A Beginner’s Guide to Selling on Amazon without Inventory

Whether you’re selling beauty and personal care products or clothing, you need to have products on hand to cater to customers. Right? 

Well, that’s not exactly the case when you’re selling on Amazon. 

The thing is, you can sell on Amazon even without inventory. Now, this might seem like a far-fetched idea, but it’s not impossible. If you’re an Amazon seller, you have several options for selling on Amazon without any inventory. This article sheds some light on how you can leverage this business model, the benefits of selling on Amazon without inventory, and ways to make this practice sustainable for long-term business growth. 

5 Options for Selling on Amazon Without Inventory

How does selling on Amazon without inventory work? 

When a customer buys something from your Amazon store, you’ll purchase the product from a partner, such as a supplier or manufacturer. Depending on your agreement, the same partner can handle fulfillment processes like storage or shipping. 

We’re sharing five business models you can follow to sell products on Amazon even without any inventory.

Dropshipping

With dropshipping, sellers can sell on Amazon without inventory. When a customer makes an order from your store, you’ll send this order to a third-party company (supplier or manufacturer), who will then take care of aspects like production, packaging, and shipping. In dropshipping, the seller acts as the middleman who facilitates the transaction between the customer and the supplier or manufacturer. 

While Amazon permits dropshipping, it’s important for sellers to follow the platform’s dropshipping policy. Failing to comply with Amazon’s guidelines may result in your selling privileges being revoked. 

Pros of Dropshipping

• Lower overhead costs
• No need to invest heavily in inventory because you won’t have to purchase products beforehand
• Dropshipping is relatively easy to start since you won’t have to deal with physical inventory, storage, shipping, and managing stock levels
• You can run a business anywhere, as long as you have an internet connection
• Greater flexibility when it comes to what products you can sell, making it an easily scalable solution

Cons of Dropshipping

• Because the dropshipping space is highly competitive, you may be faced with challenges like lower profit margins 
• Dropshippers may come across common problems like issues with inventory, higher shipping costs, especially if your products come from different suppliers or manufacturers, and mistakes made by the third-party company, such as shipping the wrong item or manufacturing a low-quality product.
• You’ll have limited control over customization options, branding, and product quality

However, you can take advantage of the full potential of Amazon dropshipping with a tool like SellerRunning. It helps sellers manage and expand their operations across multiple marketplaces around the globe effortlessly. It’s entirely risk-free and takes care of compliance for you. SellerRunning also protects profits with advanced tax calculators and seamless order fulfillment managed by their US prep center.

Print-On-Demand (POD)

As a thriving industry, POD is estimated to be worth over $60 billion by 2032. It’s a type of business model where products are made when the seller receives an order. This model allows for greater customization and flexibility for both the seller and the buyer because of several reasons:

• Niche customers can have access to unique designs for items like accessories or clothing
• Content creators who want to start a business can use POD to bolster their branding by selling branded merchandise
• Entrepreneurs have the opportunity to develop custom products without inventory 
• For sellers, your supplier will take care of everything, from printing to shipping

Print-on-Demand Pros

• Amazon sellers can create and sell products quickly without handling physical inventory.
• The supplier will usually cover shipping and fulfillment.
• POD involves lower risk, given that you won’t hold any inventory. You can quickly add or remove certain products or designs and test out new design ideas. 

Print-on-Demand Cons

• If you’re only doing a small batch, the cost of each item will likely be higher.
• You have no control over storage and shipping.
• The scope and quality of POD products will vary, depending on the POD service provider you’ll be working with. You also have to consider factors like customization options and size availability. 

Popular Print-on-Demand Companies

If you’re planning to go the POD route to sell on Amazon without inventory, here are some of the most popular service providers worth considering:

• Printful 
• Printify
• Redbubble
• Society6
• Gooten 

Amazon Merch on Demand

Amazon’s Merch on Demand service is a good alternative to POD companies. With Amazon Merch on Demand, sellers, such as independent designers and even global brands like Disney and Marvel, can showcase their custom designs to Amazon shoppers. All you need to do is come up with a design and let Amazon handle the rest. 

Here’s a rundown of how Amazon Merch on Demand works:

• Create original designs and upload them to your Amazon Merch on Demand account.
• Pick a product type, add a product description, and suggest a list price for your items.
• Amazon will create a product page on the platform and print products that are sold.
• Aside from printing, Amazon will also handle shipping and customer service. 
• Amazon Merch on Demand also provides users with analysis tools so they can monitor the performance of their designs. 

The great thing about Amazon Merch on Demand is that it caters to a variety of items, including t-shirts, totes, and even pop sockets. Plus, you can start your business with zero inventory and earn royalties every time a product is sold. This is a great option for content creators or influencers who want to bolster their branding and boost their audience engagement. Moreover, products under Merch on Demand are eligible for Prime Shipping. 

