Learning to sell on Amazon without inventory can be your first step to creating a thriving online business.
Most budding entrepreneurs think selling on Amazon requires stocking piles of merchandise in a warehouse.
Conversely, you don't need inventory to sell on Amazon. In fact, you don't have to incur upfront expenses buying products to run an Amazon business.
In this in-depth guide, I'll show you can start selling on Amazon without holding stock.
I'll cover the following topics:
- Why you should sell on Amazon without inventory
- Amazon business models
- Amazon fulfillment methods
- How to leverage dropshipping to sell on Amazon without inventory
- Resources to help you establish your business
By the tail end of this post, you should be able to start and scale your business without spending money on inventory.
Let's dive right into it.
Benefits of Selling on Amazon Without Inventory
There are many reasons you'd want to know how to sell on Amazon without inventory. These include:
You Don't Need Upfront Investment
The primary benefit of selling products without buying them first is that you won't incur upfront costs. Essentially, you can start your business with little or no money.
When you don't have to pay for products upfront, you can source a wide range of products, maximizing your profits.
You Can Focus on Other Areas of Running Your Business
Inventory management can be time-consuming.
Running a no-inventory business model allows you to use the time you'd have spent on logistics and fulfillment of inventory on marketing and customer service.
You Can Grow Your Business Faster
Marketing and customer service are important because more people can know about your business, enabling them to make informed decisions.
Amazon boasts a staggering 310 million buyers worldwide, so the more eyeballs you put on your business, the better.
Amazon is a Reputable Marketplace
Online shoppers trust Amazon. 89% of customers say they're more likely to purchase products from Amazon than other eCommerce sites.
You can leverage the trust Amazon has created with customers to scale your business.
Amazon sellers enjoy protection against chargebacks, cushioning them against potential risks.
With all these benefits, selling on Amazon without inventory can be an excellent way to generate a stable income online.
Different Amazon Business Models
Knowing the different business models on the platform and how they work is crucial to help you understand how to sell on Amazon without inventory.
While you still incur upfront investment to sell products on Amazon via arbitrage is relatively more cost-effective than the other business models.
Arbitrage involves buying products from retail stores and then selling them on Amazon for a profit, which means managing inventory is part of the business.
Amazon arbitrage is broken down into two categories; online and retail arbitrage.
Both models are similar, but as the names suggest, one is online-based while the other is run from a brick-and-mortar retail store.
Amazon wholesale involves buying physical inventory in bulk from manufacturers and reselling them in smaller quantities to retailers, typically arbitrage sellers.
Again, this model requires you to hold stock. And because you'll purchase inventory in bulk, you must anticipate significant upfront costs.
You can build a flourishing Amazon-based business by selling handcrafted goods on the marketplace. Still, you'll need to maintain an inventory with this model.
Private labeling involves selling products under your company's name even though you're not the manufacturer.
While private labeling is profitable, it also includes the highest upfront costs for running an Amazon store. Private label is the most common Amazon business model for third-party sellers.
Amazon dropshipping is a popular model for people looking to make money on Amazon. It is the best way to sell on Amazon without inventory.
You don't have to worry about packaging, inventory management, or shipping with dropshipping.
While there are other ways to sell on Amazon without inventory, I will focus on dropshipping for now.
How Does Dropshipping Work?
As I mentioned, selling dropshipping products is the easiest way to get started on Amazon. The business model allows you to sell your target without worrying about inventory management.
Your work as a dropshipper is to determine which products you want to sell on your Amazon store and find reliable suppliers to take care of the shipping process.
You only need to market the products to your customer base on and off Amazon. The supplier will hold and maintain the inventory.
As a dropshipper, you want to find winning products. I am talking about merchandise that your target customers want to buy. It'd be best, therefore, to use an Amazon Product Research Tool to find profitable and marketable items.
The Downsides and Upsides of Selling on Amazon Without Inventory
Dropshipping is an excellent way of selling on Amazon without inventory. But before taking the plunge, consider the pros and cons of this business model. That way, you can decide whether it is a viable idea.
Below are the key advantages and disadvantages of leveraging dropshipping as an Amazon seller.
Some upsides of Amazon dropshipping include:
Low Up-front Costs
The primary benefit of starting a dropshipping business is that you don't need inventory. Instead, the customer places an order; you'll buy the merchandise from a supplier, who'll then do the shipping, and you will keep the profit from the sale.
