Amazon Dropshipping: Top 8 Questions Answered

If you’ve ever wanted to start selling online through Amazon, dropshipping is one of the best ways to do it. While you do need a little bit of capital to get started, thousands of people have been able in the past to make a living off of their Amazon FBA businesses — and you can too if you dedicate yourself to it. Of course, there are different opinions about what is dropshipping and what isn't. To put it simply, if you sell something on Amazon on behalf of someone else, it's considered dropshipping, regardless of whether or not you told the customer that or not. With that out of the way, both Amazon dropshipping and the so-called retail arbitrage are great ways to make passive income. In this article, we'll look at some of the top questions asked about Amazon dropshipping to help you get started.

Question: What is the difference between Retail Arbitrage and Dropshipping?

Answer: Retail Arbitrage is the process of finding a product at a lower price than it is selling for on Amazon, then reselling that product for a higher price. Dropshipping is when you send your customer directly to a supplier’s website (usually by using an affiliate link) in order to make a sale and collect your commission.

Question: Is it legal to sell products from other companies?

Answer: Yes, but not all retailers will allow you to do this. The Supreme Court has directly concluded that it is not illegal. Retailers cannot stop someone from selling their products if their merchandise has been legally acquired. However, some brands may have restrictions against reselling their products due to copyright issues or other reasons.

Question: What happens if I get caught?

Answer: Although it is legal, you must be aware of some challenges. Oftentimes Amazon sellers could receive harassment from corporations trying to intimidate you away from selling their products online. You should also expect phone calls from lawyers and cease-and-desist letters from big corporations who don’t want their products being sold online at discounted prices! Here are four tops for avoiding trouble:

1. Don't sell certain brands and products as new after buying from retailers
2. Keep your receipts handy for sourced products in case of disputes
3. Avoid dropshipping on Amazon through certain manufacturers
4. Avoid dropshipping counterfeit products on Amazon

Question: How much money would you need to start retail arbitrage?

Answer:

Amazon FBA is one of the easiest ways to make money online. This is especially true if you know how to source profitable products, ship them to Amazon and get them ready for sale on the platform.

The good news is that it doesn't require a lot of capital to get started. In fact, according to a survey of several thousand Amazon sellers revealed that:

18% started with $500 or less

10% started with an amount between $501 and $1,000

12% started with an amount between $1,001 and $2,500

18% started with an amount between $2500 and $5000

22% started with more than $10,000.

Question: How much can you make doing retail arbitrage on Amazon?

Answer: If you’re thinking about selling your products on Amazon, it’s important to understand how much money you can make before you start selling. This Amazon seller survey was conducted in late 2019 and included responses from more than 1,000 people who sell on the platform.

Close to a third (30%) of SMB Amazon sellers have reached lifetime revenue of over $100,000, here's the complete breakdown:

Under $25,000: 43%

$25,001-50,000: 11%

$50,001-100,000: 10%

$100,001-500,000: 14%

$500,001-1,000,000: 6%

Question: How much can you make as a third-party seller on Amazon?

Amazon recently released its annual report and shared some interesting data about its third-party sellers — those who sell products under their own brand names (or those of others) rather than as Amazon Prime-eligible items. Close to 20% of SMB sellers have achieved lifetime profits of more than $50,000 — not bad for a so-called “side hustle” — and 14% have lifetime profits over $100,000. That may seem like an impressive figure, but it’s important to remember that these numbers reflect only those who have been active on Amazon for at least two years.

Question: What is Amazon FBA?

Answer: Amazon FBA, which stands for "Fulfillment by Amazon," is a fulfillment service that allows merchants to sell their products on Amazon.com and have them shipped by Amazon.

When you use Fulfillment by Amazon (FBA), Amazon stores, packs and ships your products.. This means you don't have to worry about finding a warehouse, packing and shipping orders, or tracking inventory levels.

There are two different ways to use FBA:

You can send your inventory to an Amazon warehouse, where it will be stored until it sells. Or, you can send your inventory directly to the customer’s doorsteps using Amazon’s shipping services (known as “Fulfillment by Merchant”). The second option costs more but gives you more control over your shipping options.

Question: What are the benefits of Amazon FBA?

Answer: First off, it's in Amazon's name. When you sell through Amazon FBA, people know that they're buying from Amazon. That's huge!

Second, you'll be able to pay less for shipping. With Amazon FBA, there are deals with shipping companies so you can get a better rate than usual on your shipments.

Third, Amazon handles customer service for you! So if someone has a problem with their order or wants to return something, they can contact Amazon instead of having to go through your company directly—which means less time spent dealing with customer service issues and more time doing what you love: making things!

Finally, because all FBA orders are processed in exactly the same way as any other product sold by Amazon itself, you'll be able to offer free shipping over a certain amount (Prime) or for Prime members only (FREE Super Saver Shipping).