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Avoid the Amazon Dropshipping Scam

Self-proclaimed Amazon coaches and experts are pushing the Amazon dropshipping scam as a “proven strategy,” but we want to clear the air here and now: a scam is a scam– and the Amazon dropshipping scam is no exception. Unfortunately, the drop shipping scam can cost you your Amazon account, your cash– and your peace of mind.

The coaching vampires are out in droves, trying to convince unsuspecting targets of the glories of retail dropshipping on Amazon. “Very little investment necessary!” “Generate tens of thousands in revenue without carrying inventory!” “Make big money fast!”

Don’t fall victim to the Amazon dropshipping scam. Learn the truth about retail dropshipping on Amazon now.

What is meant by Amazon dropshipping?

Dropshipping_Riverbend

Amazon dropshipping is a fulfillment method where a seller doesn’t keep the products it sells in stock. Instead, when products are sold, they purchase them from a third party and have them shipped directly to the customer.

The basic concept behind dropshipping is simple. The seller never possesses the goods sold. Instead, the seller acts as a kind of middleman:

  • The seller advertises the goods for sale
  • The seller receives the order
  • The seller places their own order with the supplier of the goods
  • The supplier directly ships the goods to the buyer

Dropshipping on Amazon requires careful management of supplier relationships, quality control, and customer service to be successful. Amazon has specific policies regarding dropshipping to avoid counterfeit goods and a host of other shady issues.

Is Amazon dropshipping real or fake?

Yes, Amazon dropshipping is real and can be a legit business model. So long as your business aligns with Amazon’s requirements, you can dropship on the platform. Here are circumstances where Amazon dropshipping is legitimate:

  • To the buyer, the fact that the item was dropshipped is unknown. As far as the buyer is concerned, they bought the item directly from the seller.
  • The seller has a wholesale relationship with the supplier/shipper.
  • The supplier/shipper sends out goods indicating the correct name of the seller of record.

Amazon Dropshipping Scam

To dropship on Amazon, you need to meet these 3 main criteria:

  1. Act as the primary seller for your products.
  2. Clearly identify yourself as the seller on all packing slips, invoices, and external packaging.
  3. Take on the responsibility for handling and processing customer returns for your products.

If the supplier does their job correctly, the seller’s name is visible on the shipping label, along with an invoice that shows the seller of record. Correct information on the shipping label is key because any customer returns or service needs to go through the seller of record – not the supplier/shipper.

What is not allowed – and has become known as the Amazon dropshipping scam – is actually retail dropshipping. In the retail Amazon dropshipping scam:

  • The Amazon seller lists items for sale – even though they do not have possession of the items.
  • When an order is placed, the Amazon seller orders the item from a retailer such as Walmart, Home Depot, Sam’s, or another seller on Amazon.com.
  • The order arrives at the buyer’s location in branded packaging from the retailer, such as a Walmart box.
    The buyer is often confused and doesn’t know where to turn for returns and customer service questions.

Here’s a step-by-step breakdown of how legitimate Amazon dropshipping typically works.

Connecting with suppliers: The dropshipper establishes relationships with suppliers or wholesalers who agree to fulfill orders on their behalf. These suppliers can be found through various channels, such as online marketplaces, trade shows, and direct outreach.

Listing products: The dropshipper selects products from their suppliers and lists them on Amazon complete with product descriptions, images, and competitive pricing. These products may already exist on platforms like Amazon, or they can be unique items.

Customer orders: When a customer orders on Amazon, the dropshipper purchases the product from their supplier. It’s important that dropshippers ensure that the supplier has the item in stock and can fulfill the order promptly.

Order notification: The dropshipper then notifies the supplier of the order and provides the customer’s shipping details. The supplier handles the packaging and shipping of the product directly to the customer. In legitimate cases, the supplier adds the correct label info before shipping.

Amazon dropshipping can be an attractive business model if you want to start an online business without the burden of managing inventory and fulfillment. But it must be done in compliance with Amazon’s requirements– or not at all.

How risky is dropshipping on Amazon?

Engaging in dropshipping on Amazon carries risks, especially when sellers are influenced by misleading advice from shady Amazon gurus. Navigate Amazon dropshipping with a keen eye for compliance and a clear understanding of potential challenges. Here are some risks to look out for:

Amazon account suspensions: Violations of Amazon’s policies, unethical practices, and or a pattern of customer dissatisfaction can lead to an Amazon account suspension. Amazon account reinstatement in these cases can be challenging and may involve a lengthy process, impacting your operations and bottom line.

Non-refundable fraudulent orders: Sellers involved in a dropshipping scheme face the harsh reality that fraudulent orders may never be refunded. The funds tied to these orders, charged to the Amazon Business Prime and buyer accounts, are effectively lost, placing the account owner at a financial disadvantage.