Note that when it comes to your design submission, these will still have to follow Amazon’s content policy. You can check out the detailed guide for Amazon Merch on Demand here. 

Digital Products

You can find an array of digital products being sold on Amazon, such as eBooks, apps, audiobooks, and videos. For instance, if you’re writing books, Amazon lets you do any of the following:

• Sell physical copies of your book
• Use Kindle Direct Publishing (KDP)

Amazon offers robust support for sellers looking to sell digital products on the platform. If you’re an artist who wants to sell your unique works, you can use Amazon Merch on Demand. For musicians, you can use TuneCore, which lets you upload your songs and make them available on channels like Amazon, iTunes, and more. For developers, the Amazon App Store lets you make your app or game available to various Amazon devices. If you’re into making audiobooks, Amazon has Audible, which is a membership service that gives customers access to an extensive catalog of titles, including podcasts and Audible Originals. For video creators or producers, Amazon has Prime Video Direct, which offers flexibility for creators and helps them expand their reach. 

Pros of Selling Digital Products on Amazon

• The opportunity to grow your audience base to a global scale
• No need to handle physical inventory 
• Amazon takes care of the distribution of digital products
• Selling digital products on Amazon is scalable, allowing you to add or remove products you want to sell depending on factors like their performance and audience demand

Cons of Selling Digital Products on Amazon

• Different digital markets will have varying levels of competition
• You may need to pay additional fees like commission fees
• Potential challenges in marketing your digital products, which can affect its visibility and sales performance

Fulfillment by Amazon (FBA)

With Amazon FBA, sellers can outsource order fulfillment services to Amazon. This means that Amazon will take care of the storage, packing, shipping, and delivery of your products. To start selling on Amazon via FBA, you need to sign up for a selling plan. From there, you need to list your products and then prepare and ship your inventory to Amazon fulfillment centers or warehouses. 

Pros of FBA

• Access to Amazon’s global network of warehouses
• FBA orders are eligible for Prime Shipping
• Using FBA gives you more time to focus on growing your business through product development and offering enhanced customer experiences 
• Helps sellers scale their business and save time
• Provides sellers with an end-to-end solution for processes like storage and returns
• Access to discounted shipping rates
• Round-the-clock customer service
• Opportunity to win the Buy Box

Cons of FBA

• Numerous fees, such as fulfillment costs, storage costs, and returns processing, can quickly add up
• Your branding opportunities will likely be limited, given that Amazon takes care of packing and shipping
• Sellers may encounter more returns due in part to the platform’s open return policy

If you’re looking for more ways to win the Buy Box, Threecolts offers several solutions to help you out. FeedbackWhiz Alerts is a powerful monitoring tool designed for Amazon sellers. With Bindwise, you can monitor your listings and protect them from hijackers. It also alerts you on potential issues that can lead to problems like Buy Box losses. Meanwhile, SmartRepricer is a handy tool that automates your Amazon pricing so you can gain a competitive edge and have more opportunities to win the Buy Box. 

Fulfillment by Merchant (FBM) or Third-Party Logistics 

Amazon’s Merchant Fulfilled Network (MFN) is a program that lets sellers list their products on Amazon. With MFN or FBM, the seller also manages everything in between independently, from storage to customer support. To use MFN/FBM, you need to set up your seller account (either an Individual plan or a Professional plan) and choose a fulfillment option that best suits your needs. If you go with MFN/FBM, you can handle order fulfillment in-house. Alternatively, you can use Amazon FBA, enlist a third-party logistics service provider, or combine all three fulfillment options. 

When it comes to third-party logistics providers (3PL), these companies will handle supply chain-related processes, which can include storage, packing, and shipping. In some cases, 3PL providers may also handle customer service. The scope of their services will likely depend on your arrangement with them.

Pros of FBM

• Greater control and flexibility over order fulfillment aspects like inventory management and quality control
• If you’re handling fulfillment in-house, you can save on fulfillment fees
• Greater customization when it comes to packaging and branding
• Sellers are not dependent on third-party service providers, especially if you handle the order fulfillment process in-house

Cons of FBM

• MFN/FBM is a labor-intensive process since you’ll be handling the entirety of the fulfillment process
• You may find it difficult to scale your business faster because you’ll then need to get a bigger space to handle storage, plus more staff to accommodate your growth
• Your reach may be limited, especially if you’re not equipped to handle international orders
• You will be responsible for handling customer service, including inquiries and returns

Why Sell on Amazon Without Inventory?

