How to Sell on Amazon Without Inventory – a Guide for New Sellers

Q: Is it possible to sell products on Amazon without holding stock?
A: Yes!

But what exactly does “how to sell on Amazon without inventory?” mean? Well, the question can imply one of three things:

1. You own inventory but don’t want to go through the trouble of packaging, storing, handling, and shipping products.
2. You don’t own inventory but still want to sell products (manufactured by someone else) on Amazon.
3. You don’t own or want to own physical stock but still want to sell on Amazon (you’re interested in selling digital products).

All 3 options are doable and legal under Amazon’s terms of service.

Continue reading to learn how to set up an online Amazon store and sell products without holding any inventory in-house!

How to Sell on Amazon without Inventory – Weighing the Options

Third-party sellers set up profitable Amazon stores by following a well-known seller blueprint:

Research a product 🡪 Purchase inventory in bulk 🡪 Run product ads 🡪 Make sales and revenue

And while this blueprint continues to work well for a lot of entrepreneurs, not everyone has the inventory management wit—and sometimes budget—needed to purchase, handle, ship, and maintain products. 

After identifying this bottleneck, Amazon allowed third-party sellers to create a store and sell products without inventory!

If you want to do the same, you can:

• Enroll in the FBA (Fulfillment by Amazon) program.
• Try dropshipping products 
• Use a combination of FBM and third-party logistics (3PL) service providers
• Sell digital products

Let’s explore each option in greater detail.

Option 1: Amazon FBA 

FBA stands for Fulfillment by Amazon and is the shipping option of choice for most third-party Amazon sellers. If you’re not a fan of packaging products, storing them in your garage, applying product labels (according to Amazon’s requirements), and shipping out individual units each time an order comes in, then FBA is for you. 

Under the Amazon FBA program, once your stock is ready and awaiting dispatch, all you have to do is ship it to the nearest fulfillment center. From there, Amazon will pick, package your goods, store them safely inside a warehouse, and deliver them to buyers’ addresses. 

In short, you can invest more time and mental energies into building an attractive store and market your products both on and off Amazon. 

The convenience that comes with outsourcing logistics to Amazon comes at a cost known as FBA fulfillment fees and varies according to factors like product weight and dimensions. The bigger and heavier a product gets, the higher the FBA fees. 

Despite the additional FBA seller fees, countless Amazon store owners still prefer to sell via FBA for the following reasons:

• More sales: Amazon FBA sellers are eligible for free two-day Amazon Prime shipping. With more than 200 million Amazon Prime customers globally, your product gains visibility resulting in increased sales. 
• Free customer support: Amazon is renowned for its excellent customer support services and holds non-FBA sellers to the same standard. With FBA, Amazon handles customer support on your behalf and frees you from the responsibility of responding to customer queries!
• Access to large Amazon storage centers: FBA sellers can safely store their inventory inside large Amazon fulfillment centers found throughout the country. Each time an order comes in, Amazon will package and ship your products—you won’t even have to lift a finger!

The alternative to FBA is FBM (Fulfillment by Merchant) where you list products on Amazon but handle product storage, packaging, shipping, and customer support by yourself. FBA takes precedence over FBM unless you plan on selling large-dimensional or heavy products. In that case, FBM is more advantageous—but how do FBM sellers store inventory?

Option 2: Sell Products through Amazon FBM and Third-Party Logistics (3PL) Service Providers

If you want to sell on Amazon without managing inventory (and avoid the extra Amazon seller fees), you’ll have to work alongside third-party logistics (or 3PL) service providers. These service providers store, pack, ship, and even handle customer support on your behalf (some 3PL service providers offer the package as the FBA program). 

FBM sellers look to third-party fulfillment when: 

• Amazon imposes inventory storage limits and you aren’t allowed to ship your whole inventory to a fulfillment center, or
• Q4 is near and the inventory cutoff date is soon approaching (i.e. the date after which Amazon refuses to accept and store inventory at its fulfillment centers); however, you anticipate high-sales and require additional storage.

You should look to work with 3PL service providers only if it’s cheaper than Amazon FBA—but don’t count on that happening. Amazon operates one of the largest logistics networks in the world sprawling across different continents and has vast experience when it comes to shipping products. 

