Amazon’s dropshipping business can also do 7-Figures monthly sales.
Dropshipping seems to be very simple, you can sell without having to pay for the stock in advance, but if it is not handled well, Amazon sellers may be difficult to make a profit. However, as long as the seller masters some methods, it is still possible to succeed. In fact, some sellers have turned this highly competitive, low-margin business model into a lucrative business with seven-digit monthly sales.
Therefore, this article will introduce how the delivery sellers can use automation and business integration software to increase sales and purchases while reducing costs.
Why is the delivery business so attractive to sellers?
Why is the delivery business so attractive to sellers and very competitive? Because sellers don’t need a lot of money to invest in building warehouses, they can sell products as long as they have a network and tax number. And because the seller did not purchase the product inventory before the product was sold, so there is no need to worry about the problem of unsalable inventory, price reduction or capital tightening.
However, the bad thing about the delivery is that many sellers did not initially purchase products from real wholesale suppliers, and procured products from intermediaries who pretend to be wholesale suppliers. The price was high and sellers could not get suppliers. “Bulk purchase” discount, the profit is meager. The seller wants to ensure that the product is purchased directly from the manufacturer, so that the purchased product is cheaper and there is no middleman or wholesaler to increase the price.
What kind of products are suitable for shipment on Amazon?
Almost every Amazon seller uses the same tools to mine the best-selling products on Amazon, and then after finding the best-selling products, they will try to find the source of the supplier, but this is not the best practice.
What sellers have to do is search for suppliers and focus on finding a growing supplier, not just focusing on a single product.
In addition, offering a diverse range of products is less risky and more secure than a single best-selling product.
When sellers start selling products, they still have to stick to the categories they are familiar with or keen on. Because it will make your process of finding, contacting and suppliers easier and more enjoyable. But note that sellers should sell Amazon-approved categories, so sellers should investigate Amazon’s list of restricted categories before contacting suppliers.
How to find a supplier with high profit products?
High-quality delivery suppliers with high-margin products are hard to find, but sellers should not be forced to find low-margin product suppliers. The biggest difference between the two is that high-quality OEM products will purchase products directly from the manufacturer, or manufacture the products themselves, without any middlemen, and the procurement cost is low.
So how do sellers find quality delivery suppliers? Maybe you can try the following 6 different methods:
(1) Find directly from the source of the product
Sellers can use barcodes or use the GS1 company database to find manufacturers, then contact them directly and ask if they are willing to ship them. Although some manufacturers are willing, most are unwilling. If the manufacturer is not willing to ship on behalf of you, you can investigate if they have a list of wholesale suppliers.
(2) Find manufacturers with some non-technical problems
Sellers can find manufacturers who are still optimizing their products and want to create new categories and are willing to try to deliver them. This way sellers can stand out from other sellers and guarantee profits.
(3) Call the supplier or ask for a video conversation by Wechat/Skype
The seller can call the supplier to ask questions to determine the legality of the potential wholesale supplier. If the seller asks the following questions and the shipping supplier cannot answer them, then you may want to pay attention:
· What are the costs other than product costs?
· Do you need to pay in advance or pay a deposit?
· Is the product sold to consumers or retailers?
·What is the return policy and process?
· Provide product data tracking? If so, what product information is included? How often is it updated? When was the last update?
·What is the format of the product data, how to retrieve it?
(4) Face to face conversation
Exhibitions are a great place to contact legitimate wholesale suppliers. Sellers can use Wholesale Central to discover specific categories of exhibitions. The Las Vegas International Gifts and Consumer Goods Show (ASD) is the most comprehensive wholesale trade show in the United States, and the Canton Fair is the most comprehensive international wholesale trade show.
(5) formalizing the business
Real wholesale suppliers do not sell products to small informal businesses. If you don’t fill out a tax return, or provide a tax ID or EIN code, the “supplier” is still willing to sell the product, then you should pay attention to whether it is a liar.
(6) Search on Google and look forward from the back
If you have used the previous method and want to find a specific category of suppliers, then use Google. But keep in mind that real wholesale vendors don’t retail to consumers, they don’t appear at the top of search results. Therefore, when Google searches for a supplier, do not directly view the first page of the search results page. It is more appropriate to look forward from pages 7 and 8.
