Beginners may find the idea of selling on Amazon without an inventory scary, but it is not as tough as it may sound. Amazon offers resources such as Amazon Seller University to assist new sellers with the selling process. Those with low resources may need help to invest in inventories.
The good news is that Amazon provides a variety of business strategies and fulfillment techniques that can save money. For instance, Amazon’s FBA (Fulfillment by Amazon) program enables sellers to store and transport their products from Amazon’s warehouses. Anyone can begin selling on Amazon without an inventory if they conduct research and plan carefully.
Can I Sell on Amazon Without Holding Inventory
Yes, you may sell without inventory on Amazon. It is still possible to earn money using Amazon’s different services, such as FBA, or third-party logistics.
FBA enables you to ship your products to Amazon’s fulfillment centers, where Amazon will handle storage, shipping, and customer service. And third-party logistics can store and ship your items to customers. With these methods, you can begin selling on Amazon without maintaining inventory and achieve success.
Benefits of Selling on Amazon without Inventory
There are various advantages to selling on Amazon without stock.
Here are the following:
- Cheaper warehouse space
If the inventory is not required, you will require less warehouse space, and this can help you save money on rent and other bills. You can also choose to use a fulfillment service like Amazon FBA, which allows you to store and ship your products from Amazon’s warehouses, lowering your warehouse space requirement.
- Tweak your expertise
You can focus on other parts of your business, such as marketing, branding, and customer service when you no longer have to worry about inventory management. This can assist you in refining and expanding your knowledge in these areas, which can be significant business abilities.
- No big upfront investment
Beginning a firm that requires inventory can necessitate a substantial initial expenditure. Selling on Amazon without inventory enables you to launch your business with minimal capital outlay and to scale as it grows. This might be especially helpful for individuals just starting out or with low budgets.
There are several advantages to selling on Amazon without inventory for entrepreneurs and small businesses. It provides for lesser initial expenses, less risk, and more time to focus on other company elements. In addition, it can result in less expensive warehouse space, the capacity to modify skills, and no large initial expenditure. Additionally, selling without inventory allows firms to expand and grow more efficiently.
Which Amazon Business Model Without Inventory
Amazon has a range of business structures that keep it at the top of the e-commerce sector. Amazon’s business models include the private label, wholesale, retail arbitrage, online arbitrage, drop shipping, and handmade.
- Private label
Private labeling is selling things under your brand name instead of the manufacturer’s. AmazonBasics and other private-label products are high-quality and affordable. Amazon’s large consumer base and marketing strength can boost sales and profits.
Amazon sells bulk products from various vendors on its website. Amazon sells wholesale products to customers at a markup. This technique lets Amazon sell more things without making them.
- Retail arbitrage
Retail arbitrage involves buying things at a discount and selling them on Amazon for more. Amazon sellers buy clearance or discontinued items from retail retailers. Amazon’s marketplace has become more accessible, making this strategy popular.
- Online Arbitrage
Online arbitrage is similar to retail arbitrage, but people buy cheaper things online and resell them on Amazon or buy discount products on eBay, Walmart, and Target that can be sold on Amazon for a profit.
Amazon Handmade sells handmade goods from craftsmen and crafters. This strategy facilitates the creation and sale of unique, one-of-a-kind things not seen in regular outlets. Amazon helps these businesses reach a wider audience and attract new customers.
Dropshipping distinguishes itself from other Amazon business models because it does not require the seller to maintain inventory. This indicates that the seller offers things on Amazon and, when a client purchases, orders the product from a third-party supplier, who then distributes the product directly to the customers.
The Pros of Dropshipping:
- Try out new goods without investing in large quantities – You don’t have to stock a lot of products in a warehouse.
- Less expensive to launch than traditional retailers – You don’t need to spend a lot of money when launching your store because everything is digital. No need for a brick-and-mortar store.
- You don’t need to manufacture, stock, and ship the goods – You merely resell the products of your suppliers at a higher cost.