Plus, if Amazon messes up the shipping process, they’ll recognize their fault and reimburse you the amount whereas if the fault lies with a 3PL service provider, Amazon may not be so accommodating. 

What is the Minimum Quantity to Sell on Amazon?

There is no minimum shipping quantity to sell on Amazon under the FBA program. You could send just a handful of units to a fulfillment center to test how well a product sells. 

When you get serious about selling, then make sure to send as many units as Amazon allows (check your inventory storage limits first). Otherwise, the cost to transport small batches of inventory from the place of manufacturing to a fulfillment center will set you back financially.

How Can I Make Money with No Inventory?

Amazon FBA is one of the best ways of making money online without holding inventory in-house. It’s possible to earn cash without purchasing inventory, but you won’t be able to create an asset and most definitely won’t be able to scale a business. 

Quick cash-grab schemes aside, Amazon dropshipping is one way to make money without purchasing thousands of dollars’ worth of inventory, but the selling model has its fair share of drawbacks. Read on to learn more about the Amazon dropshipping mode later on in the blog.

Do You Need a Warehouse to Sell on Amazon?

You need a warehouse to store inventory and sell on Amazon (Amazon dropshipping is an exception). Now, you don’t need to own a warehouse to do business on the platform; Amazon has a program called FBA or Fulfillment by Amazon where it picks, packs, stores, ships orders, and handles customer support on behalf of third-party sellers. 

The second option is to partner up with a third-party logistics (3PL) service provider who basically does the same thing as Amazon FBA. However, given the size and complexity of Amazon’s logistics infrastructure, you’ll be hard-pressed to find a 3PL service provider that can match Amazon’s shipping times, offer a better pricing plan, or both. 

Amazon FBA vs. FBM: What’s the Best Inventory-less Way to Sell on Amazon?

The Amazon FBA vs. FBM debate (for sellers that own inventory but don’t want to store it at their premises), boils down to whether you want to let Amazon handle and fulfill your products or a third-party storage and handling services provider.

It makes more sense to pay the FBA fees than a 3PL service provider because you can leverage superior shipping services and also advertise products, create new offers, and manage inventory, all from a single dashboard.

Option 3: Try Out Amazon Dropshipping

Options 1 and 2 offer solutions to sellers who want to purchase inventory without storing it in-house. Option 3, i.e. Amazon dropshipping, is for sellers who wish to list products and sell on Amazon without holding inventory at all. So what is Amazon dropshipping and how does it work?

Dropshipping as an Amazon Seller

With Amazon dropshipping, you don’t purchase inventory in bulk or store it at a warehouse. Instead, you create an Amazon storefront (also called a product listing or a product detail page) on behalf of a supplier or manufacturer. Then, each time an order comes in, you purchase the product from your manufacturer, who then ships it to the buyers’ address. 

Amazon dropshippers operate as agents or middlemen and usually have to dropship multiple products side by side to earn substantial profits. 

Amazon dropshipping is legal; however, you have to abide by the official Amazon dropshipping policy otherwise you could be penalized, or worse, have your Amazon seller account suspended.

Amazon’s dropshipping policy includes the following rules and regulations:

1. Enter into a legal agreement with your supplier whereby they agree to elect you (and you alone) as their sole dropshipping representative on all invoices, external packaging, and packing slips.
2. Remove all evidence of a third-party dropshipper on your products before shipping them out. This includes details found on external packaging, invoices, and packing slips.
3. Also remove any information or contact details belonging to a seller other than yourself, if present.
4. Do not purchase products from another online retailer and have them shipped to your customers.
5. Handle customer returns for your products
6. Comply and stay up to date with Amazon’s Seller Code of Conduct and other applicable seller policies.

Go through each of the above-mentioned points carefully and remain updated with Amazon’s official Dropshipping policy—but don’t jump into dropshipping just yet!

Every Amazon selling model has its advantages and disadvantages and Dropshipping is no exception. Read the following pros and cons to know what you’re getting into!

Pros of Dropshipping

• Low investment required: It’s possible to start dropshipping with just a few hundred dollars in hand along with a letter of authorization from your supplier.
• Easy to learn the ropes: Sellers don’t have to purchase expensive online courses or learn how to operate sophisticated software; you can get a good hold of the basics by watching free tutorials available on YouTube and elsewhere.
• Multi-Channel selling: Dropshipping isn’t specific to Amazon like FBA—you can dropship a product from your website, eBay, and even social media channels.

