With the recent ebay update, a drop shipper is required to have a “Drop shipping Agreement” which means a business relationship has to be established and permission has to be taken to drop ship and resell the products you want to sell.
You will learn:
- Pros & Cons of this sourcing strategy.
- How find Amazon drop shipping friendly sellers and how to know if they need help selling their products.
- How to build trust with these sellers.
- How to format a drop shipping Agreement if they cannot provide it.
- What documents do you need (optional but recommended).
- What is my profit margin expected to be?
What are the Pros & Cons of this sourcing strategy?
- Protect your ebay store from restriction/suspension.
Note: You can click here to create your free membership and get a free coming soon training how to get back on ebay if you were suspended and how to protect if you have one.
- Higher profit margin.
- More competitive price, your retail price will be better and lower than the vast majority, if not all of other competitors who are sourcing from Amazon, your competitors will go crazy I believe.
- More repeated sales due to the fact the price is very competitive and I am assuming you have chosen something on demand.
- It’s time consuming, the solution I recommend is to follow a strategy where few listings bring you thousands of US dollars a month instead of listing thousands of listings and making few hundred dollars or you can work with a virtual assistant. I am not saying do not list thousands of listings but you get my point, if you list thousands of listings and make few bucks, this way you are working for ebay and for Automation Tools websites.
How To Find Amazon FBA Suppliers Who Are Willing To Give A Drop shipping Agreement and…A Discount?
This might sound weird, but remember there are tons of Amazon FBA sellers who are looking for drop shippers like you and me and they are willing to give you a special discount to resell their product with a satisfactory profit margin because of the following reasons:
- Amazon is charging them for stocking their inventory, the more they keep it the more they are charged so it’s better to move inventory.
- The more sales they make the higher the chance they will rank to the first page on Amazon.
- High number of stock and low number of sales. I will let you know how to uncover this pain point.
Let’s move on to the steps:
- Choose the niche you want to source, for example let’s say “Baby Toys”. I understand this is broad and you can be more specific.
- Go to Amazon.com if you are drop shipping in USA or Amazon.co.uk if you are drop shipping in the UK. The same for Germany, France, Canada…etc.
- Search for Baby Toys
- Select Prime (optional)
- Go to page 2, 3 or 4. (optional you can go farther or source from 1st page)
- Pick up to 10 sellers (you can go higher) but minimum 5. You can choose sellers with 4-star rating at least for example, this is your call.
- Check their inventory, do that by Opening The Product Page>Add To Cart>Click On Cart>Change quantity to 10+ > Put 999 > Click Update and see the response by Amazon.
You will notice Amazon will respond to you with the actual quantity, if the quantity is in hundreds, that means their stock is more likely to be collecting dust with no movement in Amazon’s warehouse.
P.S. Some sellers on Amazon limit the quantity, for example 2 pieces, 3 or 4 etc. You can ignore them if you wish and thus, Amazon does not give actual quantity.
8. Below the Add To Cart Button, Click on the Brand/Store name on the product page where it says Sold by (Seller name) and fulfilled by Amazon. See the yellow mark on the image.
9. Hit Ask A Question and send the seller your message. Do not include your email, phone number or website as Amazon might delete it. You can try at your own risk writing your email like AhmedAlzomor(AT)G M A I L(DOT) C O M.
or take the store/brand name to Google and include the word “Contact” so it will be like Store Name + Contact and search for their website or contact details.
Also, you can consider creating a NEW windows/mac user account> Use a VPN> Create a new amazon account with a new email address.
This way you can risk your account as if it’s restricted for such communication, you have the original one.
Try to negotiate a good discount because this will allow you to compete on ebay and increase your margin and it will help you generate more sales and list less items.
How To Build Rapport And Trust?
Remember the following when you send the message:
- Sympathize, rephrase their feelings/needs/wants for example by saying “All sellers strive to have as many sales as possible and rank for page 1 quickly, I will take full responsibility of all marketing costs after receiving your approval to drop ship your product in return for satisfactory margin percentage”. Feel free to change the script, this is just an example.
- Trustworthy: Make your message trustworthy by mentioning your name, purpose of the message and your performance metrics and volume of sales and reviews (does not apply to new sellers mentioned volume of sales). It’s also recommended to have a professional email address and a website because they are expecting to be dealing with professionals.
Assure the seller that you can comply to their marketing needs and concerns (like advertising costs, brand reputation, retail pricing limit, handling returns and complaints).
- Concise and to the point: Make it short and cut the fat, remember the purpose is to get the agreement and the discount.
How to format a drop shipping Agreement if they cannot provide it?
Make a one page agreement, include your logo and it can be a little bit fancy text, address, phone number, date, name of ebay account owner or business name. Make your details the same as the one you have registered on ebay.
Mention in the agreement that you are authorised to drop ship and resell this product by (business name) and any other details you believe it’s important.
Check this agreement example to further understand how it’s structured.
What documents do you need (optional but recommended)
- We recommend you to have your LLC and resale certificate
Having said that, you can first contact the sellers, if it works with you you can go ahead and create your LLC. This will establish more trust and make the sellers they are dealing with a BUSINESS.
What is my profit margin expected to be?
I once contacted an Amazon Seller on facebook group dedicated to Amazon FBA sellers, and he said he is willing to give 25% discount. Check this survey I made on facebook and the comment:
Conclusion, this sourcing strategy works but it will take time and on the other hand you must be able to sell more and list less to achieve the target income you need, I am not encouraging you to list less but the point is instead of making $1000 in profit with 3000 sales with Retail Arbitrage, you can make $1000 in profit with 400 sales.
Let’s take an example, an amazon seller selling his product for $39, giving you 25% which means product cost is $29.75 and the margin is $9.25 if you sell it for $39. This margin is excluding ebay + PayPal Fees.
After deducting ebay + PayPal fees the margin would be
($39 X 12.5%) – 0.30 = $4.58 is ebay + PayPal Fee
Profit Margin= $9.25-$4.58
4.67 USD profit per sale + Cashback if any + Tax Exemption savings
NOTE: Your front end profit can be higher because your competitors on ebay are adding their margin on a retail price with no discount from seller or a small percentage of discount. The special and high discount you get puts you a in a stronger position to compete and have more control on margins.
I advise you to go with High Ticket Items to have higher margins if you can this way you can have Drop shipping Agreement + Competitive Price + Mid To High Profit Margins.
You just need to focus on choosing the RIGHT niche and product with focus on optimization and keeping the metrics high.
- Choose the niche/product
- Search Amazon
- Contact minimum 5 Sellers from page 2, 3 or 4
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