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How To Sell On Amazon Without Inventory: 3 Methods That Work

Have you ever wondered how to sell on Amazon without inventory?

There are roughly 6.3 million total Amazon seller accounts worldwide, and 1.5 million of them are currently active. There are also a variety of methods for an Amazon seller to achieve success on the platform. How Amazon sellers deliver their products is a key differentiator.

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Image Credit: www.marketplacepulse.com

Many people want to know how to start an online store without inventory for their own online business. The good news is that you don't need any merchandise at all! You can start selling on Amazon without inventory, and we'll show you exactly how.

In this post, we'll discuss several methods for selling products online without inventory. Continue reading to learn which option will help you optimize your online store's endeavor and meet your objectives of selling merchandise.

Getting Started with Your Online Business

It might be intimidating to begin as an Amazon seller at first. The issue when starting to sell on Amazon for sellers who do not have a previous eCommerce business is, how to sell online without inventory! 

Fortunately, there are methods to sell on Amazon without being worried too much about inventory, as well as many tools and reports to help you choose the most acceptable selling option for your Amazon business based on the benefits and drawbacks of each.

Methods Of Selling On Amazon without Inventory

Most of the Amazon sellers prefer FBA; when broken down, Amazon merchants sell as follows:

  • Only FBA: 57%
  • Only FBM: 9%
  • Both: 34%
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Image Courtesy: JungleScout

FBA (Fulfillment By Amazon)

This method of FBA is ideal for beginners; this is how most people start their new online business. It means that rather than having an in-house stock of items for sale on Amazon, as a company, you would pay a fee to Amazon warehouses, where they store your products and ship them when orders come in.

Fulfillment encompasses storing, packing, and shipping purchases and handling returns and exchanges—customers like eCommerce fulfillment since it is effective and reliable. You send your company’s goods to Amazon fulfillment centers with FBA, where they pick, pack, ship, and handle customer service for you.

According to Jungle Scout's 2021 State of the Seller Report, 91% of Amazon vendors utilize FBA exclusively or with FBM.

Amazon's fulfillment networks are the most advanced in the business. You may utilize Fulfillment by Amazon (FBA) to store your items in Amazon fulfillment centers. They’ll handle everything from picking, packing, shipping to handling customer service for all these items. Fulfillment by Amazon can help you expand your operation while also attracting new consumers.

Amazon's FBA program, in a nutshell, if you sell the item, we'll ship it. The Amazon FBA program is designed to store your items at its fulfillment centers, where employees then pick them as they're sold, pack and send them, as well as provide any customer support required.

How FBA Works

Using FBA requires a few steps and considerable investment on the front end, but it works like a charm for selling on Amazon without inventory.

Amazon FBA also aids sellers in their success by providing them with several tools and benefits, including rapid, convenient delivery, worldwide brand recognition, and sophisticated analytics to help you to track sales.

FBA is the way to go for eCommerce entrepreneurs seeking a comprehensive solution for their brand and access to Amazon Prime customers.

Step 1: FBA Set Up

Create an Amazon seller account, and log into Amazon Seller Central to begin FBA set up.

Step 2: New Product Listings

After you've added your items to the Amazon catalog as per the product category for your Amazon Seller Account, choose FBA inventory.

Step 3: Getting Amazon Product Prepared

Get your items prepared for transport to an Amazon fulfillment center, following Amazon's packing and shipping standards and delivery requirements.

Step 4: Sending Products To Amazon

As per your shipping strategy, print shipping labels for Amazon and ship products to FBA centers against your professional seller account.

PROS

  • You don't have to do anything else after you've sent your items to Amazon. Amazon deals with sales, shipping, returns, and customer service.
  • Because Amazon's marketplace is so big, there’s a good probability that you would make money right away.

CONS

  • Amazon takes a significant percentage of your revenue as fees.
  • You must pay in advance for your items.
  • You must follow Amazon's regulations.
  • It isn't easy to establish your brand because you're doing it on someone else's land.