Unsettled credit card balances: Credit cards used for purchasing items from retailers within the Amazon dropshipping scam were initially expected to be repaid through disbursements from Amazon. However, these funds are typically held, and there’s a possibility that they’ll be permanently unavailable. This situation results in elevated credit card balances, creating financial strain for the account owner.

Reduced customer trust: Unfortunately, victims of the Amazon dropshipping scam often find themselves with little to no recourse. Many of the entities involved, including the account owner and other players, are located overseas. Seeking justice or restitution from bad actors in different countries proves to be a difficult task. At the end of the day, the dropshipping scam fosters mistrust among loyal Amazon customers who rightfully start to question the integrity of the platform.

Expensive lesson for sellers: Amazon sellers who unknowingly or knowingly participate in the Amazon dropshipping scam can face an expensive lesson. The consequences, including financial losses, non-refundable orders, and unsettled credit card balances, serve as an Amazon business-ending punishment that was undeserved by sellers who might have been unaware of the fraudulent nature of the operation.

Declining profit margins: Unrealistic promises of high-profit margins by Amazon gurus might lead sellers to set unrealistic prices. Poor pricing strategies can impact competitiveness and profitability.

Intellectual property issues: Scam gurus may advocate using unauthorized images or content to help sell dropshipping goods. But, infringing on intellectual property rights, like a trademark or copyright, can result in legal action and negative consequences you might not have been aware of.

While dropshipping on Amazon can be a legitimate business, the influence of scammy Amazon gurus has elevated the risks of even legitimate dropshipping on the platform. Success requires a commitment to ethical practices, compliance, and a thorough understanding of the dynamics of the Amazon marketplace.

What are the consequences of retail dropshipping on Amazon?

Amazon Dropshipping Scam

If you’re caught in the Amazon dropshipping scam, the consequences can be drastic:

  • Your seller account may or may not receive a warning (Is it worth it? No.)
  • Your seller account is suspended. (Yikes!)
  • The platform permanently holds any funds currently in your account. (No cash to scale!)
  • In extreme cases, if funds were recently transferred, the platform may claw back funds from your financial institution. (Scary stuff!)

So what’s the big deal? Isn’t retail drop shipping on Amazon still worth the risk? One word– NO.

Amazon caught on to the fact that retail dropshippers shut down by the platform would open new accounts and start the entire retail Amazon dropshipping scam again. That’s why so many repeat offenders have had their funds held permanently. Amazon wants to deter scammers from opening more dropshipping accounts.

Sure, the seller can try an Amazon appeal. But, an Amazon account reinstatement in these cases is difficult and requires the seller to prove they will no longer retail dropship.

The consequences of retail dropshipping on Amazon are losing your account and your funds– permanently. A massive one-time loss could destroy the small margins you worked hard to achieve over many months – or even years. Don’t fall victim to the Amazon dropshipping scam. It just isn’t worth it.

Why do gurus sell the Amazon dropshipping scam?

The Amazon gurus pushing retail dropshipping typically offer a combination of software and inexpensive virtual assistant help. The coaches see their margins rise with each get-rich-quick “student” they sign up. They’ve soon created a dropshipping machine that requires very little work. They make their money whether or not their client’s Amazon accounts are suspended– and frankly, they don’t care.

Meanwhile, clients realize extremely thin margins. They can only make real money by turning incredibly high sales volume. An overly high sales volume only increases the risk of having large sums of money permanently held when they are ultimately suspended.
Plain and simple, scammy e-commerce gurus are out to make a quick buck. Beware.

Why not just give Amazon retail dropshipping a try?

Amazon Dropshipping Scam

That’s the sales pitch of many dropshipping gurus. “Don’t you want the laptop lifestyle?” They assure their targets that suspension is rare (it’s not) and that they can “fix” the situation if a suspension happens.

Instead of trying it, we recommend aspiring online sellers choose a sustainable business model or learn what compliant Amazon dropshipping really entails.

Other business models offer higher profit margins, anyhow. Whether you set up sales rep relationships, find a great wholesaler, or launch your own private-label brand – surely your margins should be higher than the 1 to 3 percent retail dropshipping offers.

Sure, these options are more work and possibly require a larger investment. But at least your business will be lasting and not perpetuate daily fear that Amazon might permanently take your money.

The Amazon dropshipping scam, isn’t it. It’s a short-lived opportunity and only signals to new Amazon shoppers that they can’t trust the platform. In the end, the promoter is the one who actually gets rich.

Do not fall victim to the Amazon dropshipping scam. Instead, enlist the help of Riverbend Amazon Consultation Services to help you navigate your next–best steps.

Amazon. Solved.

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