One of the most common questions I get is “How to sell on Amazon without inventory?” If you’re looking to start an Amazon business and are afraid of building inventory, don’t worry! This advice guide will answer that question and show you how to sell on Amazon without inventory.
How To Sell On Amazon Without Inventory FBA vs. FBM
Once you’ve decided to sell your product on Amazon, it’s time to decide how you’re going to do it. There are two main ways: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). Amazon FBA and Amazon FBM are two separate services that can be used to sell products on Amazon without inventory. The goal of this article is to educate you about these two options, so you can decide which one best fits your business model.
With FBM, you store and ship your own products directly from your warehouse or store. With FBA, Amazon handles all fulfillment and customer service for you. FBA is a fulfillment method that allows you to store your inventory in Amazon’s fulfillment centers, which means all of your customer orders will be processed, packaged, and shipped out by Amazon.
If you choose to use FBM instead, this means that you’ll need to store your inventory at your own location—and process, package, and ship out every order yourself. It’s more expensive than using FBA because it’s not automated like the latter option; however, if you don’t want to pay shipping fees or give up control over how products are packaged (or if shipping speed isn’t an issue), then this might be a better choice for you.
But there is another way. I’ll show you how to sell on Amazon without inventory using Fulfillment by Merchant (FBM) with dropshipping.
What is Amazon FBM?
Amazon Fulfillment by Merchant (FBM) is one of the most popular options for selling on Amazon. Amazon charges a fee for this service, but it is still cheaper than using FBA.
The biggest downside to FBM is that you are responsible for shipping the product from your location to the customer. This can be time-consuming and expensive, especially if you have a large inventory. But if you want to sell on Amazon without Inventory you should start using dropshipping. Dropshipping is the process of selling physical without holding any inventory and falls under FBM category.
Dropshipping falls under FBM category and is a form of e-commerce in which a retailer does not keep goods in stock, but instead transfers the customer order and shipment to a third party. The third party—a wholesaler or manufacturer—then ships the goods directly to the customer.
Although dropshipping doesn’t require you to purchase inventory, it does come with some other challenges. For example, if you’re looking for more control over your product selection and pricing, dropship suppliers may not offer the flexibility you need. They also tend to charge higher fees than traditional suppliers do because they have less overhead costs due to their lack of inventory and physical space.
Advantages of Dropshipping
There are a variety of advantages to selling on Amazon without inventory. If you’re just starting out, or if you want to grow your business, it can be an excellent option for you. Here are some of the biggest benefits:
- No upfront costs to ship products – You won’t have to pay for shipping labels and materials until after the product has been sold.
- No upfront costs to store products – You won’t have to buy extra storage space until after the product has been sold.
- No upfront costs (or even liabilities!) from managing inventory – Dropshipping eliminates this inefficiency by outsourcing all aspects of ordering, storing, shipping and fulfilling orders—leaving you free from the liability of having too much inventory on hand!
- No ongoing employee overhead required – You do not need any employees whatsoever when dropshipping because these tasks will be entirely handled by your dropshipper or 3rd party fulfillment service provider (FSP). This saves money while still ensuring customer satisfaction through excellent customer support through these FSPs’ call centers which are often located overseas (in countries like India) where they can pay people very low wages while keeping their prices competitive with US based companies who must factor high labor costs into their pricing models.”
Cons of Dropshipping
There are a few cons to dropshipping that you should be aware of before jumping into this business model.
- You don’t own the inventory so if you run out, you have to wait for your supplier to ship more. This can cost time and money in the form of missed sales, paying for shipping twice and/or having customers return their purchases because they don’t want to wait for the product they ordered. If you have multiple products that sell at different times during the year, it may be hard to predict when certain merchandise will sell better than others which could make inventory planning difficult.
- No control over inventory.
- You’re dependent on your suppliers’ fulfillment process and shipping times.
- You have to rely on the supplier’s customer service.
- You’ll have to pay for any returns that happen in your store, which can be costly if you don’t have a return policy set up with your supplier.
FBM fees are charged to sellers who use Amazon FBM. You can find FBM fees here.
Should I dropship on Amazon?
If you’re a new seller and aren’t quite ready to invest in inventory, dropshipping can be an easy way to get started. If you have a product that already has some traction, dropshipping is a great way to test the market and see if there is demand for your product. Dropshipping also helps you test your branding, packaging, and other aspects of the business before investing in expensive inventory.
As long as you don’t mind putting in some time marketing the products on Amazon, dropshipping can be a profitable option for many Amazon sellers. Dropshipping is my number one choice in “How To Sell On Amazon Without Inventory”.
Is dropshipping allowed on Amazon?
Dropshipping is a great way to get your business off the ground, but it can be a bit confusing as to whether or not it’s allowed on Amazon. Luckily, the answer is yes! You can sell products that you don’t have in your possession, which is what makes dropshipping so useful for entrepreneurs who want to make money online.