FBM (Fulfillment By Merchant)

Fulfillment by Merchant, or FBM, is another way of selling products on Amazon without inventory if you use a third-party merchant. Amazon allows sellers to handle the storage and delivery of their merchandise themselves. However, this can be burdensome in terms of time commitment and costs associated with shipping fees that Amazon does not reimburse.

How FBM Works

As an FBM vendor, you are not dependent on Amazon in regards to fulfillment which means that you handle your inventory. However, we would cover the third-party fulfillment next.

Third-Party Fulfillment Centers

Third-party fulfillment centers are companies that store your inventory, pack orders, and handle shipping, invoicing, tracking, and customer service for you. This option is perfect for an individual seller who doesn’t want to deal with their stock but still needs assistance managing large order quantities.

Amazon FBA is the most popular alternative since Amazon has a broader knowledge of customers and specializes in selling items with its brand name recognition, dependability, and detailed resources.

Pros of Third-Party Fulfillment

  • You won't have to keep any inventory or send out orders yourself.
  • Fees are usually less in comparison to FBA.

Cons of Third-Party Fulfillment

  • You must pay in full for your items.
  • You don't have much control over delivery, customer support, etc.

Dropshipping

Dropshipping lets you fulfill customer purchases when you don't have or carry the goods. Instead, you buy the product from a supplier directly and have it sent straight to the client when your online store offers a product using this method. Considering the risk involvement and startup requirements, Amazon Dropshipping is ideal for beginners.

As the Amazon seller, you don't own or store the inventory but instead purchase the goods directly from the supplier as needed to satisfy customer orders. Dropshipping products is permissible under Amazon's terms of service as long as certain conditions are met.

However, it would help if you were always designated as the Amazon seller of record for the items. Additionally, any packaging or invoices mailed to clients should include your store’s information as the seller and you should make sure all the supplier/third-party information has been deleted prior to shipping. You also accept and process any refunds when utilizing a fulfillment center, so this part is covered.

How Dropshipping Works

  • A consumer comes across your website while browsing the web and places an order.
  • You receive the order from a customer and immediately place an order with your distributor at an agreed-upon wholesale price (for example, sourcing could be from a seller from eBay or Walmart).
  • The vendor delivers the item to you with YOUR company's branding and logo. As a consequence, it appears as if the goods came from YOU rather than the supplier.

Pros of Dropshipping

  • You won't have to do inventory management yourself.
  • The startup requirements are incredibly modest. For example, there are no upfront expenditures for merchandise. All you need is a website, and you can start selling right away.
  • The overall risk is relatively low.

Cons of Dropshipping

  • Because you do not influence shipping, managing customer service may be difficult.
  • High competition, which means that the margins are typically tiny.
  • You'll most likely have to rely on SEO and other marketing methods.

FBA vs. FBM (Third Party) vs. Dropshipping: Which One Should You Use?

There are alternative ways to build a brand without having any inventory on Amazon. For example, if you compare these fulfillment methods, FBA vs. FBM vs. Dropshipping, these options provide you the choice of selling on Amazon without being too worried about the inventory.

Your Sales Strategy Defines The Fulfillment Method

First, you need to determine your sales strategy. Then, use the corresponding fulfillment method that fits with it.

Retail Arbitrage

Retail arbitrage is the practice of purchasing goods at a discount from retail outlets and reselling them on Amazon for a profit. Sellers search for clearance and liquidation sales, in which retail prices are lowered on items that may be resold for a profit. It is a time-consuming procedure, but it's one of the more cost-effective ways to get FBA inventory since it doesn't usually need purchases in huge quantities. This is an excellent way for a new individual seller to experiment with the Amazon FBA environment.

Buying Wholesale

Buying wholesale entails acquiring a significant amount of goods from the manufacturer at a reduced price. The objective is to find reliable suppliers with whom you can build long-term partnerships to provide your consumers with a consistent supply and demand. Rather than having huge orders delivered to your house or workplace, have them sent and stored at an Amazon fulfillment center, where all delivery operations are handled.

