Amazon FBA VS Dropshipping: Which One Should You Choose?
Both are different business models, and as with every business model there isn't a single "best" way to go. Each of us has our individual ideas of what we would like to gain from the business we create.
Introduction to Dropshipping Dropshipping means that you won't have any physical inventory. Instead, you'll work with a warehouse which is able to keep the stock in hand. If an order is made on your site You make contact with the warehouse and they will then deliver the item directly to your client. There is no way to interact with the product other than the simple act of putting it on your site. In reality you won't pay for it until someone has paid for it. This means you won't lose any cash (other aside from the Shopify charges and advertising fees)
Introduction to Amazon FBA Amazon FBA is also commonly referred to as Amazon Fulfillment from Amazon is also a means by which you sell your product to a client.
But, with Amazon FBA the customer will have to communicate directly. However, it will not remain in your possession for long. Once you've received the item and you have it in your possession, you'll be packing it and sending it off to Amazon. Amazon will then store it within their storage facility (for cost). While they are there your item will be featured on the Amazon website. Once your product has been sold, Amazon will ship it out to you directly. It's simple and convenient. It is also possible to have the item delivered directly from your vendor directly to your fulfillment center since there is a possibility here that is contingent on several aspects.
The Similarities and Differences Dropshipping and Amazon FBA are methods of eCommerce. The products you sell directly to the consumer. The way you approach this is completely different, however. With dropshipping, you'll have your own website. Through Amazon FBA, you will be taking advantage of the reputation that Amazon has built up through the years. In essence, your product is going to be displayed on the biggest eCommerce website on the planet. With dropshipping, you'll receive your funds prior to you buying the item. If you are using Amazon FBA, you will be required to purchase all your stock in advance. Additionally, you will be charged Amazon FBA fees until the product is sold. But, with dropshipping, it isn't just 'no payments until the product is sold'. You'll need to invest money to advertise and there are Shopify costs to consider too.
Amazon FBA Pros If you have your product listed correctly on Amazon and you are able to do so, there is a high chance for it to begin to show up in all kinds of search results. When your product begins to earn more money it is likely that this trend is only going to get better. Customer service will also be handled by Amazon. They will manage the refunds and replacements on your behalf.
This implies Amazon FBA is going to be ideal for people who wish to be more relaxed in the way they manage their business. It is also likely that the margins of profit for Amazon FBA will be much higher than dropshipping. Of course, this will require you to put some effort to shop for your goods properly.
List of Pros to Amazon FBA ● ● ● ●
Qualify for Amazon Prime with your listed items You can win the Buy Box The first priority is awarded for FBA vendors over self-fulfilled sellers the majority of the time. The shipping is managed by Amazon and there is no need to worry about it! Profiting from the biggest global online store
Amazon FBA Cons The most significant drawback is the initial cost for starting up may be very high according to the product. It is necessary to purchase for your initial inventory. Also, you will need to make sure that the stock you've given to Amazon is maintained 'up to date'. '. Of course, you'll be able to see that the level of rivalry on Amazon is very high. If you are able to sell a specific product in the market the likelihood is that others are already doing it. That means that you would need to reduce your margins against your competitors. However, this isn't always the situation.
List of Cons to Amazon FBA ● ● ● ●
An upfront investment to purchase the product There is a chance that the products won't sell. There is a lot of competition from other sellers. Fees are a part of FBA
Dropshipping Pros It requires less capital to establish dropshipping as a business. It's not necessary to do any work to maintain your business. With Shopify it is in a position to automate a large portion of aspects of the business. You might have to address certain customer queries occasionally and not be too frenzied. You can easily operate dropshipping as a side business in addition to your full-time work.
List of Pros to Dropshipping ● ● ● ● ● ●
Option to operate an online niche or general type of store Customers are yours forever and you can reach them through an email database. Your brand is the name you use to represent your business and will develop over time. Like Amazon it is possible to offer upsells Possibility to sell your store huge profits There are many suppliers for every product, with plenty of space to negotiate
Dropshipping Cons The issue is that when you dropship, you are beginning with a blank slate. It is essential to focus on building your brand and advertise on platforms like Facebook or Google. The dropshipping profit margin isn't as great as many people believe. 20-30% is a typical profit. In the end, it is very challenging to run customer service when you dropship. It is necessary to handle refunds as well as complaints. This is why it's essential to partner with a reputable dropshipping business.
List of Cons to Dropshipping ● ● ●
The requirement to test various products before determining the one that is successful. Finding the best supplier can be difficult You are accountable for 100 percent of customer support
Conclusion and Final Thoughts You can clearly see Dropshipping as well as Amazon FBA are both different business models. There isn't a single model that is superior to the other. Both require some capital investment but in the beginning, dropshipping is the more economical method to choose since there is more control. There are some who prefer Amazon FBA method because the product basically "sells itself" which is not always the case however, it certainly will be more prominent. Dropshipping is more than likely to be more difficult than Amazon FBA because you have to constantly test your products and simultaneously develop your brand.