However, there are some limitations, so it’s important to check Amazon guidelines first before deciding if you’re going to start a dropshipping business or not.
What is Amazon FBA?
Amazon FBA stands for Fulfillment by Amazon. It’s a fulfillment option that allows you to send your inventory to an Amazon warehouse and let them do all the heavy lifting. They’ll store, pick, pack and ship your orders for you—which means you don’t need to worry about customer service or shipping costs (the only cost is the storage fee).
Amazon warehouses are located strategically around the country so that customers can receive their packages quickly—and if they’re not in stock at one warehouse, Amazon will ship from another location. If you’re selling clothing or shoes on Amazon FBA then it’s especially important that your inventory is being shipped quickly because it may not be worth switching out sizes if customers are going to wait several days for their order.
How FBA Works?
Amazon FBA is a fulfillment service that allows you to sell your products on Amazon.com. You store your products in Amazon’s warehouses and Amazon ships the products when orders are placed. When an order comes in, it is shipped directly from one of the many fulfillment centers around the country.
FBA sellers can use a variety of shipping options including Prime, Standard, One-Day, Two-day and even Same-Day shipping for eligible items. As an example: A customer wants to purchase a product from an FBA seller who has chosen Two Day Shipping as their default option for getting their goods into customers hands quickly; but it costs $8 for this method and they want to save money by choosing 1 Business day shipping instead which only costs $3 extra plus some additional fees like tax depending on where you live etc…so now that extra money saved could go towards another product!
Advantages of FBA
FBA is a great choice for those who are new to selling on Amazon and are wondering how to sell on Amazon without inventory. It’s also a great choice for those who have limited time or budget, or limited expertise and knowledge about the selling process.
FBA can be an excellent strategy if you want to build a business but don’t have the capital needed to fund inventory before sales start rolling in.
The disadvantages of FBA
As you can see, FBA is a great way to sell on Amazon without having any inventory. However, there are also some drawbacks to using FBA:
- You will have to pay for storage, handling, and shipping. If you’re just getting started as an Amazon seller and don’t have much money to invest in this business model, this would be a problem for you.
- You must have a minimum amount of inventory before selling through FBA (typically around $1,000). There’s no way around it—you’ll need more stock than that if you want to even consider selling through FBA!
- You’ll need to ship your inventory offsite so that Amazon can store it since they don’t allow third-party sellers on their warehouses or fulfillment centers. This makes sense because they want customers who buy from them directly instead of going through third-party sellers like yourself!
Fees for FBA sellers
FBA sellers also incur fees. You can find Amazon FBA fees here.
How Amazon Fulfillment Centers Manage Amazon FBA Inventory
In addition to purchasing inventory for the FBA program, you can also use Amazon’s fulfillment centers (FCs) as a source for finding products. FCS are located all around the world, and you can see their locations on this map.
Retail Arbitrage is a popular way of using these centers: buying wholesale from stores like Target or Walmart and selling them at retail via an online marketplace like Amazon FBA.
Another option is Online Marketplaces: selling products that you purchase elsewhere on marketplaces like eBay or Etsy.
Which is the best fit for Amazon FBA or dropshipping?
If you’re just starting out, FBM is the best option for you and is my number one recomendation in how to sell on Amazon without inventory. It’s much easier and cheaper to get started with FBM than it is with FBA. You can’t sell as many items if you don’t have an inventory and there are restrictions on what categories or products you can sell, but those limitations will help you focus on building a solid foundation for your business. Once your ecommerce store has built up some momentum and sales velocity, then it might be time to consider moving over to Amazon’s fulfillment centers where they’ll handle all of that work for you.
In order to thrive on Amazon, you must have the proper strategy.
You must have the proper strategy to succeed on Amazon. Without it, you will fail. So before you even think about selling your product on Amazon, make sure that you know your business model and target audience, as well as your competition. You also need to understand the rules of the game – what are Amazon’s policies and regulations? How much money do they take from each sale? What are their goals for customers and sellers? Do they offer any incentives or discounts for new sellers?
Knowing this information will help ensure that when you decide to sell on Amazon (or in any case), you’ll be able to manage inventory properly, manage customer service efficiently and effectively, manage shipping costs effectively…and so forth.
Dropshipping is a business strategy that allows you to sell products without owning them, it’s growing in popularity among Amazon sellers and it is my number one reccomendation in how to sell on Amazon without inventory. The good news? It’s totally allowed on the platform! The bad news? It can be complicated to set up, and you’ll need to do some research before you begin.
It’s important to keep in mind that Amazon is a very competitive marketplace, and it can be difficult to get your product noticed among the thousands of other products listed every day. If you are looking for an easy way to sell products without having any inventory then FBA or dropshipping might be just what you need!
Check out my article How to make money with a 3D printing side hustle.