Working with an Amazon automation agency is a great way to take your dropshipping business to the next level. It’s important to carefully select the Amazon agency you’re going to work with, though, to get the best possible results.
Here are the top three questions you should ask potential Amazon automation agencies to make your decision easier:
1. Do You Run Amazon-Approved Fulfillment/Business Models?
Choosing an Amazon agency that runs Amazon-approved fulfillment models is essential. That’s why this is the number one question to ask an automation agency.
If there is any hesitancy to say “yes,” or the answer is a justification for made-up fulfillment methods like “two-step dropshipping,” that’s a BIG red flag. That’s the last fulfillment model you should use. Avoid any Amazon agency that can’t give you a resounding “yes” to this question.
2. Where Do You Order Products From And What Brands Can I Sell In Your Program?
The ideal answers to these questions can differ depending on the fulfillment model (dropshipping or fulfillment by Amazon). We’ll break down both of them below for you:
Fulfillment by Amazon (FBA)
If an agency truly has distributor or exclusive contracts with brands, they will be able to tell you exactly which brands they have contracts with and what brands their clients sell.
At League Of Ecom, our clients are licensed to sell a variety of brands ranging from John Deere to L’Oreal Paris to Samsung because we spent years establishing these contracts. Below is an example of a Letter Of Authorization from Lenovo we acquired for one of our clients.
Any Amazon automation agency you’re considering working with should be able to show you Letters of Authorization for brands they sell if they are genuinely authorized. Don’t be afraid to ask to see them.
To run a fully compliant FBA program, you should be ordering products from Authorized Distributors or Manufacturers of the brand. Answers such as “Alibaba or Aliexpress” or “from distributors” are not acceptable.
You should make sure YOUR corporation obtains a distributor contract with suppliers within the agency’s network. Your corporation should be the one listed on compliance documents like the Lenovo Letter. If you are ordering products from a genuine source, you should be able to request a letter from the distributor stating that your corporation is licensed to sell the products you order from them.
Amazon’s Compliance Department will request these documents during the first few months of active selling. If an agency tells you they can’t get you a Letter Of Authorization from a brand or a contract with the brand directly, they likely aren’t running a compliant business model.
It’s not easy to find an Amazon automation agency that runs an Amazon-Approved program. League of Ecom is one of the only ones. If you ask an agency where they order products from and they say retailers like Walmart or Sam’s Club, that’s a problem.
Ordering products from Walmart to dropship on Amazon is not legal. Learn more about the drawbacks of dropshipping from Walmart to Amazon here.
3. Does Your FBA Program Operate Using Credit Or Cash?
It’s important to understand how Amazon pays you as an Amazon Seller.
When you sell a product on Amazon, the revenue generated from the sale is not immediately deposited into your bank account. Amazon holds your funds inside of your Amazon Account until the product has been delivered AND a couple of days have passed.
This slight delay allows Amazon customers time to raise any concerns if your product is counterfeit or if they received a box full of rocks. Once a few days pass with no red flags raised, Amazon will pay you.
You should NEVER operate an FBA program using credit. From the moment you pay for a product, it can take up to 15 days for it to reach Amazon’s fulfillment center and be active for sales. It is impossible to sell out of all FBA inventory, have each order delivered, wait a few days to receive the payout from Amazon, and pay off a credit card bill all in the remaining 15 days until your statement is due.
The average Inventory Cycle is about 6-8 weeks minimum. From the moment you pay for inventory, you should expect to fully realize the ROI within 45 days of the product reaching an Amazon fulfillment center (estimating a 30-day sellout time, plus 1-2 weeks to receive the last payment).
You do NOT want to pay monthly credit card interest on a wholesale purchase which is why FBA is a cash-based program. You will pay for inventory by sending wire transfers directly to brands.
If you find an Amazon agency that works through credit, that’s not the agency you should choose.
Selecting an Amazon agency is one of the biggest decisions you’ll make as a dropshipper. It’s worth taking the time to ask these questions and make an informed choice.
One Amazon automation agency that ticks all the boxes is League of Ecom. We help business owners like reach a level of selling you’ve only been dreaming about.
Contact Us to learn more about the ways League of Ecom can transform your e-commerce business.