Are you wondering whether you should join Amazon’s marketplace to expand your digital presence? With 2.73 billion monthly visitors, the global e-commerce giant offers unrivalled visibility. Selling on Amazon can be an effective way of growing your business, but what about the costs involved in stocking products? Fortunately, there are solutions for selling on Amazon without stock.
In France alone, Amazon attracts 152 million monthly visitors.
In 2021, French VSEs and SMEs sold an average of over 150 products per minute on Amazon Marketplace. Their average sales on the platform amounted to €150,000, and around 100 of them exceeded €1 million in sales for the first time.
Not being there means cutting yourself off from a potential market worth several hundred thousand euros a year. However, selling on Amazon without stock raises questions in terms of storage and product management.
To gain greater freedom and avoid penalizing storage costs, you can sell on Amazon without stock. You can opt for dropshipping or logistics outsourcing .
In this article, find out what these methods consist of and what their advantages and disadvantages are.
Why sell on Amazon without stock?
The headache of e-commerce inventory management
Marketplaces like Amazon give sellers greater visibility and access to a wider audience.
If you want to sell on Amazon, you can of course store and manage your products yourself. However, many sellers prefer to free themselves from inventory management in order to :
- focus on their core business and the presentation of their offers
- limit storage costs
For e-tailers, inventory management is at the crossroads of two priorities:
- Maximize profitability
- Delivering an optimal customer experience
How can we maintain the right balance between product supply on the one hand, and minimizing warehousing costs and the risks associated with excess stock on the other?
Traditionally, inventory management required excellent anticipation of customer needs, in order to adapt stock to variations in demand. The challenge was to always have enough stock to serve customers in optimal conditions, but not too much to avoid driving up costs. With a view to optimizing profitability, solutions for selling on the Internet without stock have emerged. Why are they interesting for sellers?
4 reasons to sell without stock
Selling on Amazon without stock has several advantages:
- Lower operating costs: substantial savings on product warehousing.
- Greater flexibility: you can offer a wider range of products without having to invest in purchasing and managing a large stock.
- Less sensitivity to demand variability: you’re less affected by fluctuations in sales of any one product.
- Productivity gains: you’re freed up from inventory management and can reallocate time and resources to other activities.
Selling on Amazon without stock is now possible. The two main solutions to this problem are dropshipping and logistics outsourcing, either with the Amazon FBA solution, or with a logistics provider, or both at the same time!
In any case, it’s worth noting that selling on amazon without stock doesn’t mean there’s no stock at all. It simply means that stock is not managed by the seller.
How to sell on Amazon without stock?
How do I dropship on Amazon?
Dropshipping is a way for a merchant to sell products online without having any stock of his own.
On the merchant site, the seller identifies the products as his own. In practice, however, he buys them from a supplier, who then handles the sale.
On the other hand, the consumer is never aware that the goods come from the supplier.
In concrete terms, dropshipping on Amazon involves 3 phases:
- The Amazon customer buys the product you have listed on the site.
- Once the purchase has been validated, you buy the product from your supplier and send him the customer’s shipping details.
- The supplier sends the product to the address given by the customer.
The advantages of dropshipping on Amazon
The first advantage of dropshipping for the merchant (or dropshipper) is not having to invest in a large quantity of stock.
This method gives you greater flexibility in your choice of products. You can offer a wide range of products without having to invest in large quantities of stock. You can also easily add new products to your catalog.
What’s more, dropshipping also saves sellers the hassle of managing inventory and shipping products.
Beware, however, that not all storage and shipping costs are the sole responsibility of the supplier. The dropshipper is billed for these costs in the price of the product, which can mean lower margins for the supplier.
Another advantage is that salespeople can devote more resources to promoting their products and managing their sales.
The risks of dropshipping on Amazon
Despite its obvious advantages, dropshipping on Amazon also presents a number of risks and drawbacks.
Firstly, you are totally dependent on your suppliers for :
- ensure shipment of goods
- guarantee product quality
- and, more generally, for the entire post-purchase experience once the order has been placed online.
Ultimately, the entire end-customer experience depends on your supplier’s performance.
You need to be sure of their reliability to avoid long delivery times, quality problems and product returns. A poor choice of supplier can do lasting damage to your reputation as a seller.
You are also dependent on the rates of your suppliers and their carriers. Make sure you understand these costs before you start, to assess your profitability.