Cons of Dropshipping

• Stiff competition: Due to low barriers to entry like low starting and overhead costs, dropshippers face stiff competition across popular product niches on Amazon. Tough competition also always equals low profit margins.
• No control over the business: Dropshippers don’t own the product, they act as agents or salespeople for their suppliers. As such, you cannot influence product quality or branding elements. 
• Possible inventory woes: Just as you have little to no control over product quality, inventory management and fulfillment times are also beyond your scope of influence. The lack of real-time inventory updates could result in customers placing orders only for your supplier to run out of stock. Such situations damage the brand reputation and reduce the likelihood of repeat purchases.
• Missing out on product promotions: Holiday seasons present sellers with an opportunity to run product promotions to boost sales and climb the rankings for relevant search terms. Unfortunately, as a dropshipper, you’ll have to watch your competitors capitalize on key holidays from the sidelines.

Dropshipping appeals to sellers who don’t want to own or store inventory and still want to sell on Amazon. But as they saying goes: you can’t have your cake and eat it too, i.e. you can’t forgo the responsibility of owning and handling inventory and still get to decide how to run the business.

And for many sellers, that’s the biggest downside of dropshopping—no ownership, no decision-making power, and no digital asset to call your own. 

Is Dropshipping a Career?

The answer depends on what you define as a career. If earning money online without creating a store or a business is a goal worth pursuing, then yes, dropshipping can be a career. However, if you want to create an Amazon store, grow a brand, and scale your business to new heights, then maybe you should look into Amazon Private Label. 

But what about sellers who want to go one step further? Entrepreneurs who don’t want to deal with physical inventory at all?

Option 4: Sell Digital Products 

Amazon is a virtual marketplace, so it’s natural to expect virtual products listed on its website. And one of the best parts about selling digital products is a lack of physical inventory. 

In a way, digital products combine the positives of private label selling (the chance to set up an Amazon business) and dropshipping (not having to purchase, store, prepare, handle, and ship physical stock). 

Here are the types of digital products you can sell on Amazon:

eBooks

You can sell both physical and eBooks on Amazon. Physical books (e.g. comics, textbooks, collectibles, hard and soft copies, etc.) are sold via FBA or FBM. On the other hand, digital copies can only be sold via Amazon’s Kindle Direct Publishing (or KDP, for short) program. 

KDP members can upload and promote their books through “print on demand” or digital. Our recommendation is go to with digital due to two main reasons:

1. The absence of a hefty upfront fee as is common with print on demand
2. Significantly higher royalties for publishers (up to 70%)

Best-selling Amazon eBooks have the potential to net you greater revenues than the sale of physical goods, but that depends on how well your content is received and how skilled you are at marketing your product.

Amazon eBook Guidelines

Amazon imposes strict KDP guidelines to ensure its customers have a positive purchasing experience. Make sure to operate within the following guidelines when selling eBooks on Amazon:

• Create an attractive book cover that isn’t promotional, blurry, or doesn’t fit the book cover (either because it’s too small or too big to fit inside the frame).
• Check and double-check for any grammatical mistakes, typos, or repeating text. Use this nifty Amazon Kindle Previewer tool to identify mistakes or passages that need to be reworked.
• Avoid formatting errors like in-line page numbering, forced alignment or uploading your files in other than DOC, HTML, or DOCX form. Rookie mistakes such as these damage the author’s reputation and invite negative feedback.
• Do not upload content that is objectionable, e.g. hate speech, pornography, glorifying abuse, etc. For more details, view the official KDP Content Guidelines page.
• Use metadata correctly and responsibly. Your eBook should be free from URLs or mentions of other books. Go through the metadata guidelines page at least once before uploading any content.
• Finally, under no circumstances should you upload plagiarized or copy/paste content—it’s the fastest way of getting banned from the platform. 

Looking for a more in-depth guide on how to create an eBook on Amazon? Check out this Kindle Self-Publishing guide.

Digital Art

Aspiring artists, skilled photographers, and those talented at creating awesome designs can upload and sell their art on Amazon. Like KDP, you don’t have to own inventory—Amazon will create a product detail page, print your design on different products, ship inventory, and handle customer support, all at no extra charge. 

