As most people want to do online shopping, selling products through online stores has become increasingly popular in recent years, and two popular methods for doing so are Amazon FBA and dropshipping. Amazon FBA (Fulfillment by Amazon) is a service that allows sellers to store their inventory in Amazon’s warehouses and have Amazon handle the shipping and customer service. At the same time, dropshipping is a method of selling products without holding any inventory, by sourcing products from a supplier who ships them directly to the customer.
Both approaches have pros and cons. So, let’s take a look at the various perspective of Amazon FBA and Dropshipping.
What is Amazon FBA
Amazon FBA (Fulfillment by Amazon) is a service offered by Amazon that allows sellers to store their products in warehouses, and have Amazon do the shipping, handling, and customer service for their products. With Amazon FBA, sellers can send their products through their online store to an Amazon fulfilment centre, and when customers place orders, Amazon picks, packs, and ships the products on the seller’s behalf.
This service allows sellers to leverage Amazon’s vast logistics network and infrastructure, and take advantage of Amazon’s reputation for fast, reliable and free shipping, secure payment methods and customer service.
What is Dropshipping
Dropshipping is a business model in which a seller does not keep the products they sell in their online store. Instead, the seller purchases the product from a third-party supplier and ships it directly to the customer. Dropshipping is the most popular nowadays among young entrepreneurs because the seller does not have to handle the product or manage inventory.
The seller sets up an online store or e-commerce business, lists products for sale, and markets them to potential customers. When a customer places an order in the online store, the seller purchases the product from the supplier and has it shipped directly to the customer.
Difference between Amazon FBA and Dropshipping:
Inventory Management:
Sellers send their products to Amazon’s warehouse, and Amazon handles the storage, picking, packing, and shipping of the products to customers. Dropshipping involves the seller not keeping inventory and instead having the supplier ship the products directly to the customers.
Upfront Costs:
Amazon FBA requires an initial investment to purchase and send inventory to Amazon’s warehouse. With dropshipping, there are no upfront inventory costs since the supplier is responsible for storing and managing inventory.
Shipping Time:
With Amazon FBA, since the products are stored in Amazon’s warehouses, the shipping time is usually faster than dropshipping. In dropshipping, the shipping time depends on the supplier’s location and delivery method.
Profit Margins:
Amazon FBA generally has higher fees and costs associated with it, which can result in lower profit margins for the seller. With dropshipping, the seller can often achieve higher profit margins since they don’t have to pay for storage or other associated costs.
Control Over Products:
With Amazon FBA, the seller has more control over the goods they sell because they can view and manage their inventory. Since the products are not being handled physically, the seller may have less control over the product quality and shipping times when dropshipping.
| Factors | Drop shipping | Amazon FBA |
| Shipping Risk | High | No Risk |
| Investment | Low | High |
| Control over products | Low | High |
| Upfront Cost | No | Yes |
| Shipping Time | High | Low |
| Direct contact to client | Yes | No |
Conclusion:
Amazon FBA and dropshipping are both decent options for selling products online. Amazon FBA gives you access to Amazon’s large customer base, quick shipping, and more control over the products you sell. Dropshipping, on the other hand, eliminates the need for inventory management and allows for more flexibility in product offerings and pricing.
Finally, the decision between Amazon FBA and dropshipping is determined by the seller’s particular conditions and desires. Some sellers may find success by combining both methods, while others may find that one method works better for their particular situation.
