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Blog / Ecommerce platform guide / How to Sell on Amazon Without Inventory: 4 Top Methods for Sellers

Ecommerce platform guide

How to Sell on Amazon Without Inventory: 4 Top Methods for Sellers

How to Sell on Amazon Without Inventory: 4 Top Methods for Sellers
Sandra Ķempele

By Sandra Ķempele

13 min read

Are you eager to start an online business and sell on Amazon, the leading online retailer in the US? If so, you might be wondering: “How can I start selling products without inventory?”

The good news is—you can launch and grow a thriving business without any traditional inventory management or significant upfront investment. Whether you’re a seasoned ecommerce seller or want to make some extra money online, there are several methods to choose from.

In this blog post, we’ll explore how to sell on Amazon without inventory, including the globally renowned Amazon FBA and Amazon FBM models, the flexibility of dropshipping, and the creative potential of print-on-demand.

How to sell on Amazon without inventory: 4 methods explained

Selling on Amazon without inventory is a compelling option, offering flexibility, reduced risk, and a diverse product range. Let’s unpack 4 popular ways how to sell on Amazon without inventory: Amazon FBA, Amazon FBM, dropshipping, and print-on-demand.

Amazon FBA (Fulfillment by Amazon) is a fulfillment service for ecommerce businesses that allows sellers to store products in Amazon’s fulfillment centers. 

Your products are received, sorted, and stored in massive warehouses spread across the globe. Once an order comes in, your product is shipped to the customer. This way, Amazon acts as your logistics partner that takes care of the entire order fulfillment process on your behalf.

How it works

First, you need to create an Amazon seller account and log in to Seller Central to join the Amazon FBA program.

Then, create your storefront and start adding product listings to the Amazon catalog. After you’ve added a new listing, specify it as FBA inventory by changing the Fulfilled by value from Merchant to Amazon.

As a seller, you need to source and send your products to Amazon’s fulfillment centers, where they are securely stored and integrated into Amazon’s inventory tracking system.

Once Amazon receives products at their fulfillment centers, the items are available for customers to buy. When a customer places an order, Amazon is responsible for packing and shipping the product.

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Pros and cons

One of the standout advantages of using Amazon FBA is that it frees up your time to focus on other aspects of your business, like marketing, product development, and expansion. In the FBA model, Amazon also handles customer inquiries and returns, which takes a significant load off your customer service responsibilities.

Products fulfilled by Amazon are eligible for Amazon Prime, so you can offer customers free two-day shipping. Plus, Prime members typically spend more than other shoppers, amounting to  $1,400 a year on average.

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Source: Pixabay

With Amazon’s extensive network of fulfillment centers, your products can be easily shipped all over the world. This is a great bonus if you’re looking to tap into international markets. In addition, Amazon’s standard shipping rates are lower than what any individual sellers can negotiate, which can help you attract more customers.

If you’re new to selling on Amazon, you can sign up for the New Seller Incentives program, which offers free promotional clicks on ads, free shipping to fulfillment centers, free storage, and more benefits.

While Amazon FBA can be a convenient and efficient way to sell products on Amazon, it comes with various costs that you should be aware of. In addition to fulfillment, storage, and referral fees, you may incur additional costs for inventory removal, return processing, professional seller account subscription, and other services.

If your products aren’t selling quickly or need to be removed, you’ll be charged long-term storage fees. These additional costs can eat into your profit margins, especially if you’re selling low-margin products.

Finally, the popularity of the Amazon FBA program has led to increased competition among Amazon sellers. You may find it challenging to stand out in a crowded marketplace, and competition can sometimes lead to price wars that drive down profit margins.

Amazon FBM (Fulfillment by Merchant) is an order fulfillment method where Amazon sellers take full responsibility for storing, packing, and shipping their products directly to customers. Instead of relying on Amazon fulfillment centers, you manage the storage and shipping process yourself.

This approach gives you more control over your operations and can be a viable option for sellers who want to sell on Amazon without outsourcing fulfillment to Amazon FBA.

How it works

First, you need to list your products on Amazon just like you would in the FBA model. 

Once a customer orders your product, you receive a notification from Amazon with key information like the customer’s delivery address and the product they’ve ordered.

With FBM, it’s up to you to pick the product from your inventory, package it, and send it to the customer. You’re responsible for maintaining your inventory in your own storage facility or a third-party fulfillment center.

You’re also in charge of shipping and customer service, allowing you to build a more direct customer relationship. In addition, you have full control over the choice of shipping carriers and packaging, offering a more personalized service.

Pros and cons

Amazon FBM can be a cost-effective option for sellers who already have efficient warehousing and shipping processes in place. You can oversee the whole fulfillment process, which allows you to tailor it to your specific business needs and quality standards. 

