Why Amazon Sells Books But Gives Bananas Away for Free

An important question that often comes up with suppliers and brands new to drop shipping is what products should be drop shipped?

The first answer that might come to mind is, “Everything!”.

Since retailers don’t hold your physical stock they are more willing to offer a larger selection from your catalogue. This is one of the reasons that supply side companies find drop shipping advantageous.

Drop shipping, however, is much more complex than this.

Some products are simply less suitable for ecommerce than others. That’s why even the likes of Amazon and Walmart still haven’t been able to completely solve complicated logistics challenges in certain product categories.

Knowing which products are drop ship friendly or drop ship resistant can save a lot of time, overhead, and crushed bananas.

In this post I’m therefore going to

• Provide a quick overview of the characteristics that make a product more (and less) suitable for drop shipping
• Use bananas as an example to show how this works (spoiler alert: not great)
• Finally, I’ll discuss how books are one of the best items to drop ship and why this was an important factor in Amazon’s early success

Drop Shipping Suitability

According to researchers Bart J. Bronnenberg of Tilburg University and Paul B. Ellickson of the University of Rochester, products that sell well online have the following characteristics:

1. Purchased infrequently
2. Homogenous
3. Purchased in low quantities

Other characteristics that I would add to this list include:

1. Not having to be physically touched or tested before purchase
2. Long shelf life
3. Difficult to stock in large quantities (i.e. due to size)
4. Difficult to maintain enough in-store variety (e.g. in enough colors and sizes)
5. Low shipping cost relative to total item value

Examples of products that fit in this category include things like music, DVDs, furniture, and electronics.

By corollary, the more of the following opposite characteristics a product category has the more it will be resistant to drop shipping:

1. Purchased frequently
2. Not homogenous
3. A large number and variety of products are purchased at a time
4. Must be physically touched or tested before purchase
5. Short shelf life
6. Can be easily stocked in large quantities
7. Easy to maintain enough in-store variety
8. High shipping cost relative to total item value

The best example of this category of drop ship resistant products are produce items, which are bought several times a week in large numbers of varied small items, many of which have short shelf lives. Consumers also generally prefer to physically touch groceries before purchase.

This is not to say that produce items are impossible to drop ship, rather the logistics required are much more difficult and expensive, as can be seen by the following banana example.

Bananaaaaaa!

To get an idea of the difficulties involved in drop shipping certain kinds of products, let’s imagine what it would take to drop ship a single bunch of bananas to my grandmother (who is as passionate about bananas as a Despicable Me minion):

• The bananas would have to be picked, packed, and shipped at just the right time to make sure that they don’t arrive spoiled
• The packaging would have to be specially designed to protect them from bumps and bruises during shipment as well as overly cold or warm temperatures (incidentally such packaging has actually been achieved for another difficult-to-ship item, ice-cream)
• The temperature of all the shipping containers, trains, trucks, vans, and/or bicycles that ship/deliver the bananas would have to be regulated within a particular range as well
• The end customer would have to take receipt of the bananas within a certain time frame to avoid spoilage
• As for returns, even if there was a workable policy and method, it’s highly unlikely the bananas would arrive back in a condition to be resold
• All this for a product that a customer has only paid around $1 dollar for

The Worst

Alas, for all of us that love drop shipping and ecommerce, it’s clear that there is no way for me to cheaply order my grandmother a single bunch of bananas from a retailer or supplier, whether locally, nationally, or internationally, that would allow them to arrive on time, unspoiled, and without an exorbitant price tag.

This is one item where it just makes more sense to bite the bullet, get out of the house, and drive down to the local supermarket to purchase in person.

So now we know bananas are one of the worst products to drop ship.

But what’s one of the best?

Books

In contrast to bananas, books are excellent products for drop shipping.

They don’t spoil, you can offer much more variety online, they are bought infrequently and in small quantities, and have low shipping costs compared to total item value.

They also don’t have to be touched or tested before purchase and their standardized sizes and shapes mean they stack and ship easily.

If you were to choose a product to begin a drop shipping program with, in terms of basic logistics you couldn’t go wrong with books.

It’s All About Logistics

Based on the above, if you’re just starting out with drop shipping, it’s a good idea to begin by offering products from your catalogue that are more ecommerce friendly.

The logistics required to ship items similar to books is much less complex than bananas and can give you the necessary experience to later tackle difficult categories.

Incidentally, this is exactly the strategy that Jeff Bezos has taken with Amazon.

By beginning with books, Amazon gained the required experience and revenue stream to then branch out into other more complex categories such as apparel.

It’s telling, however, that only now, over twenty years later, has Amazon decided to seriously take on the logistic challenges of produce.

And they’re not going it alone either.

Instead, they’re acquiring Whole Foods, which will give Amazon the expertise and physical footprint required to be successful in this vertical.

As for bananas, Amazon’s giving them away for free.

So there you have it.

All it takes to understand and learn from Amazon’s entire ecommerce strategy is two things.

A low-priced book and a free banana.

Azad Sadr is Dsco’s head of industry research and content development.