June 14, 2021

Drop Shipping – Not Without Risks

By: Kayleigh Cockerill

You’re looking to expand your established Amazon business or maybe you’re just getting started and drop shipping seems like an easy way to make more money.  In the world of e-commerce, avoiding storage fees and the hassle of fulfilling orders yourself sounds like a breath of fresh air but don’t be lured by the low startup costs and convenience.  There are serious repercussions to consider before committing to drop shipping.

While Amazon allows drop shipping, sellers must adhere to these policies:

  1. Be the seller of record of your products.
  2. Identify yourself as the seller of your products on all packing slips and other information included or provided in connection with them.
  3. Be responsible for accepting and processing customer returns of your products.
  4. Comply with all other terms of your seller agreement and applicable Amazon policies.*

*Taken directly from Amazon’s drop shipping policy https://sellercentral.amazon.com/gp/help/G201808410

Meeting these criteria eliminates the possibility of using some of the most popular drop shippers in retail sales – big box stores like Walmart, Costco, and Home Depot.

Drop Shipping Out of Policy:

If a buyer makes a complaint that results in an ASIN violation, Amazon will likely request invoices for you to appeal the violation.  If you want your account in good standing and your ASIN reinstated, you have no choice but to submit invoices from the drop shipper.  If the drop shipper doesn’t meet Amazon’s criteria, your account is in trouble.  Perhaps you choose not to appeal the violation to avoid detection.  Eventually, a buyer complains through buyer-seller messaging that their order arrived in a Walmart box, Amazon bots will identify the complaint and may suspend your Merchant Fulfilled Network privileges, or even your entire account.  Until you implement and submit a successful Plan of Action, your funds are frozen and your business is dead in the water.

Problems with Drop Shipping even when vendors are Compliant:

Relying on a third party to fulfill your orders always comes with risks.  Without control over the drop shipper’s quality-control practices, inventory audits, packaging standards, and on-time order fulfillment, you are at the mercy of another business to keep your Amazon metrics within the target range.  Too many used sold as new complaints, pre-order fulfillment cancellations due to out-of-stock inventory, or late shipment rate violations and your account is at risk of suspension.

If you find yourself in deep water with Amazon because of drop shipping, whether or not you’ve been operating within policy, Riverbend can help!

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