- More product choices – There are a lot of products to choose from in the market.
The Cons of Dropshipping:
- Maintaining quality is challenging – You will have a hard time maintaining the quality of your products because you have no control over how your products are manufactured and produced.
- Lack of command over your supply chain – You will have little to no control over your supply chain because you are merely acting like a reseller for your suppliers.
- Potentially low-profit margins – Although this doesn’t apply to all, this is possible especially if the prices provided by your suppliers are a bit higher.
FBA and FBM with Third Party Logistics Makes You Can Without Inventory
Amazon’s Fulfilled by Amazon (FBA) program is a popular fulfillment option that allows retailers to keep their merchandise in Amazon’s warehouses. And FBM is also a popular fulfillment method for sellers. Although FBM is fulfilled by merchants, sellers can use third-party logistics to store and fulfill orders.
Amazon’s Fulfillment by Amazon (FBA) program enables companies to outsource order fulfillment to Amazon. When a customer makes a purchase, Amazon selects, packs, and ships the goods from one of our fulfillment centers. For these orders, Amazon can additionally provide customer support and accept returns.
As your firm expands, Fulfillment by Amazon can assist in reducing fulfillment hassles.
Step 1: Set up FBA
Create a selling account on Amazon and login to Seller Central to configure FBA.
Step 2: Create product listings in step two
Specify FBA inventory after adding products to Amazon’s catalog.
Step 3: Prepare products
Prepare the products for safe and secure shipment to a fulfillment center in accordance with Amazon’s packaging and shipping criteria.
Step 4: Deliver goods to Amazon
Create a delivery strategy, print Amazon shipment ID labels, and send packages to Amazon fulfillment facilities. Learn more about supplying Amazon with an inventory.
The Pros of FBA
- You can utilize Amazon’s reputation to your advantage.
Amazon is a brand that people around the world have faith in. When people order a product, they know they will receive it. Additionally, customers are aware that they can return the item if necessary. This has a substantial effect on purchasing intent.
- You Obtain the Opportunity to Execute Operations at Lightspeed.
Amazon’s one-of-a-kind online purchasing platform allows for faster loading and shipping. Therefore, they can distribute products to your customers faster than you can.
- You may increase your ranking and popularity on Amazon.
If you utilize Amazon’s FBA program, your product would rank better in search results. Total pricing is used to classify products from vendors who do not employ FBA. (the price of the product plus shipping costs). As an FBA seller, however, your products will be categorized simply by price, placing them at the top of search results.
- You Have an Increased Chance of Obtaining the Buy Box.
The Amazon Buy Box is the huge ‘Add to Basket’ symbol that appears on all product listings on Amazon. If you and Amazon are selling a comparable product, Amazon will have the Buy Box. Since FBA is one of the things Amazon considers when evaluating your delivery methods, you will likely win the buy box on your competitors’ goods listings.
The Cons of FBA
There are downsides to FBA and these can be the following:
- Higher costs
The fees associated with FBA, such as storage, pick-and-pack, and shipping, can cut into your profits. It is essential to incorporate these costs into your pricing strategy and determine whether they make sense for your company.
- Limited authority
Amazon manages storage, shipping, and customer service with FBA. This can save time and effort, but it also limits your control over the process. It can be time-consuming to deal with Amazon to resolve order-related issues.
- Long-term storage expenses
You may be charged long-term storage fees if your inventory remains in Amazon’s warehouses for an extended period. This can be expensive, and you may need to reconsider your inventory strategy to avoid incurring these fees.
FBM with Third-Party Logistics
Amazon’s Merchant Fulfilled Network (MFN) is also known as Fulfilled by Merchant. (FBM). It refers to a fulfillment method in which vendors list their products on Amazon but handle their storage, shipping, and customer service.
There are several considerations to consider when deciding how to fulfill consumer purchases in Amazon’s stores. It might be difficult to determine how to store inventory, pack and ship products, and handle returns and refunds while maintaining excellent customer service standards.