How does the shipping supplier handle the data?
The next step is for the seller to sort out the list of potential suppliers, but don’t make decisions based entirely on price and reliability. Generation shipments require suppliers and sellers to share data with each other at different stages of the sales process. When selecting suppliers, the sellers should pay attention to these five key data:
(1) Product data
The more complete and accurate your listing information, the more likely it is that the product will be discovered and purchased. The seller’s goal should be to use accurate and compelling content. Getting the following data access is the first step in selling your vendor’s products on Amazon and other sales channels:
·Width, length, height, weight
·Function (size and color, etc.)
·Manufacturer parts code
·Minimum ad pricing
·Suggested retail price
(2) Inventory data
The supplier’s inventory may be updated on an hourly basis. To prevent out-of-stocks, sellers need to know the inventory level regularly, which is an aspect that sellers often overlook on behalf of shipping. If your supplier is unable to provide daily updates, then it is not considered.
The seller can consider asking the supplier the following questions:
· Will the product be manufactured only when the order is placed or is it directly stocked?
· How long does it take to stock up?
How often do you update the inventory quantity? How automated is inventory data?
· Is the product sold to a large retailer? How many retailers are there to supply products? If there are large retailers or there are many sellers selling products, can all available stocks be sold out in a few minutes?
(3) Price data
The price of the supplier’s products will fluctuate. Ideally, the supplier will follow the price quoted on your purchase order, so you don’t have to spend time manually checking thousands of invoices.
(4) Order data
The seller is responsible for submitting the purchase order to the supplier immediately after the product is sold, so the seller has to find out the process by which the supplier receives the order. The order data that the seller may need to provide is:
· SKU and SKU titles
· Customer’s name, address, phone number and email address
·Transportation and preferred express delivery
(5) Confirm delivery
Once your supplier sends the order to the end user, the supplier will need to provide confirmation shipping and logistics tracking information. This file is submitted electronically and the seller can import the sales system automatically or manually. The seller is then responsible for uploading this information to the order sales channel.
Payment method of the shipping supplier
Some suppliers generate one invoice for each purchase order, while others invoice for all purchase orders together for a period of time. Sellers need to understand the supplier’s policies before starting the business. Request sample invoices for cost details and any other details that may affect accounts payable.
(2) Billing cycle
When do sellers need to pay in full? Is the date of the purchase order or the invoice date? Usually these terms are negotiable, which determines whether the seller can hold some cash for other businesses. In fact, if you can convince a supplier, you can use your existing cash flow to expand your business, rather than taking on high-interest debt or external investment.
How to release the shipping product listing?
This process can be tedious and time consuming, but it is critical. Sellers need to download the vendor catalog and ensure that the product data meets Amazon’s requirements. Then you need to match your UPC code with an existing ASIN or by creating a new product listing.
In addition, you need to edit the supplier’s product data to ensure consistency and integrity. The shipping seller also needs to standardize the use of any abbreviations and acronyms.
It may be boring to publish the products one by one, and it is possible to make mistakes. However, in order for consumers to find and purchase your product, you must be aware of the completeness and accuracy of the product content, and must be compelling and consistent with Amazon’s content and format requirements.
What if the product data on Amazon does not match the vendor data?
Many sellers will manually match the UPC to the ASIN, which takes a lot of time and effort, or they will use the Amazon Inventory Loader, but this tool only searches for UPC matches, and there may be data loss or errors. The disadvantages are:
· Amazon’s data is the same as that provided by third-party sellers. Some products have wrong UPC codes, or component codes are incorrect or missing.
· A single UPC may match 10-15 different ASINs, and the Amazon Inventory Loader often matches the UPC with the wrong ASIN;
• Using the UPC code to identify the product does not verify the product packaging quantity. Some products sold in different units of measurement (such as 6 packages) may not be clearly identified.
Data mismatches can result in a large number of consumers returning or canceling orders. Then they may also leave negative feedback, causing the seller’s account to be frozen.
Therefore, some of the shipping sellers should avoid using the Amazon Inventory Loader because the disadvantages outweigh the benefits. Manually ensuring that the UPC matches the ASIN, the problem with this approach is that the process is cumbersome and labor intensive.
