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Is Amazon Dropshipping Profitable in 2020?

August 21 2020 04:29
Winnie
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Before figuring out whether you can earn through Amazon dropshipping in 2020, we need to clarify how to interpret the term "Amazon dropshipping."


It can refer to two significantly different meanings:


  1. Opening an Amazon store and drop shipping items through it.

  2. Opening an independent store and using Amazon as the supply source.


In this post, we will discuss the first option.



Is dropshipping on amazon still profitable in 2020?

is dropshipping on amazon still profitable in 2020

Yes. Dropshipping on Amazon can still earn you money in 2020 because many e-commerce activities are happening worldwide. The profits of e-commerce and dropshipping have exceeded $4 billion, with a year-on-year increase of 7% over the past ten years.


Also, small retailers have achieved a nearly 30% conversion rate increase through smartphones.


Let's say you want to start an Amazon store for dropshipping, here are some tips you can follow to start a profitable dropshipping business via amazon.


How to be successful with amazon dropshipping?

While you can make money with this business model, but if you want to make significant money with this method, you need to scale up and avoid making mistakes.


1.  Understand the supplier's return policy

When working with suppliers, you must be familiar with their return policy because each supplier's policy is different. Dropshipping is suppliers ship directly to customers, so their policies will directly affect your policies.


Generally speaking, you need to understand the following points:


Are there any fees for goods returned to the supplier's warehouse? If so, how much does it cost?


How many days after the product is sold can ask for a return or refund?


Do your customers or do you need to pay the return shipping fee?


Does the supplier accept the replacement or refund of placing a wrong order (such as purchasing a wrong T-shirt size)?


What is the supplier's entire return process like?


If you have a lot of suppliers, you need to understand their return policies in detail.


The specific points are as follows:


If the supplier supports a 30-day return and exchange service, your return and exchange policy should tighten this period, such as 20-25 days. Because sometimes you may forget to re-ship to the customer so that there will be room for a time.

 

If you have many suppliers, try to include all supplier policies in your return policy.


For example, your T-shirt supplier supports a 20-day return and exchange service, and the mobile phone case supplier only provides a 14-day return and exchange period. You can set different return and exchange deadlines according to different products in the return and exchange policy; or combine them into one and set the return and exchange deadline to 10-12 days.


Do not display the return address on the return policy page. Instruct customers to contact you privately, and then give the address to customers depending on the situation. It is sometimes better to let the customer return the product to your address than directly returning it to the supplier. Why would you do that? Because it can detect whether customers and suppliers lie. If you see the product, you can determine whether it is what the customer said. Moreover, because you got firsthand information, if it is damaged as the customer said, the supplier can't be sure that the product isn't damaged after receipt.

 

The tracking number must be provided for return or exchange; otherwise, it will not be accepted. Be sure to state this clearly in the return and exchange policy and tell the customer that no return or exchange is acceptable without the tracking number.


2.  Automate the dropshipping process

At the same time, you must also ensure that your inventory quantity, price, product description, etc., are always accurate to prevent your Amazon account from being banned and prevent any mistakes which may incur a loss.


As mentioned earlier, you need to sell products to make a significant profit via amazon dropshipping, so make sure that your Amazon listings are dynamically optimized. But you can't do any of it manually, and you have to rely on dropshipping software or dropshipping supplier with system integration with Amazon.


When choosing the software or supplier for automated dropshipping, here's what you need to automate to make a profit.


Purchase order creation – when an order is received, you must automatically send it to the supplier for fulfillment


Repricing – As the supplier's prices are frequently fluctuating, you must ensure that your listings are automatically adjusted to have a purchase box. Otherwise, you will not make any sales.


Inventory list management- When out of stock, you must ensure that the listing is deactivated to prevent unfulfillable transactions.


Product Data Synchronization-The products shipped by the supplier must exactly match your Amazon product list. Any changes in packaging or product version should be taken into account.


Order Tracking-Your supplier must electronically provide shipping and tracking information that can be sent to Amazon immediately. This process must be fully automated to process the volume of orders you will receive.