How FBM Works:
- Sellers who provide the Individual plan
All of these merchants use Amazon’s standard delivery prices. Individual sellers ship orders at the specified rates even if the shipping credit is less than the total shipping costs; therefore, you must price things such that you make a profit.
- Participants in the Professional plan
If they pick FBM, sellers on the professional selling plan can set their delivery costs. They can modify shipment templates for certain domestic and foreign regions, including handling and transit periods. Professional sellers can also modify delivery costs by order, per item, or per weight.
As mentioned before, FBM requires merchant fulfillment, but sellers can hire third-party logistics to help them complete the fulfillment tasks. The third-party logistics provides:
- Inventory management
- Shipping and Receiving
- Labeling and packing
- Kitting and bundle
- Other prep services
The pros of using 3PL:
- Someone else performs tiresome jobs.
Third-party logistics save time on distribution and inventory management. All you have to do is remotely track your inventory. This saves you money on labor and frees up time for more vital business tasks.
- Flexible services
Many 3PLs offer business management services. The warehouse’s fulfillment center might handle customer support and shipping. This will stream your third-party logistics supplier, saving you time.
- Long-term income in the long run
Third-party logistics will first cut earnings. 3PL providers can efficiently manage bigger inventory numbers, saving most firms money in the long term. Sorters, deliverers, and everyone in between benefit from 3PL labor savings.
The cons of using 3PL:
- You lose inventory control.
3PLs’ biggest drawback is that you can’t watch the process. Most business owners want control over their goods, but outsourcing logistics can make that difficult. However, if you use an excellent 3PL with real-time tracking, you can track inventory, delivery, incoming shipments, and more.
- Poor service influences your company.
Bad 3PLs may hurt your company, and customers don’t care who delivers the merchandise. Thus, before entrusting your reputation to your logistics staff, be sure they have experience with your services.
How to Sell on Amazon without Inventory
There are four steps to sell on Amazon without inventory.
Step 1: Choose the right business model or fulfillment methods
As we mentioned before, you can choose dropshipping, it doesn’t have inventory. Or you can choose FBA or FBM with third-party logistics. In this way, Amazon or third-party logistics can handle storage, shipping, and other things for your products.
Step 2: Do product research and choose the right product
Look for products that are in high demand, have good profit margins, and aren’t too competitive. You can use tools like Jungle Scout, Helium 10, and AMZScout to help you with your research.
Step 3: Source product
Once you’ve determined your niche, you need to find suppliers for your products. There are several ways to do this:
- Alibaba: Alibaba is a global wholesale marketplace where you can find suppliers for a wide range of products. You can search for suppliers based on location, product, or minimum order quantity.
- Trade shows: Attending trade shows is a great way to meet suppliers and see products in person. You can find trade shows in your niche by searching online.
- Online directories: There are several online directories, such as ThomasNet, that list supplier for different products.
Step 4: Create a product listing on Amazon
Finally, you’ll need to create a product listing on Amazon. This includes writing product descriptions, uploading product images, and setting a price for your products. Make sure your product listing is clear and informative, and use keywords to help your products show up in Amazon search results.
Step 5: Ship to Amazon warehouse
You can find a reliable Amazon freight forwarder to do this for you. FBABEE is a reliable Amazon freight forwarding company, based in China. It provides one-stop services for Amazon sellers, which include shipping, prep, customs, insurance, and other add-value services.
Selling on Amazon without inventory is a realistic alternative for entrepreneurs seeking to launch a business with a low initial outlay. By utilizing dropshipping services, retailers may offer a vast selection of products without managing inventory or storage.
You already know how to sell without inventory on Amazon. Dropshipping, FBA, and FBM with third-party logistics are viable options. Which one is appropriate for you? To conclude, compare each method’s price, evaluate your financial capabilities, and determine your preference.