Selling on Amazon without any inventory offers several benefits for sellers. Because you don’t need to purchase and store products, you’ll have a lower barrier to entry. Here are three key benefits of selling on Amazon without inventory.

Minimal risk

Selling on Amazon without inventory entails a reduced risk when it comes to overstocking or understocking certain products. And because your money isn’t exclusively tied to your products, you’ll be able to pivot your business quickly in case a product doesn’t sell well or if certain products have higher demands.

Lower overhead costs

Doing business on Amazon without inventory means you won’t need to have a huge capital to purchase, store, and ship products. Having no inventory also lets you start your Amazon business even with limited resources. Plus, because you won’t need to manage physical inventory, you’ll save time and be able to focus more on how you can grow your business and market your products. 

Scalable  

Selling on Amazon with no inventory can be a scalable solution for many entrepreneurs. For example, if you’re using Amazon FBA, you can quickly scale your business because you’ll be able to expand your product offerings without being limited by having to manage physical inventory. Furthermore, selling without inventory makes it easier for you to run your business from home or from an office. Lastly, by outsourcing storage and shipping, it’ll be easier for you to manage orders. 

Despite the numerous benefits of selling on Amazon without inventory, it can give rise to unique challenges, such as:

• Being dependent on suppliers, manufacturers, or third-party logistics (3PL)
• Having limited control over your products—especially when it comes to their quality and packaging, as well as how they’re stored and shipped—can affect customers and the experiences they’ll have with your business.
• Potentially having lower profit margins because of increased competition, especially in the case of Amazon FBA, and having to pay several different fees to suppliers or 3PLs 
• Complying with Amazon’s policies for different business models. For example, if you’re planning to go the dropshipping route, then you’ll have to follow a different set of guidelines from Amazon’s policies when it comes to using the Amazon Fulfilled by Merchant (FBM) model.

Best Practices for Selling on Amazon Without Inventory

We’re sharing a few helpful tips on how you can start selling on Amazon without inventory. Following these best practices can help you optimize your business and equip you for success.

• Find the right products to sell: Having the right products plays an important role in the success of your Amazon business. If you’re planning to sell on Amazon without inventory, it’s best to thoroughly research potentially profitable products to sell, assess their demand, and factor in components like your profit margins and overhead costs. Make sure that you choose products that match your business goals and align with your branding. You can start your research by looking at top or trending products on Amazon. If you want to get estimates on your Amazon sales or find profitable products to sell, you can use tools like Jungle Scout’s Amazon Sales Estimator or Opportunity Finder. Threecolts’ Tactical Arbitrage is also a great tool for sourcing profitable products to sell on the platform. 
• Work with reliable partners: The partners you work with will also influence your Amazon business’s growth and success, which is why it’s crucial that you find reliable suppliers, manufacturers, or 3PLs. Create a list of potential partners, check their track record, and see if they can maintain communication and transparency. Only work with partners who can offer high-quality products. Otherwise, you can potentially put your reputation and customer experiences at risk. 
• Offer unparalleled customer service: Aside from ensuring the quality of your goods even without physical inventory, you also need to stay on top of your customer service. Make sure to promptly and professionally respond to queries or concerns. Make your customer service easily accessible to your patrons by providing them with multiple communication channels, such as social media and email.
• Remember to optimize your listings: Listing optimization is vital for search visibility. Plus, it makes it easier for customers to find your products. Aside from writing engaging descriptions, incorporate SEO and use high-quality images for your products. Ask customers to leave a review or give you a good rating. Keep in mind that you must still follow Amazon’s listing guidelines and best practices for listing quality.
• Monitor your performance: Use data to your advantage. Review all your data, such as sales data and customer reviews, to see which areas are working well and which ones need to be improved. You can also test out different aspects of your business, such as rolling out new products or product descriptions, to see which one performs better. Lastly, once you’ve analyzed your data, use your insights to tweak your strategy so your business remains flexible and agile. 

Growing Your Amazon Business Without Inventory

While it might seem impossible, you can start selling on Amazon without any inventory. Whether you prefer to dropship your products or use Amazon FBA, it’s best to do your due diligence first and learn about the advantages and drawbacks of each option. Furthermore, while selling on Amazon without inventory seems like a viable solution for entrepreneurs, it may not always be the best choice for your business. Despite its benefits, you’ll still need to assess its drawbacks to see if selling on Amazon without inventory will help you achieve your business goals. 

Whether you’re planning to sell on Amazon without inventory or going the traditional selling route with physical inventory, using a reliable marketplace management platform like Threecolts can help you scale your Amazon business. From answering ecommerce tickets faster to gaining visibility on your profit and loss, Threecolts offers an array of applications to help you customize your online business. Explore the different solutions offered by Threecolts today.

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