Online Marketplaces

Online marketplaces, such as Alibaba.com, are one way to get FBA goods. This technique entails purchasing in bulk from overseas internet marketplaces at a discount. ThomasNet, eWorldTrade, and IndiaMart are some of the most popular websites. It's crucial to be aware of counterfeit items when looking for products on these online markets and assessing satisfaction rate to customer service responses.

Other Factors Also Play Their Roles In The Fulfillment Method

There are other significant things you should think about before deciding on a fulfillment method to sell products online.

Product Size And weight

Sellers with small, lightweight items that change frequently will profit from Amazon's fee plan. On the other hand,  some delivery methods might not be ideal for selling large, heavy goods.

Control Of Customer Experience

FBA sellers use Amazon to store and ship their items and handle customer support on their behalf. Dropshipping sellers have more control over the customer experience.

Seller Feedback

Amazon's seller feedback system is a mechanism for customers to provide comments on vendors and their interactions with Amazon. FBA sellers are more likely to get positive feedback.

Inventory Turnover Rate

As Amazon keeps track of how long inventory remains in its fulfillment centers, an FBA seller's turnover rate is crucial. To avoid Amazon's high storage fees, vendors with slower turnover rates should consider third-party FBM or dropship.

Fees

There are fees associated with both methods. However, being a seller, you need to consider which one is less costly for you based on your product details.

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Image Credit: Amazon.com

You Should Use FBA If…

  • You should use FBA if…
  • You want Amazon to handle your customer service
  • Your inventory turnover time is low
  • It is cost-effective compared to 3rd party FBM or Dropshipping

You Should Use FBM If…

  • Your products are heavy and big
  • Your inventory turnover time is high
  • Your expenses will be higher if you choose FBA

You Should Use Dropshipping If…

  • You don't want to invest much
  • You want to play risk-free
  • You are good at digital marketing

How To Sell On Amazon Without Inventory FAQs

How can I make money on Amazon without inventory?

It is possible to make money on Amazon without inventory. However, it can be challenging to find reliable suppliers overseas, and there are risks involved when dealing with different international marketplaces where counterfeit items could be an issue.

What are FBA fees?

There are many fees associated with Amazon's fulfillment service that sellers should consider before using it as a method for selling their products on Amazon. The first-party fee is the base rate per unit you pay regardless of how much your product sells for on Amazon, which includes pick & pack, weight handling, storage in an Amazon warehouse (if applicable), customer shipping costs (for FBA orders), and other extra storage expenses. You can check it here.

Can you use both FBA and FBM to sell products online?

Yes. In fact, according to the research by Jungle Scout, over a third of Amazon sellers sell using both FBA and FBM. So if you have a wide range of items, you may want to utilize both to get the advantages of each.

Is dropshipping legal on Amazon?

Yes. You can drop ship your orders to customers by having the manufacturer send them directly to Amazon fulfillment centers. They are stored until an order is placed before being sent out for delivery.

If dropshipping on Amazon is so risky, is it a good idea?

Dropshipping is typically less dangerous than FBA since you don't have to spend much money on products before receiving an order. Again, however, it's all about your product and the market in which you operate.

Will Amazon buy your inventory?

Amazon will purchase the inventory from you if it is damaged or lost while in Amazon's possession (in the fulfillment center, during delivery to or from a customer). It is immediately available for sale when your merchandise arrives at a fulfillment center or receiving center.

What are the disadvantages of selling on Amazon?

As with anything in life, an Amazon business has its flaws, including incurring extra fees, facing fierce competition, having lesser control, etc.

Final Words

Selling on Amazon is a great way to add another revenue stream for your business. Still, there are many options and considerations you need to take into account when choosing how best to sell online without inventory. For example, if you're an Amazon seller who doesn't want to deal with inventory, FBA (fulfillment by Amazon), FBM (third-party fulfillment), and dropshipping are efficient methods.

You should choose how to sell on amazon based on how often you plan to make orders, how much money you are willing to invest in the process of selling online, and your product details.

Thank you for reading! Please join my webinar to learn more about selling on Amazon.

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About the author 

Mike Vestil

Mike Vestil is an author, investor, and speaker known for building a business from zero to $1.5 million in 12 months while traveling the world.

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