- Dropshipping is a fulfillment model, not a business model.
- There are different types of dropshipping, some of which are banned on Amazon.
- Dropshipping from Walmart to Amazon (or eBay or Shopify) is not allowed.
Dropshipping has become a hot topic lately, but there are still a lot of misconceptions surrounding this popular fulfillment model. In this article, we’ll answer one of the most common questions about dropshipping– is dropshipping from Walmart to Amazon allowed?
Let’s break it down.
What is Dropshipping?
It’s important to understand that the term “dropshipping” simply refers to the way a product is delivered to a customer. Dropshipping is a fulfillment model, not a business model. Depending on the context, dropshipping can mean dozens of different types of selling.
Typically, dropshipping involves selling a product without maintaining physical inventory or shipping the goods to the customers. The dropshipper operates an online shop or site where customers can browse products, ask questions, and place orders. Once a customer places an order, the dropshipping store forwards that order to the supplier. The supplier then ships the purchased item directly to the customer, without further involvement from the dropshipper.
Can You Dropship From Walmart To Amazon?
Based on this dropshipping model, many people get the idea to buy products from Walmart and dropship them to customers shopping on Amazon. However, buying products from Walmart and selling them on Amazon is not legal.
That’s worth repeating: You cannot dropship from Walmart to Amazon.
Despite this fact, many dropshipping agencies do still practice Walmart to Amazon dropshipping. They operate this illegal model of dropshipping by:
- Finding a product on sale at Walmart or Sam’s Club
- Listing that product for sale on their Amazon business page
- Upon receiving an order, inputting the customer’s shipping address into the Walmart Checkout process
- Letting Walmart ship the product directly to their customer
While this practice may seem fine on the surface, the issue is that products ordered from Amazon don’t come in Walmart boxes. Amazon prohibits this dropshipping model because they do not want their customers to get packaging with their number one competitor’s logo on it.
Then there’s the added concern over how customers will react. Customers are immediately able to tell that something strange occurred just by looking at the packaging their products come in. They’ll be frustrated when they look at the Walmart packing slip or invoice and see that they overpaid for the product. At that point, customers tend to either leave bad reviews on the storefront or return the product altogether.
Customers may also end up confused about who they should contact for help about the shipment– the company whose name is on the packaging or the online storefront they ordered from?
There are simply too many issues with this dropshipping model, even if it was allowed. One of the biggest flaws of this mode is you need to buy a product at a retail price from Walmart, then sell the product at a retail price. The average ROI in this form of dropshipping is around 8%, much less than other dropshipping models that see returns of 20% or more.
How Do You Get Caught Dropshipping?
If for some reason you are still considering this dropshipping model, you’re probably now wondering how you would get caught (and stopped).
This is one instance where Amazon and Walmart work together. They collaborate to shut down these dropshippers. If Walmart catches you ordering a high volume of the same products and sending them to many different residential shipping addresses, they will start to cancel your orders immediately after placing them.
It doesn’t stop there, either. Walmart will also take note of your credit card number and billing address. If that card or billing address is used on another account to place orders, Walmart will terminate that account, too. Being used as a supplier cuts into Walmart’s profits, so they take swift action to prevent it whenever possible.
Here’s the problem:
Before you sell a product on Amazon, you are required to input the latest shipment date for that product and the latest delivery date. Having your Walmart accounts terminated can cause big problems when it comes to meeting these delivery deadlines for your store on Amazon.
If you ship more than 4% of products late or cancel more than 2.5% of your orders, Amazon will suspend your store and shut you down for not meeting your delivery guarantees. That’s very likely to happen if you sourced all your products from Walmart and then suddenly can’t order any products from there after your account is terminated.
For more information on reasons why your Amazon shop may get suspended, check out our article Amazon Suspensions Explained here.
Even if you can somehow meet your delivery deadlines, you still have an issue. Bad feedback or excessively high return rates are easy ways for Amazon to identify and shut down an illegal dropshipping business.
Buyers are also only allowed to contact you for customer service through your Amazon Seller Central account. Amazon’s AI reads all buyer messages and if the customer even mentions the word “Walmart,” your store is immediately terminated from the Amazon platform. You can see Amazon’s full drop shipping policy here.
The policy explicitly states that sourcing products from retail stores is against the selling Terms of Service. When you violate the Terms of Service, you’re always at risk of being shut down.
Why Do Brands Hate Dropshippers Who Aren’t Licensed?
Brands and manufacturers do not want people purchasing products from retail stores and selling on Amazon. The reason for this is that dropshippers often do not follow the company’s minimum advertising price (MAP) and minimum order quantity (MOQ) guidelines. They also may not be qualified to sell a specific brand’s products.
Large brands issue price guidelines to their distributors that state that each of their products cannot be sold below a certain price or on certain platforms, among other stipulations. Dropshippers are typically unaware of these rules since they don’t receive official distributor contracts for the products they sell.
It may sound minor, but it’s a big deal to the brands making the products.
If a product is selling for different prices across various online marketplaces, it can ruin a brand’s reputation. Plus, with unauthorized retailers, the brands (and Amazon) have no way to know if your product is real or a cheap counterfeit.
These are just a few of the reasons why brands don’t tolerate unauthorized resellers. With so many unknown variables in the mix, it’s hard for brands to offer quality assurance and maintain control of their product(s).
Luckily, Amazon is now permitting brands to give intellectual property violations to unlicensed sellers on their listings. As a result, thousands upon thousands of these stores operating this illegal model are terminated every month.
Is There an Amazon-Approved Dropshipping Model?
Dropshipping is a fulfillment method that comes in several different forms. Some are allowed, and some are not. Operating a dropshipping business model where you buy from retail stores and sell on Amazon is not legal.
This dropshipping model is prohibited by Amazon, Walmart, and almost all other major brands in the USA. You can not build a profitable business if the platform you sell on, the supplier you purchase products from, and the manufacturer of the products you’re selling are all actively trying to shut you down.
However, if you’re interested in dropshipping on Amazon, there’s a better way.
League Of Ecom operates a completely different dropshipping model that’s 100% Amazon-Approved. We establish a distributor contract between your corporation and licensed, authorized dropship distributors across the United States. Once we have a contract opened with a distributor, you get access to their entire product catalog with business pricing.
Unlike dropshipping from Walmart to Amazon, this is a completely legal business. That means your corporation will get discounted rates from brands so you can sell for more profit at the same retail price. Or you can even sell products at lower prices than other dropshippers since you’re getting the products at a lower cost. The dropship distributors also offer same-day, one-day, or two-day shipping and prioritize dropship shipment so our products arrive to customers faster.
What are you waiting for? Click Here to get started with League of Ecom today