Business Overview

An Amazon drop shipping business is essentially a middleman between customers who want to purchase products and businesses that sell them. A drop shipper will receive orders from customers, purchase those products from a separate retailer, and then ship those products directly to customers. This helps eliminate some of the costs and time associated with traditional distribution channels.

Who is this business right for?

Success in this business model is dependent on your ability to establish fruitful relationships with drop selling wholesalers. You must also have a knack for finding products that will sell and marketing them in ways that will appeal to customers.

What happens during a typical day at an amazon drop shipping business?

Your typical workday could consist of a range of activities that include the following.

  • Generating relationships with an ever-expanding list of wholesalers who’ll serve as your drop shippers
  • Writing product descriptions and displaying your merchandise items for sale
  • Conducting sales with customers, including answering questions, resolving complaints and soliciting reviews
  • Communicating with your wholesale partners to check on and resolve product availability, shipping dates and other potential issues and roadblocks

What is the target market?

You’ll have two “customers” in this business, and serve as the critical intermediary between both. Your end customers are the buyers of your products. Their profile will depend on what you’re selling. Your other critical parties are the wholesalers who will serve your needs and those of your customers. Your wholesalers must be reputable, dependable, and easy to work with. Before doing business with them, check online for customer complaints or any other feedback that would trigger a warning.

How does an amazon drop shipping business make money?

You won’t hold inventory or ship purchased items. Your only means of making money is by selling products held by the wholesalers at enough of a markup to generate a profit. To illustrate, if you can find a wholesale product for $15 that Amazon shoppers want at a $25 price point, you’ll make a $10 margin on the sale, minus your selling fees.

What is the growth potential for an amazon drop shipping business?

Here are a couple interesting statistics from this 2017 survey by ecommerce service provider BigCommerce. Sixty-seven percent of millennials and 56 percent of Gen-X shoppers prefer online to in-store shopping. And 80 percent of all Americans made at least one Internet purchase over the last month.

As for Amazon, the company reported a sales gain of 23 percent in 2016 and forecast an additional 24 percent increase in the first quarter of 2017, according to Bloomberg Technology. Going back just a little farther in time, Amazon accounted for 60 percent of the total online sales growth in the United States in 2015, according to Market Watch.

In other words, ecommerce is skyrocketing, and Amazon is the rocket engine.