certainly be a costlier and riskier proposition in most instances.

To produce those sales, suppliers will have to bear all of the costs associated with marketplace selling – from fulfilled by Amazon warehousing fees to advertising.

According to Patricio Robles of Econsultancy

Eventually it’s conceivable that Amazon could carry relatively little merchandise that it sells directly to consumers, save for a growing number of higher margin Private Label Brands.

From Bloomberg..

It’s expected that small-time vendors (companies selling their goods directly to Amazon on a wholesale basis) will have to make the switch from using the Vendor Central platform to the Seller Central platform.

Next the Purge of the Affiliates…

In 2018 – 2019 Amazon had $280.52 Billion in sales. Most of it driven by its online platform.

With over 1 million affiliates Amazon is primarily a affiliate driven shopping platform.

Unless you were getting your pages in the first 10 results of a google search, you never had much show of selling much, if anything.

I’ve always had a problem with the 24hr cookie though.

Commission rates that were between 4 and 10% are now 1 – 3%.

If you have affiliate pages for Amazon products already operating, it is simply a case of hanging on to them. If they are big ticket items, you will still make money.

A list of rates and some commentary here.

If your an affiliate marketer there are plenty of good options out there for you. One Here.

Why DropShipping on Amazon Is 1 bad Idea

Now. It’s the Dropshippers Turn.

From the page of AmazonSellers Lawyer

It seems like Amazon is continuously going to crack down harder and harder on anybody they feel is violating their drop shipping policy.

Amazon Sellers’ News: Sellers are continuing to be suspended for drop-shipping directly from places like Sam’s Club or Walmart directly to customers

As Jungle Scout.com clearly shows in the video (below).

Is DropShipping on Amazon Dead?

No, there will always be a platform for sellers on Amazon. And the dropship lifestyle will continue. There are other markets to peddle our craft.

If your an Amazon dropshipper, it becomes a whole new ball game (for some).

It is best not to rely on just one platform though. It costs nothing to list on E-Bay and other sites, and you don’t pay anything until you sell.

Many using E-Bay have put up with their twists and turns over the years, but still list there, and are satisfied with their return, well they complain.

I think the louder they complain the more they like it, otherwise they would stop listing there ( you would think).

Other Drop Ship Options

How about Walmart?

No set up or maintenance fees and sellers pay a fee of 8 – 20% on sold items.

Unlike E-bay it is a fixed price platform.

A list of alternatives below.

Why DropShipping on Amazon Is 1 bad Idea
Courtesy of Salehoo

Setting up Your Own Dropship Store.

This should be a carefully considered option. It will have set up costs, usually a monthly plan, plus percentages for hosting, fees for transactions and extras for any apps you sign up for.

The profits to be earnt are substantial, and you are not dependent on the whims of some one at Amazon, or E-Bay wanting to change tact, right at that point where everything you have set up is working for you.

Some other reasons to consider doing this..

  • For building your own brand.
  • Building your own store
  • Selling at prices set by you.

The traffic will not be as heavy as the big platforms, but once your store is set up, it will not take much to get traffic to your products.

Shopify, Wix, Magneto and Big E-Commerce are popular, with ready made stores, really we are spoilt for choice.

A detailed review here by Merchant Maverick

It all costs money though, and you need to have some sort of plan as to how you are going to get a return on your money.

Many people start with a small amount (less than $500).

For those with some E-Commerce experience it is enough to get them started and have income coming in before the $500 has been spent.

If you want to learn how to set up your own Woo- Commerce store try… This Link

I did a blog post earlier this year on the best courses for 2020. We could have had these done and looking for more with this never ending covid thing.

Back to the subject…

Dropship Apps? Beware of Scams.

Whats a Dropship App?

There is a plethora of online services to help online retailers run their business more efficiently and more profitably.

Just like the gold rush days, there are the good, the bad and the average.

Dropshipping apps, are apps that have data bases of products in varying categories, which can then be downloaded to your site. The app will always remain in sync with your site, record sales, the better ones will full fill sales. and more.

The best one in my humble opinion is AliDropship.

Don’t be fooled by the name it is not in any way associated with Aliexpress except that it downloads stuff from Aliexpress.

If you didn’t know Aliexpress has items from 14 different countries. It is not exclusively Chinese as some would have you believe.

Click here and you will be taken to a page where everything is explained to you with great clarity.

Just to cut to the chase, it costs $US89.00 (A one time payment), and it is suitable for Woo-Commerce and Shopify.

I don’t like forever monthly payments.

My other recommended dropship app is Sprocket.

Sprocket specializes in US & EU products. I don’t like the monthly payment on it.

At $19.00 for the basic one sounds reasonable, but you only get 25 products to list. Where as with the Alidropship plugin you get unlimited products.

At the moment Sproket is giving a couple of weeks free, plus Shopify is giving 3 months free.

So pick your app and go and play with on Shopify for a couple of months.

Does Salehoo still play a role in the Dropship Space.

Short answer is Yes. A big role.

It may be a little old school but if you have not been involved in E-Commerce previously.

Starting with Salehoo’s labs finding which products are selling, then testing the waters on the free sites like, E-Bay, Amazon, or E-Bid is about as good an education you can give your self in E-Commerce.

With more than 8,000 suppliers, all vetted as genuine manufactures or wholesalers Salehoo is here to see that you have great back up and that everything around their platform is above board.

You can click Here to be taken to Salehoo’s information page

Conclusion

Salehoo took a bit of a hit last year with Amazon moving the goal posts. Still they are a reputable company, having been in the E-Commerce space nearly as long as E-Bay.

I have no problem recommending them. Want something unique? have a look at Salehoo.

Sprocket and Alidropship are great products. Sprocket was off the scene for a while last year, but is now back bigger than ever.

The best thing about Sprocket, Alidropship and Salehoo is the back up after the sale.

Alidropship keeps adding little innovations, it is way undervalued in my opinion.

If you go the Woo-Commerce path, save this link You will get a good hosting deal.

All the best MJD.

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