For example, you can include personalized branding, inserts, and promotional materials in your shipments, helping you build brand recognition. 

FBM is a good choice if you’re offering unique, bulky, or oversized products that don’t fit well within Amazon’s standardized fulfillment process. If you’re selling large sporting equipment and you’re already familiar with the items’ specific packing and handling requirements, FBM might be a more suitable option.

On the flip side, some customers trust products fulfilled by Amazon more than those fulfilled by individual merchants. In addition, Amazon FBM doesn’t offer Prime eligibility and the same level of benefits as FBA, potentially impacting your sales and competitiveness.

Amazon FBM is more time-consuming, as you’re responsible for every aspect of order fulfillment, from packaging to shipping. Managing inventory during sales spikes can be especially challenging, as you need enough staff and resources in place. 

However, if you sell a low volume of products, have plenty of space to store them, and have minimal fulfillment requirements, Amazon FBM is a suitable option. 

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Dropshipping is a business model in which the seller partners with a third-party supplier to fulfill customer orders.

The distinctive feature of dropshipping is that the seller doesn’t need to pick, stock, handle, or ship the products themselves. Instead, the supplier or manufacturer manages fulfillment, making it a hands-off, efficient approach to selling online.

If you want to sell on Amazon, you need to follow some rules. According to Amazon’s dropshipping policy, you must always be identified as the seller of record products. You need to remove any third-party supplier information from packaging and invoices to customers. It’s also your responsibility to process returns if the customer is not happy with their order.

How it works

As a dropshipper, you identify products you want to sell, often from a range of suppliers or manufacturers. These products can vary widely, from clothing and electronics to home decor and beauty products.

Your task is to create product listings for the items you’ve chosen to sell. This typically includes adding product descriptions, images, and pricing, making your products available to potential customers on your chosen ecommerce platform.

When a customer places an order, you forward the details to the supplier or manufacturer who will fulfill it. This can be done manually or, in most cases, through automated software systems. The supplier is then responsible for preparing, packing, and shipping the product directly to the customer.

Pros and cons

Dropshipping requires minimal initial investment, making it accessible to entrepreneurs with limited capital. Plus, you’re not burdened with inventory management, eliminating storage costs and logistical challenges that may come up.

Amazon dropshipping provides instant access to a large potential audience and has 30+ product categories to choose from. You can sell in as many different dropshipping niches as you want, which means you can reach highly targeted markets.

When selling on Amazon, be aware of high competition, which can lead to price wars and difficulties in making your business stand out. Typically, profit margins in dropshipping are lower than wholesale purchasing, challenging price competitiveness in some niches.

Your success in dropshipping hugely relies on your suppliers’ performance. You have limited control over fulfillment, shipping times, and product quality, so it’s essential to find a supplier with good standing. Otherwise, issues like stockouts or shipping delays can affect your reputation and sales.

Dropshipping on Amazon offers a low-cost, low-risk entry into ecommerce, but it comes with intense competition and limited control. To succeed, select reliable suppliers, manage pricing and costs carefully, and consider diversifying your sales channels to reduce dependence on a single platform.

Print-on-demand (POD) is a business model that allows sellers to create custom-designed products, including apparel, accessories, home decor, and much more, without the need for holding inventory. Products are created and manufactured only when a customer places an order.

How it works

First, you must decide what kind of products you’d like to sell. This can range from apparel items like custom t-shirts to home decor and tech accessories. 

If you’re partnering with Printful, you can choose from 300+ items available in Printful’s product catalog. Then you can customize these products with your own design—artwork, logos, or graphics—to create unique items.

Let’s say you’re starting a clothing brand and want to start selling custom hoodies. You’ve picked the all-over print hoodie, added your design, and listed the item for sale on Amazon. What happens once a customer places an order?

First, Amazon notifies you through your seller dashboard or email notifications. With the Printful integration, all order details are automatically transferred to Printful’s system, including the product size, color, and shipping details.

Next, Printful begins the production process, which may involve custom printing or embroidery.  

Once the product is ready, it’s packaged and shipped directly to the customer with either white-label or custom packaging that carries your branding.

Pros and cons

One of the primary advantages of POD is the level of customization it offers. You’re in charge of the design and branding of the products, allowing you to create unique, branded items that resonate with your target audience.

If you’re a designer or an artist, print-on-demand gives you a platform to show off your creative talents. You can turn your artwork into tangible products without the need for traditional manufacturing or storing your own inventory.

Another benefit is the wide range of items you can customize. The large variety can help you cater to different customer preferences and market niches. Since all the items are produced on demand, you can test the waters with bold design ideas while avoiding the risk of unsold inventory.