You don't have to own warehouse space or buy inventory, allowing you to maximize profits.
Seamless Setup Process
It is easy to start as a dropshipper since managing inventory isn't part of the setup. To earn money, advertise your product, generate a sale, and get paid.
While you need to work hard, you can build a stable business if you're consistent and know how to source winning products.
As a rule of thumb, stick to Amazon dropshipping regulations.
You Can Sell a Variety of Products
Since you don't have to manufacture or stock merchandise, you can sell multiple products. And, with 30+ categories on Amazon, you can never run out of products to sell.
Remember to choose profitable products and reliable suppliers. You can leverage product and supplier automation software to make the entire process seamless.
Below are some downsides of dropshipping to generate online sales.
The barrier to entry in the dropshipping industry is relatively low. As a result, many people throng the model to enable them to start an online business.
To survive the stiff competition, you may have to keep adjusting prices from time to time. Even though you can still make money, the strategy may need to be revised in the long run.
Besides, there's no guarantee that customers will like your dropshipping website's products, especially if you don't do in-depth research.
Dropshipping may involve working with overseas suppliers. As a result, you must anticipate shipping delays. If you've partnered with non-reliable suppliers, this may mean losing customers.
Non-existent Product Quality Control
It's difficult to determine the quality of the products you're sourcing. But, again, this boils down to working with suppliers you can count on to deliver high-quality merchandise.
Step-By-Step Guide To Amazon Dropshipping
Since we've established dropshipping is an excellent model to sell on Amazon without inventory, let's now go over the exact steps you need to follow.
Step 1 - Create an Amazon Seller Account
The first step involves creating a seller account.
Then, choose a professional selling plan. I don't recommend the individual plan because it lacks crucial features. You cannot advertise your product listings with an individual plan. A professional selling plan costs around $40 monthly.
Step 2 - Find a Profitable Product
Many sellers who fail to build thriving dropshipping don't do one thing right; find a profitable niche. Amazon boasts over 12 million products, so it's understandable why sellers fail to pinpoint the right products.
One of the best strategies to find profitable merch is to go for high-demand, low-competition items.
Side Note: Leveraging a good research tool makes finding viable merchandise in multiple niches easier.
Step 3 - Find a Trustworthy Supplier
You have found profitable products; the next step is to size up genuine suppliers to work with.
Finding a supplier you can count on every time is one of the most challenging aspects of selling products online.
Still, you can simplify the process by using software that allows you to scrape a list of authentic suppliers at the click of a button.
In addition, you can look for suitable suppliers on leading online marketplaces like Alibaba or AliExpress.
It would be best to contact a supplier to establish a working relationship beforehand. The last thing you want is for a supplier to ship your orders with their company address because it is against Amazon's policy.
Step 4 - Create a Product Listing
You now have a great product and a reliable supplier. It's time to list your merchandise. Here's how to do it:
- Open Seller Central and head over to Inventory
- Click "add a product." The product screen will come up.
- Click Inventory and then Add a Product
- Create "create a new product listing" to complete the process
Next, you'll want to choose your product category and fill out the info for the listing.
Be sure to account for Amazon's fees setting your dropshipping price. The costs are as follows:
- Professional Seller: A monthly fee of $40
- Individual Seller: $0.99 per sale (not recommended)
You'll also incur a referral fee, typically ranging from 8 to 15% of the item's price.
Tips for Amazon Dropshipping
While it's pretty easy to get started with dropshipping as a way of selling without inventory, you need to use a smart strategy to make good money.
That said, here are several tips to help you make the most out of your dropshipping business.
Use Amazon's Advertising Tools
Amazon offers a range of advertising tools, including sponsored products and display ads, that can help you drive more traffic to your listings and increase sales. It's worth exploring these options and testing different campaigns to see what works best for your business.
Stay up-to-date on Amazon's Policies
Amazon has strict policies in place to protect both buyers and sellers. Ensure you understand these policies and adhere to them to avoid issues with your seller account.
Use a Dropshipping App
Several apps are available to help you automate and streamline your dropshipping business on Amazon. These can help you manage orders, track inventory, and even automate pricing, saving you time and effort.
Utilize Customer Service Responses
Providing good customer service is key to success on Amazon. Respond promptly to customer inquiries and complaints, and go above and beyond to ensure a positive customer experience.