As a digital art content creator, you’ll earn royalties on sales depending on the marketplace and product type. Once you’re ready, visit the official Merch on Amazon page and sign up to enroll in the program. Because it’s an invite-only platform, you won’t be able to sell immediately—but don’t let that stop you from applying.

If your content is good, Amazon will get in touch with you soon enough. Since digital products are sold via the FBA program, you have the chance to advertise your offerings to millions of potential customers. As such, it’s imperative that you stick to Amazon’s guidelines. 

Here are a few major points to keep in mind:

• Don’t upload content that infringes on others intellectual property (e.g. copyrights and trademarks).
• Ensure your product complies with all applicable local, state, and federal laws.
• Avoid content that promotes or glorifies sexual violence, religious intolerance, hatred, human tragedy, illegal activities, etc.
• Don’t use low resolution, blurry, or watermarked images.
• Create designs with a maximum size of 25 MB, have print dimensions of 300 DPI, and use RGB colors.
• Discard metadata unrelated to your review requests, design, or display your contact information.

Note: Getting an approval to sell on Amazon may take a few months. Once you get approved, revisit the official Content Policies page to ensure you’re still compliant as these policies may change over time.

Music

Fancy yourself a musician? Sign up for a TuneCore account today. TuneCore is designed to help artists, labels, and managers promote their music through Apple Music, Spotify, TikTok, and more than 150 streaming and download stores worldwide.

To get started, go through this quick sign-up process and start uploading your tracks. You can distribute music on Amazon so long as you adhere to its preferred format and style guide. Also, make sure your compliant with the following rules otherwise Amazon may reject your uploads:

Don’t do the following:

• Add email addresses, pricing, contact information, or URLs on the cover art.
• Display logos of digital stores like iTunes or reference them by name.
• Upload cover art that is blurry, low resolution, or doesn’t fit the frame.

Do the following:

• The title of the release and artist name that appears on the cover art (if any) should match the exact details that were entered into TuneCore.
• The cover art should only include the title and the artist name.
• Upload a square cover art image that’s 1600 x 1600 pixels in dimension.
• The cover art must be in RGB mode for color and black and white images.
• The cover art should ideally be 300 dpi (72 dpi is the minimum).
• The cover art should also be uploaded as a GIF, PNG, or JPG image and you must own the rights to the image.

Note: It costs $9.99 to distribute a single and $29.99 for an album or EP on Amazon TuneCore.

Conclusion

This concludes our blog on the different routes sellers can take to sell on Amazon without inventory. All that's left now is to address the elephant in the room: which out of the 4 options is the best way to do business on Amazon without holding stock?

Although each method has its pros and cons, one option (or selling method) offers sellers greater returns and opportunities for growth than others: Amazon FBA Private Label.

Amazon FBA private label selling is the ideal way to sell without inventory as compared to the other options because:

1. In most cases, third-party logistics service providers cannot compete with Amazon on price and/or performance. If things go south, 3PL service providers may cover up for your financial loss, but cannot undo damages to product rankings resulting from negative customer feedback.
2. Dropshipping isn’t working for yourself as much as it is working for someone else. The inability to control product quality, shipment times, and brand image make it difficult to call dropshipping a ‘real’ online business. Plus, there’s little room for automation and increasing your income cap requires sacrificing additional hours. A proper Amazon business should free you from a 9-5 cycle, not put you back into one. 
3. The digital products selling model doesn’t feature the same drawbacks as the previous two options. However, not every seller can:

1. Write a compelling and informative eBook
2. Use paid software to create digital art
3. Create music or even play a musical instrument for that matter.

Based on these points, it’s fair to conclude that Amazon Private Label ticks all the right boxes—it’s a business you own, run, and reap all the benefits from. 

Amazon private label FBA has given numerous entrepreneurs the opportunity to establish highly profitable online businesses and will continue to do so for many in the future. If you want to add your name to the list, then you’ll need the help of a reliable FBA seller toolkit like ZonGuru.

ZonGuru simplifies each stage of your FBA seller journey and offers insights needed to make all the right decisions. Think of it as a collection of powerful FBA tools that ensures your FBA business runs like a well-oiled machine! 

Don’t take our word for it—try out a free 7-day trial and see for yourself!

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