While you have creative control over the design, there may be some limitations on the type of materials or printing techniques available through your chosen print-on-demand provider. Plus, the quality of POD products can vary significantly. To ensure consistent quality and customer satisfaction, you’ll need to vet potential partners thoroughly.

What’s more, POD products may have longer production times compared to ready-made inventory. This can lead to longer shipping times and may discourage customers seeking immediate, next-day delivery.

With print-on-demand, the cost per unit can be higher compared to bulk manufacturing. As a result, profit margins might be slimmer, making pricing and marketing strategies critical to your success.

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Source: Printful

Benefits of selling on Amazon without inventory

There are many benefits for Amazon sellers working without a physical inventory, including greater flexibility and lower costs. Below, read our take on the top benefits that make it worth starting an Amazon business.

If you sell products without inventory, you can be more flexible in your product range. You can quickly respond to market trends, seasonality, and customer preferences by adding or removing products from your listings. If a product doesn’t perform as expected, you can switch it up without incurring significant losses.

In ecommerce, market dynamics can shift rapidly and impact sales. Without inventory, you’re better positioned to adjust your product offerings, pricing strategies, and supplier relationships in response to changes.

The more traditional inventory method can often result in dead stock—products that don’t sell as quickly as anticipated. When you’re not handling inventory, you don’t have to worry about your capital being tied up in slow-moving or unsellable items. Instead, you’re free to allocate your resources to other aspects of your business.

When you sell products without inventory, you lower the financial risks associated with dead stock. You only purchase products from suppliers when you have confirmed orders, which reduces the risk of holding onto products that may become obsolete or less desirable over time.

Typically, inventory requires physical warehouse space, storage facilities, or office space to store your products. These often come with monthly rent or lease expenses. If you sell on Amazon without inventory, you eliminate the need for costly storage facilities and reduce your overhead costs.

Selling with inventory often involves hiring personnel to handle tasks like order picking, packing, inventory management, and shipping. By eliminating stock, you can downsize or reallocate your workforce, leading to significant cost savings.

Dropshipping or outsourcing fulfillment to a third party gives you more flexibility to allocate resources to areas of your business that directly contribute to growth, such as marketing, product development, and customer acquisition.

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Scaling a business usually needs a large investment to purchase and manage inventory. With the inventory-free model, you don’t need to worry about significant capital investment to grow your business.

Launching new products or expanding your product range is streamlined, making it easy to scale your operations. You can quickly add new products to your listings without the delays associated with acquiring and holding physical inventory.

Expanding to new regions often requires intricate logistics when managing inventory, including international shipping and warehousing. Without inventory, you can easily reach global markets through dropshipping or leveraging suppliers located in different regions, eliminating the need for complex third-party logistics.

Leveraging Amazon’s vast customer base and trust can lead to increased visibility and sales. Many customers prefer products fulfilled by Amazon, which can boost your sales potential. You can reach a global customer base without the logistical challenges of international shipping and storage.

What’s more, Amazon handles currency conversion and facilitates various payment options, making it easier for international customers to buy your products in their preferred currency and payment methods.

6. Custom branding

In models like print-on-demand, you have control over product customization and branding, allowing you to create unique items. This helps customers recognize and remember your brand, and help you build brand identity for long-term success.

When customers find products that resonate with them on a personal level, they’re more likely to become loyal to your brand. By offering custom-designed items, you can foster a deeper connection with your customer base, leading to repeat purchases and brand loyalty.

Another plus? Branded products often command higher prices. Shoppers are often willing to pay a premium for products that carry a brand they trust or feel a connection with.

All in all, custom branding is a valuable tool for savvy entrepreneurs looking to create a memorable, lasting brand presence on Amazon.

Ready to sell on Amazon?

One final question remains: are you ready to sell on Amazon without inventory? Throughout this blog post, we’ve looked at the most popular methods that let you do just that—Amazon FBA, Amazon FBM, dropshipping, and print-on-demand. Now it’s your turn to pick the method that best suits your business needs.

Whether you’ve been selling online for ages and want to increase your ecommerce sales, or you’re just getting started with a ton of fresh ideas, we hope this guide has given you direction on how to sell on Amazon without inventory.

The competition on Amazon is stiff, so keep innovating to stay ahead of the curve. Good luck and happy selling!

author

By Sandra Ķempele on Dec 21, 2023

Sandra Ķempele

Guest author

Sandra is a freelance writer and educator with a background in art and communication. She holds an MA in Art Museum and Gallery Studies, and in her free time enjoys reading, museum visits, and outdoor adventures.

Sandra is a freelance writer and educator with a background in art and communication. She holds an MA in Art Museum and Gallery Studies, and in her free time enjoys reading, museum visits, and outdoor adventures.