What are the challenges of Amazon’s shipping sales?
Amazon allows for delivery, but sellers are guaranteed to provide a superior user experience. Regardless of the business model, Amazon expects third-party sellers to achieve the following performance goals:
· Order defect rate (ODR) <1%. The ODR is calculated by dividing the number of “defective” orders (refunds, A-Z claims, or orders that receive negative feedback) by the total number of orders over a certain period of time. If the ODR is greater than 1%, the seller’s account may be frozen or even closed;
· Pre-fulfillment Cancellation Rate <2.5%. It is calculated by dividing the number of orders cancelled before the valid confirmation of shipment, by the total number of orders delivered within a certain period of time. When calculating this metric, Amazon considers the reason for the user to cancel the order;
· Delivery delay rate <4%. The delivery delay rate is calculated by dividing the number of orders that were not delivered within the expected time by the total number of orders that have been delivered within a certain time frame.
How will shipments affect your Amazon seller performance?
Unfortunately, every process of shipping is likely to violate Amazon’s policies, including listing suppliers’ products, listing, processing, and fulfilling orders.
· If your supplier’s product data is inaccurate, or if you match and sell the UPC code to the wrong ASIN, the seller will have to cancel the order so that the consumer will not receive the wrong product.
· If you still indicate that the product is in stock when the supplier is out of stock, you must cancel the order because the consumer may not receive the product in time.
· If you do not immediately send a purchase order to the supplier after receiving the sales order, the supplier may use the previous stock to fulfill the purchase order.
· If your supplier processes the order very slowly and issues a valid confirmation shipment or logistics tracking code very late, the order is likely to be classified as a delivery delay.
These issues can have a negative impact on the user experience and can lead to an increase in order defect rate, pre-shipment cancellation rate, and delivery delay rate, which puts the entire Amazon seller account at risk and sellers need to pay special attention to these points.
As an Amazon delivery seller, how do you manage pricing?
Raising or lowering prices is critical to winning the Amazon Gold Shopping Cart and maximizing profits. However, when most of the shipping sellers are considering re-pricing, they often only consider reacting to competitors’ price changes and ignoring their own costs.
Dealing with sellers often find themselves at a competitive disadvantage because they overestimate themselves and believe that even if they cut prices, they still have profit, and they don’t see all the costs in real time.
The sellers of the delivery should remember that the cost of your product is not fixed. Suppliers will continually update product prices. If your supplier price increases and you do not raise prices, then profits will shrink.
However, if the price of the supplier’s product drops, what would happen if you did not cut the price? Then the product may lose the Buy Box due to over-pricing and lose more potential sales, which is why automatic pricing is so important.
The key to success for Amazon’s delivery sellers
In order to succeed on Amazon, the seller of the delivery must expand the scale. It is intuitive to increase the sales volume and purchase volume. It is one of the methods to reduce the cost and reduce the price. To reduce costs, sellers need to automate business processes and reduce staff costs.
If possible, sellers can also use some of the shipping software, which allows you to manage new suppliers and catalogs faster and more accurately than competitors, release product listings, and better manage pricing and inventory. If the seller intends to use the shipping software, it is important to have the following six key functions:
(1) Ability to integrate suppliers and sales channels, automatically adjust inventory, and generate purchase orders;
(2) Ability to manage sales data from different channels;
(3) Manage inventory to prevent out-of-stock outages;
(4) Ability to automate the pricing process to ensure sellers’ profitability;
(5) can process orders and reduce the risk of human error and order delay;
(6) Ability to track logistics information.
It’s not that simple to ship, it’s hard to make a profit, but sellers can use the tools or resources to get a good income. Sellers who continue to rely on manual processes, spreadsheets or entry-level software to handle their business will find it difficult to scale up and eventually be eliminated. Because their cost and product price are always higher than the sellers who automate the sales process.
By automating processes and related tools, on-board sellers will save more time to expand their business.
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Hey, I’m Stanley Nieh. My team & I are determined to help Ready-to-Scale drop-shippers grow the business rapidly to the next level. My only question is, will it be yours?