Amazon's New Drop-Shipping Policy and What it Means to Amazon Sellers

​Several days ago Amazon US posted an Important Announcement for Drop-Shipping Policy.
Many Amazon sellers already had a chance to comment on this policy and note that nothing new was announced, but at least one positive aspect was found by everyone: the drop-shipping policy has become more clear and straight to the point.

We should take this chance to examine the entire policy, its meaning in general and important details, that you should not ignore when you choose this business model.

So, let’s start!
The policy starts with this statement:
If you fulfill orders using a third party, a practice known as drop shipping, you must follow all Amazon policies to ensure a consistent customer experience that easily identifies only you as the seller of record.
EXPLANATION: you need to make sure that a customer buying the product from you on the Amazon platform will receive an item, which will state yourself as a seller. This is very important for Amazon, and this is a reason why Amazon prohibits drop shipping from other online retailers (like Walmart for instance), as Amazon clients would receive a product with a Walmart label and next time will go shopping directly there, skipping this “unnecessary stop” at Amazon marketplace.  It is fine to source from Walmart, Home Depot, Lowes, or Bed, Bath and Beyond, but you cannot drop ship from their online site directly to customers. Amazon does not want customers ordering from their site to receive something in a box with Walmart or Home Depot written all over it.

The next paragraph states another important aspect:
As an important reminder, all violations of the Drop Shipping Policy can break customer trust. As a result, any violation of our Drop Shipping Policy will negatively impact your account health and your ability to fulfill future orders using our Merchant Fulfilled Network (MFN).

EXPLANATION: This means, that if Amazon somehow finds out or suspects you are drop-shipping from other retailers or suppliers who keep their labels on the package, your account might be deactivated and you would need to go through several rounds of appeals to explain yourself, or to use professional services like ours to resolve things faster.

But we would like to make sure you understand the difference between the brand label and the supplier label. When an Amazon buyer wants to buy a branded product, let’s say “XXX”, the product must state the brand name, as customers expect to receive exactly this branded item. The supplier label must state YOU as a seller, and not any other third-party.

Further Amazon explains the exact prohibited actions:
The following drop shipping methods are strictly prohibited on Amazon:

• You may not purchase products from another retailer and have that retailer ship directly to customers, if:
  • the shipment does not identify you as the seller of record
  • anyone other than you appears on packing slips, invoices, or external packaging

Note: This means that the name, logo, or any other identifying information from the other retailer may not appear on what the customer receives.

• You may not ship orders with packing slips, invoices, external packaging, or other information indicating a seller name or contact information other than your own

EXPLANATION: Please forget about drop-shipping from such online retailers, as:

1. Walmart
2. Home Depot
3. Costco
4. The Kroger Co.
5. Walgreens Boots Alliance
6. CVS Health Corporation
7. Target
8. BestBuy
9. eBay
10. Dollar General

Do your homework in advance and find a reliable supplier, if you wish to have a successful business through Amazon marketplace.
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Drop-shipping is a very beneficial strategy:

•  If you don’t want to keep storage of a purchased stock – all products will be delivered from the supplier directly to the customer, which is extremely convenient
• If you don’t have an extra budget to purchase the items in advance
• If you don’t want to risk, whether the product will be sold or not

With a drop-shipping business model you have a guarantee, that you will get paid, as you purchase a product from your supplier ONLY if it’s ordered from your Amazon account.
But in order to have all these benefits, you have to assure Amazon that you are a reliable and responsible seller, acting partly on behalf of the marketplace. The old and the new policy provides the details, you have to consider to be trusted. Put yourself in Amazon’s shoes and you will understand, that they don’t want the products to be delivered to their beloved customers from their competitors.
The last part of the policy pretty much repeats the above statements, except the one:
If you fulfill using drop shipping, you must strictly adhere to following requirements of our policy:

• You must always be the seller of record of your products, meaning you identify yourself as the seller of your products on all information included with the item.
• Remove any information identifying the third-party drop shipper before shipping.
• Be responsible for accepting and processing customer returns.

HERE: we need to pay our attention to the last point of the paragraph: YOU ARE RESPONSIBLE FOR ACCEPTING AND PROCESSING CUSTOMER RETURNS. If a customer for some reason wants to return a product, you are the one to organize this. Not Amazon, not supplier, but you.
We wish you good luck with your business on Amazon and as always, if you have any questions, don’t hesitate to turn to us.