Keep an Eye on Your Competition
Keeping track of what other sellers in your niche are doing is essential, especially if you're in a highly competitive market. This can help you stay ahead of the curve and identify opportunities to differentiate your business.
Diversify Your Product Range
One way to reduce risk and increase the chances of success with your dropshipping business is to diversify your product range. This can help you tap into different market segments and reduce the impact of any individual product's performance.
Create High-Quality Product Listings
Your product listings are the first thing potential customers will see, so making them as compelling as possible is essential. Use clear, high-quality images and write detailed, accurate product descriptions with the right keywords to help convert viewers into buyers.
Monitor And Optimize Your Pricing
Keep an eye on your competition and adjust your pricing accordingly to remain competitive. You can also use tools like Amazon's repricer to automatically adjust your prices based on market conditions.
Other Ways to Sell on Amazon Without Inventory
Besides dropshipping, you can make money on Amazon without holding inventory using the following options:
Try to secure a wholesale deal with a supplier. Then, you can purchase products at a discounted price and resell them on Amazon. This allows you to sell merchandise without holding any inventory, as you can buy them as needed to fulfill orders.
Print on Demand
With print-on-demand products, you can create custom merchandise, such as t-shirts or mugs, and have them printed and shipped directly to customers as orders are placed. This allows you to offer a wide range of products without holding any inventory.
With consignment, you list someone else's products on Amazon and pay a commission on each sale. You don't need to hold any inventory, as the consignor owns and ships the products.
Sell Digital Products
You can make money on amazon without holding inventory by selling digital products such as:
- Amazon Kindle ebooks
- Digital art prints
- Downloadable audiobooks
- Digital versions of your courses
Different Amazon Fulfillment Methods
Amazon FBA (Fulfillment by Amazon)
Amazon FBA is a fulfillment service offered by Amazon that allows sellers to store their products in Amazon's warehouses and have them shipped directly to customers by Amazon.
As an FBA seller, you'll source FBA inventory, and the platform will take care of shipping, saving you time and hassle.
The Amazon FBA business is a good option for sellers looking to leverage Amazon fulfillment centers and networks.
You can take an Amazon FBA course to help you learn the ropes about how Amazon's FBA program works.
Amazon FBM (Fulfillment by Merchant)
Amazon FBM refers to a method of selling where sellers list products on Amazon but manages all storage, shipping, and customer support by themselves. Sellers on the professional selling plan can choose their shipping rates.
3PL (Third-Party Logistics)
3PL refers to a company that handles logistics and fulfillment services for other businesses. This can include storage, shipping, and handling of orders. Using a 3PL can allow sellers to outsource fulfillment and focus on other aspects of their business.
3PL can be a good choice for sellers who want more flexibility and control over their fulfillment process.
Frequently Asked Questions
What Items Do You Not Need Approval to Sell On Amazon?
You do not need approval to sell most products on Amazon. However, certain categories of products may require approval before you can list them for sale on the platform. These categories include:
- Drugs and drug-like substances
- Tobacco and tobacco-related products
- Weapons and related items
- Hazardous materials and dangerous goods
- Personal care products (e.g., cosmetics, hair dyes, contact lenses)
- Food and beverages
- Certain health and medical products
- Prescription medications
Amazon has strict policies regarding the sale of these types of products.
If you plan to sell products in one of these categories, it's a good idea to review Amazon's policies and requirements carefully and seek approval as necessary.
You can find more information about these policies and requirements on Amazon's website.
What Is the Role of An Amazon Fulfillment Center?
Amazon Fulfillment Center is a large warehouse where products are stored and prepared for customer distribution. It is the place to receive orders from Amazon's online marketplace, process them, and ship the products to the customers.
At the center, employees are responsible for a variety of tasks, including:
- Receiving and sorting incoming products
- Storing products
- Picking and packing orders
- Shipping products
Is It Worth It to Sell on Amazon as an Individual?
Selling on Amazon as an individual is worthwhile, as it allows you to reach a large audience and earn a profit.
Still, it is essential to consider the costs and potential challenges before you begin selling on Amazon. Some of the factors to consider include:
- Customer service
- Shipping and fulfillment
The Bottom Line
There you have it.
You don't need to have warehouse storage to start selling on Amazon.
You can pursue the above solutions to make your mark in the eCommerce space without incurring massive upfront costs.
You can start with dropshipping, create multiple sales channels and scale to other options as your business grows.