Overcoming Challenges: Dropshipping on Amazon in 2021

Table of Contents

1. Introduction
2. Why Drop Shipping on Amazon in 2021?
3. Changes in Amazon's Policies
   • 3.1 New Restrictions on Drop Shipping
   • 3.2 Amazon's Trust Issues
4. The Problem with Letter of Authorization
   • 4.1 What is a Letter of Authorization?
   • 4.2 Reasons Walmart Receipts Don't Work Anymore
5. Solutions for Drop Shipping on Amazon
   • 5.1 Buying Aged Amazon Accounts
   • 5.2 Drop Shipping from Specific Wholesalers
   • 5.3 FBA (Fulfillment by Amazon)
   • 5.4 Gradual Account Building
6. Pros and Cons of Each Solution
   • 6.1 Pros and Cons of Buying Aged Amazon Accounts
   • 6.2 Pros and Cons of Drop Shipping from Specific Wholesalers
   • 6.3 Pros and Cons of FBA (Fulfillment by Amazon)
   • 6.4 Pros and Cons of Gradual Account Building
7. Conclusion
8. FAQ

Drop Shipping on Amazon in 2021: Overcoming Challenges and Finding Solutions

In recent years, drop shipping on Amazon has become increasingly challenging. New drop shippers are facing account suspensions, and even getting their accounts reinstated is becoming extremely difficult. If you are planning to start drop shipping on Amazon in 2021, it is crucial to understand the reasons behind these challenges and how to navigate through them. In this article, we will discuss the changes in Amazon's policies, the issue with the letter of authorization, and various solutions that can help you overcome these obstacles.

1. Introduction

Amazon has been cracking down on new drop shippers, making it harder than ever to enter this lucrative business. Back in the early days, opening a new Amazon account and drop shipping from various retailers like Walmart, Home Depot, and Costco was a breeze. However, Amazon's trust issues with new sellers have led to stricter requirements and increased scrutiny.

2. Why Drop Shipping on Amazon in 2021?

Drop shipping on Amazon remains an attractive business model due to its low startup costs, flexible work hours, and the vast customer base available on the platform. However, the recent changes in Amazon's policies have made it crucial for aspiring drop shippers to understand the challenges and find effective solutions.

3. Changes in Amazon's Policies

1. 3.1 New Restrictions on Drop Shipping

Amazon started implementing new restrictions for drop shippers in 2020. They began asking new sellers to upload a specific type of invoice from their product suppliers. This requirement aims to ensure that sellers have the proper authorization to sell the products they list on Amazon.

2. 3.2 Amazon's Trust Issues

Amazon inherently distrusts new sellers, especially those starting fresh accounts. Establishing trust with Amazon takes time, typically ranging from three to six months. During this probation period, new sellers face higher scrutiny, including receiving requests for additional documentation, such as the letter of authorization.

4. The Problem with Letter of Authorization

1. 4.1 What is a Letter of Authorization?

A letter of authorization is a document that provides express permission for a seller to sell a specific product. It serves as proof that the seller has obtained authorization from either the manufacturer or a wholesaler. Walmart receipts, which were acceptable in the past, are no longer sufficient to fulfill Amazon's requirements.

2. 4.2 Reasons Walmart Receipts Don't Work Anymore

Amazon's recent policy changes no longer consider a Walmart receipt as valid authorization to sell a product. While a receipt may prove that the item was purchased, it does not confirm the seller's authority to sell it. This change has caught many new drop shippers off guard, resulting in account suspensions and difficulties in getting their accounts reinstated.

5. Solutions for Drop Shipping on Amazon

1. 5.1 Buying Aged Amazon Accounts

One solution to counter Amazon's trust issues is to purchase an aged Amazon account with some previous seller activity. Aged accounts have a higher level of authority and credibility, reducing the chances of being asked for a letter of authorization. However, caution must be exercised when purchasing these accounts, as they can be expensive and require careful data transfer.

2. 5.2 Drop Shipping from Specific Wholesalers

Another option is to drop ship from authorized wholesalers who can provide the necessary letter of authorization. While drop shipping from wholesalers may result in lower profit margins compared to retail sources, working with legitimate wholesalers gives you a higher chance of passing Amazon's scrutiny.

3. 5.3 FBA (Fulfillment by Amazon)

Fulfillment by Amazon (FBA) is an alternative approach where sellers send their inventory to Amazon's warehouses. When a customer places an order, Amazon takes care of shipping the product. By utilizing FBA, sellers do not have to worry about drop shipping from retailers and can establish a track record of successful sales, increasing trust with Amazon.

4. 5.4 Gradual Account Building

For those starting with a new Amazon account, a gradual account-building approach can be effective. Instead of listing numerous items right away, start by uploading one or two items per month for several months. By gradually increasing the number of listings, you can establish a history of successful sales and build Amazon's trust in your account.

6. Pros and Cons of Each Solution

1. 6.1 Pros and Cons of Buying Aged Amazon Accounts

Pros:

• Higher authority and credibility with Amazon
• Reduced likelihood of being asked for a letter of authorization

Cons:

• Expensive upfront cost to buy an aged account
• Risk of purchasing from unreliable sellers

2. 6.2 Pros and Cons of Drop Shipping from Specific Wholesalers

Pros:

• Ability to obtain valid letters of authorization
• Increased chances of passing Amazon's scrutiny

Cons:

• Lower profit margins compared to drop shipping from retailers
• Limited product selection from specific wholesalers

3. 6.3 Pros and Cons of FBA (Fulfillment by Amazon)

Pros:

• Amazon handles storage, packing, and shipping
• Established track record of successful sales

Cons:

• Requires upfront investment in inventory
• Limited control over shipping and customer experience

4. 6.4 Pros and Cons of Gradual Account Building

Pros:

• Opportunity to build trust with Amazon over time
• Reduced chances of being asked for a letter of authorization

Cons:

• Requires patience and a longer time to scale up sales
• Limited initial sales volume

7. Conclusion

Navigating the challenges of drop shipping on Amazon in 2021 requires a proactive approach and careful consideration of the available solutions. By understanding the changes in Amazon's policies, the significance of the letter of authorization, and implementing the right strategies, you can overcome these hurdles and build a successful drop shipping business on Amazon.

8. FAQ

Coming soon...

Highlights:

• Drop shipping on Amazon in 2021 has become increasingly challenging due to new restrictions and trust issues.
• Walmart receipts are no longer considered valid for authorization, leading to account suspensions.
• Solutions include buying aged Amazon accounts, drop shipping from specific wholesalers, utilizing FBA, and gradual account building.
• Each solution has its pros and cons, including cost considerations, profit margins, and control over the selling process.

FAQ:

1. Can I still drop ship on Amazon in 2021?

   • Yes, but there are new challenges and requirements to consider.

2. Why are Walmart receipts no longer accepted as authorization?

   • Amazon now requires a letter of authorization to prove the seller's authority to sell specific products.

3. What is the best solution for drop shipping on Amazon?

   • The best solution depends on individual circumstances and preferences. Consider factors such as budget, profit margins, and control over the selling process.

4. Is it possible to start drop shipping on Amazon with a new account?

   • Yes, but it requires patience and a gradual account-building approach to gain Amazon's trust.