What’s better: Dropshipping or Amazon FBA? 🛒
The business of selling online is a busy one. You’ve got your e-commerce store, fulfillment center, customer service team, logistics partners, and so on. But what about the products you’re selling?
What’s the difference between dropshipping and Amazon FBA? And which business model is better for your business?
This blog will help you make an informed decision about whether dropshipping or Amazon FBA is a good option for your online business.
It will also help you understand the cost factor of each model and decide which one’s right for your brand.
What is Amazon FBA? 📦
Amazon’s fulfillment service, also known as FBA, is a service provided by Amazon to sellers. It’s essentially a platform that handles customer service and returns, as well as warehouse expenses.
With FBA, entrepreneurs can focus on selling their products online without the hassles of shipping and customer service.
As a seller on amazon FBA, you’re responsible for packing, shipping, and customer service of your product. This includes preparing your product according to amazon’s requirements and monitoring its fulfillment process from start to finish.
With Amazon FBA, you can scale your business rapidly. You don’t have to worry about warehouse space or inventory since Amazon takes care of it for you. However, there are some requirements that sellers must follow in order to qualify for amazon FBA.
First and foremost, Amazon requires sellers to have an amazon seller account and a valid ecommerce store built on amazon’s platform.
Secondly, you need to comply with FBA’s fulfillment requirements such as having an FBA-able product listing and fulfillment packaging guidelines.
Also important is setting up shop on FBA’s fulfillment-enabled store platform so that orders are automatically sent to amazon’s fulfillment centers when they’re fulfilled by amazon. Amazon requires sellers to provide customer service via email or phone calls only after the product has been delivered or rejected by the customer.
What is dropshipping? 🚛
Dropshipping is an ecommerce business model where retailers don’t keep products in stock, but instead transfer customer orders and shipment details to either the manufacturer, another retailer, or a wholesale partner, who then ships the goods directly to the customer.
Competitive Products 📟
Dropshipping stores don’t have competitive products being sold directly alongside their products, though the marketing of such products may be saturated on platforms such as Facebook. As a result, dropshipping allows for creativity and innovation when it comes to building a brand and product selection.
Dropshipping has several benefits over traditional ecommerce platforms. Firstly, retailers don’t need to invest in expensive inventory or warehouse space. Secondly, customer service is easier since retailers aren’t burdened with inventory considerations. And thirdly, returns are easier for dropshipping retailers as they don’t have to deal with customer refunds and exchanges.
What is the difference between Amazon FBA and dropshipping? 🚚
Amazon FBA is a method of selling products online using amazon.com as the marketplace platform. It involves amazon taking possession of, packing, and shipping the product to the customer.
Dropshipping, on the other hand, is a method of selling online using a drop-shipper as the marketplace platform. The dropshipping seller takes possession of the product and provides fulfillment service. The amazon seller does not have to be involved in any of these steps.
Both Amazon FBA and dropshipping have their own pros and cons. The amazon FBA method requires more upfront investment than dropshipping, but it offers more profit potential. If a seller opts for FBA, he or she has to be involved with the product from start to finish, which can be a time-consuming process.
The choice between FBA and dropshipping depends on factors such as the seller’s capital, involvement with the product, etc. Ultimately, FBA is a viable option for those looking to expand their business on amazon without having to invest large amounts of money or time in it.
Which business model is right for your business? 🗂️
There are many different business models to choose from when selling online. So it is important to determine which model is right for your business. When choosing a business model, consider factors such as
- The capital required to start up
- The potential for profit
- Involvement with the product
With dropshipping, sellers don’t have to see or touch the product they are selling, while with Amazon FBA sellers have to be more involved with the product. For example, they must pack and ship the product themselves rather than leave this to the seller.
Furthermore, with Amazon Fba sellers must be involved in customer service and fulfillment while with dropshipping sellers need not be.
The Cost Factor – What’s Cheaper? 💵
With dropshipping, you don’t need to store inventory or incur the associated costs of warehousing.
This is generally cheaper than using Amazon’s fulfillment service, as you no longer have to incur the costs of storing products and handling customer orders.
On the other hand, with Amazon’s fulfillment service, sellers are required to pay shipping and handling fees as well as any applicable tax.
Moreover, with dropshipping, sellers do not need to invest in expensive ecommerce software such as a POS system or inventory management program. Instead, they can use simpler software such as Shopify.
However, dropshipping providers may charge different per-order fees depending on factors such as product niche and customer base. But many dropshipping companies also offer free trials, so it’s worth exploring your options before making a final decision on which ecommerce platform to use.
Time Investment – What Takes Longer? ⏰
Amazon FBA requires a large time investment, as products must be sent to Amazon and amazon prime customers expect rapid delivery.
With amazon FBA, inventory is handled by amazon, so you have to pay for the inventory and handle shipping. The time investment of dropshipping vs FBA also includes customer service and fulfillment.
With FBA, customer service and fulfillment are handled by amazon, which leads to faster profit. However, dropshipping provides customer service and fulfillment in-house, giving you complete control of your business.
Since FBA takes longer to start generating profits, the investment required for FBA is higher than dropshipping. However, FBA’sprofit margin is much bigger compared to dropshipping’s profit margin.
Dropshipping vs. Amazon FBA – Which Is Better for Your Business? 🛒
Both dropshipping and Amazon FBA offer the benefit of order fulfillment for your eCommerce business.
With dropshipping, you handle the process of sourcing, product selection, manufacturing, and shipping yourself. This allows you to focus on other aspects of your business, such as marketing and customer service.
With Amazon FBA, you handle the process of product selection, logistics (fulfillment), and customer service. This allows you to focus on other parts of your business, such as product development and ecommerce operations.
Ultimately, both methods of ecommerce marketing offer a cost-effective way to reach customers online without worrying about logistics or customer service. However, dropshipping offers a more hands-off approach that can be a good fit for new sellers or beginners with limited capital.
While Amazon FBA requires substantial capital to start, it can offer greater potential for growth and profit with the larger customer base and access to Amazon’s services.
As you’ve read in our blog, dropshipping and Amazon FBA are both business models that help e-commerce entrepreneurs to start selling online. However, it’s important to note that they’re not the same thing.
Both of these e-commerce business models have their pros and cons and therefore, it’s vital for you to research well before deciding which one would be optimal for you.
So, go ahead and compare them yourself. If you’ve been dropshipping, do share your experiences with us in the comments section below. We’d love to hear from you! Conclusion As you’ve read in our blog, dropshipping and Amazon FBA are both business models that help e-commerce entrepreneurs to start selling online.
However, it’s important to note that they’re not the same thing. Both of these e-commerce business models have their pros and cons and therefore, it’s vital for you to research well before deciding which one would be optimal for you.
Our blog has helped you understand the basics of dropshipping better! Feel free to share the blog with your friends who are interested in e-commerce businesses as well!