Furthermore, the risk of competition is high with dropshipping products. Other dropshippers are likely to be selling the same products, which could result in a race to the bottom and impact your profitability.
Finally, when using the dropshipping method, you must respect Amazon’s rules and standards for sellers, or risk having your account suspended.
How does Shippingbo make it easier to sell on Amazon without stock?
If you opt for dropshipping, one of the major challenges lies in optimizing the post-purchase experience. Since it’s the supplier who dispatches the parcel to the end-buyer, it’s essential that the transmission of shipping information between seller and supplier is fast and reliable.
Shippingbo offers an extranet to connect vendor and supplier , making order processing easier and ensuring the fastest, highest-quality delivery possible.
In concrete terms, the OMS Shippingbo range automatically retrieves all orders from the various sales sources connected to Shippingbo(CMS, marketplaces, private sales, etc.) and sends them for processing to the seller’s Dropshipping supplier(s).
In this way, the seller ensures that the supplier takes immediate charge of the order, and benefits from a real-time view of its preparation and dispatch to the end consumer.
Conversely, suppliers’ stocks available for sale are synchronized in real time on the merchant’s sales channels (your website, marketplaces, private sales, etc.). He can then make his own transport contracts available to his suppliers.
By connecting to suppliers in this way, the vendor will be able to expand his catalog by easily adding new references.
How to sell on Amazon without stock thanks to logistics outsourcing?
How do I become an FBA seller and what does the Amazon FBA solution involve?
Another way of selling on Amazon without stock is the FBA (Fulfillment by Amazon) solution , which entrusts Amazon with the logistics management of your orders.
In this configuration, the stock belongs to the e-tailer but, for an additional fee, Amazon handles all the logistical tasks:
- Product management
- Inventory management
- Customer service
- Order processing and delivery
- Returns management
To subscribe, you must meet certain conditions:
- Ship at least 5 parcels a day
- Have an order cancellation rate of less than 1%.
The benefits of Amazon FBA
By using Amazon FBA, you benefit from the optimized logistics that have made Amazon so successful.
You minimize the risk of having your customer experience degraded by delivery problems. You also benefit from Amazon’s return policy.
Another advantage is that your products become eligible for Amazon Prime delivery, free delivery within 24 hours for subscribers to the service.
Disadvantages of Amazon FBA
Subscribing to Amazon FBA gives you access to high-end logistics management. The main drawback of this solution is its cost.
First of all, you have to pay a fixed fee for your Amazon Pro account and the sales fees applied by Amazon for each product sold.
If you buy products outside France, you are liable for VAT as soon as they cross the border. Finally, you are responsible for financing your Amazon inventory. Monthly charges depend on warehouse space and seasonality.
How does Shippingbo facilitate inventory outsourcing?
Whether you decide to outsource your logistics to a logistics provider or Amazon FBA, or both, Shippingbo is an agile, hybrid solution that lets you manage the entire logistics activity operated on your behalf.
As a reminder, in the logistics outsourcing model, you entrust the preparation and dispatch of your parcels to an expert, whether a logistics provider or a marketplace offering a fulfillment service.
Shippingbo has a network of 40 logistics partners specialized in e-commerce, with whom we can put you in touch.
Shippingbo software is then available to the salesperson to supervise the logistics activity carried out on his behalf (order status, physical stock, etc.).
This is achieved as follows:
- The seller’s extranet is connected by API to its various sales channels
- Orders are then automatically retrieved in real time via the extranet.
- They are then transmitted in real time to the logistician’s warehouse for same-day dispatch to the end consumer.
- The logistics provider’s inventory is synchronized in real time with the merchant’s sales channels.
- Each time the status of an order changes (from preparation to delivery), it is updated on the merchant’s sales channels.
- Follow-up notifications (e-mail/sms) are automatically sent to the end consumer
We’ve taken a look at the methods available to you for selling on Amazon without stock (and therefore your inventory), including dropshipping and logistics outsourcing. It’s important to note, however, that all these methods are not mutually exclusive: quite the contrary. With technologies such as Shippingbo, it’s perfectly possible to sell on the Internet while multiplying your external storage points: logistics providers, fulfillment platforms, suppliers, etc… All the while keeping control of and monitoring your inventory, in real time, and orchestrating your orders to the right warehouse!
