Can drop shipping on Amazon lead to suspension?

Drop Shipping doesn't have a great a reputation on Amazon in some circles, but used in the correct way, it can be beneficial.

But falling foul of Amazon’s terms and conditions on Drop Shipping can lead to suspension or the removal of your selling privileges, so it’s important to understand how they work.

So what is Drop Shipping? Thompson and Holt managing partner Craig Gedey explains.

“Drop Shipping is basically allowed a third party - often the supplier - to fulfil customer orders on your behalf,” Gedey says. “Some retailers choose to drop ship large, heavy items that they don’t have the capacity to store themselves. That in itself is an acceptable practise, but you must make sure that you have a signed contract with any suppliers over the warranty of the product in question, in case anything goes wrong.

“It’s the complications that can arise for customers in situations like that which the ever consumer-driven Amazon are keen to avoid. Because of that it’s useful to look at Amazon’s Drop Shipping Policy. They want to ensure a consistent customer experience by making it clear that you are easily identified as the seller of record, even if the supplier is shipping the product.”

Here’s what Amazon’s own terms and conditions say about Drop Shipping:

Drop shipping, or allowing a third party to fulfil orders to customers on your behalf, is generally acceptable. If you intend to fulfil orders using a drop shipper you must always:

• Be the seller of record of your products;

• Identify yourself as the seller of your products on all package slips and other information included or provided in connection with them;

• Be responsible for accepting and processing customer returns of your products; and

comply with all other terms of your seller agreement and applicable Amazon policies.

Examples of drop shipping that are not permitted:

• Purchasing products from another online retailer and having that retailer shipping directly to customers; or

• Shipping orders with packing slips, invoices or other information indicating a seller name or contact information other than your own.

Amazon concludes: “Failure to comply with these requirements may result in the suspension or removal of your selling privileges.”

Thompson and Holt’s Gedey says thorough research and an element of caution are important when considering whether to use Drop Shipping.

He adds: “What we have seen with some Amazon Sellers that have not done their research, is that they can come across suppliers masquerading as local, in-country sellers, who in fact then use software to place the order overseas - often in China. That takes away any element of control over the quality or reliability of the product, which could be dangerous without even knowing who the supplier actually is. At Thompson and Holt, if you do decide to utilise Drop Shipping, we recommend doing everything possible to establish your supplier’s credibility, and making sure you have a written contract in place over any product’s warranty, to avoid potential repercussions with Amazon or your customers. Everybody involved in the chain should be fully aware that you are taking on the ultimate responsibility as the seller.”

Here are the top 5 most common Drop Shipping problems Amazon sellers experience

1. Item out of stock

2. Delays with processing the order

3. Wrong item sent to customer

4. Item was damaged

5. Wrong amount shipped

It's very important that Drop Shippers choose a reputable drop shipping partner and create a good relationship with them incase anything goes wrong.

Don't forget to read '2020 Guide to Drop Shipping'

Worried about an Amazon suspension?

If you have found yourself suspended while selling on Amazon, contact Thompson and Holt for a free LiveChat to get your Seller business back online as quickly as possible.

Thompson and Holt are also offering a free month’s trial of their Monitor and Protect service to help sellers prevent a suspension of ASINs or an their account during the COVID pandemic, more information on how to protect your Amazon seller account from a suspension can be found here.