Want to start a business online but don’t know whether to go with Amazon FBA or Shopify Dropshipping? If so, you’re not alone! Many beginners are intimidated by the whole process, and dropshipping vs. Amazon FBA can seem like a complicated decision.
However, by reading this blog post, you will be able to learn everything you need to make a well-informed decision. In this blog post, we will compare dropshipping vs. Amazon FBA in detail, discuss the pros and cons of each model, and provide tips on how to choose the best option for your business. So let’s dive right in;
What is Shopify Dropshipping?
If you’re looking to start selling online without any huge investments, Shopify dropshipping is a great option. It allows you to start selling online with little upfront costs, and you can run the business entirely from your own home.
Plus, you have complete control over your products and pricing – making it a great option if you’re looking to become self-employed. The best part is you don’t even need to purchase the inventory of products you sell.
You order it from the suppliers once you receive the order from a customer, and the supplier ships the product to the customer. With the Shopify platform, setting up your store can take minutes.
Pros of Dropshipping
Low startup cost
Dropshipping is an awesome way for small businesses to start online. This business model doesn’t require any initial investment other than buying the Shopify subscription and paying for ads. This means that dropshipping can be started very cheaply, making it an ideal option for businesses with limited resources.
Aside from being affordable, dropshipping also has another advantage – there’s no need to invest in inventory. Rather, you only need to buy the products you get orders for.
Easy to start and manage
Starting an online dropship store is easy and doesn’t require any technical know-how. You can use Shopify, a platform that makes e-commerce store development straightforward and affordable. With just a few dollars invested in shop supplies (such as logo design templates or website UI design), you’re good to go!
Once your store is up and running, optimizing it for conversion rates is important – this will help you achieve higher incomes from sales. That said, there isn’t really anything stopping anyone from making money online if they put their mind to it!
No inventory costs
Dropshipping is a great way to make a killing selling niche products online. With no inventory costs and low shipping fees, you’ll be raking in the profits big time.
Plus, you won’t need to worry about running out of stock – as your customer orders, it will be shipped straight to their doorstep from the supplier himself.
High Profits Potential – With a little effort, you can make excellent profits
There are a a number of reasons why making excellent profits through dropshipping is possible. One of your main advantages over Amazon sellers is that you set your own prices.
This provides you with a full control over how much money you make and allows for hefty profits, especially if selling high-ticket items like furniture or home appliances. You don’t have to pay commissions and fees like for Amazon FBA, meaning your margin is even higher than usual.
Cons of Dropshipping
More Time Is Required To Manage Your Store
Running this business requires more time and effort than FBA. Store owners need to spend more time on the backend of their business, handling orders, shipping, etc.
In addition to this, they also need to be hands-on with promoting their products through social media platforms like Facebook and Instagram. All in all, it can be quite an arduous task trying to manage everything by yourself!
You’ll Have to Bring Customers Via Ads
Shopify requires you to run ads if you want to get sales because there’s no already present customer base.
However, Amazon has been able to amass a customer base from word-of-mouth marketing alone. As such, its seller doesn’t need to spend excessive amounts on advertising just to get people aware of the products.
What is Amazon FBA?
Amazon FBA is a business model where products are sold through Amazon’s warehouses. The FBA stands for Fulfilled by Amazon, which means their warehouse takes care of the pick, pack, ship, and refunds. As a seller, you’ll need to set up an online store on Amazon, select the right product category, and find suppliers.
The main advantage of Amazon FBA is that it allows entrepreneurs to grow their businesses quickly and scale easily due to the massive customer base of the platform. If you’re interested in selling on Amazon, then this is the business model for you!
Pros of Amazon FBA
Greater Potential For Revenue
Firstly, the potential for revenue is much higher as Shopify dropshipping involves selling products online yourself, which takes some selling skills and business acumen.
Secondly, Amazon is an established ecommerce platform with a large customer base so you can be sure of high sales numbers if your listing is optimized well.
Easy Returns Via Seller Fulfillment
Seller fulfillment is the key to success with Amazon FBA, as it eliminates all the hassle that comes along with dropshipping. With Seller Fulfillment, a team of professionals takes care of shipping and returns for you.
This way, you can focus on your business rather than fending off angry customers or convincing suppliers to issue refunds.
You Build A PL Brand
If you’re interested in launching your own business, PL branding is something that should definitely be on your radar. With Amazon FBA, you can quickly and easily build a product range that appeals to your customers – all while retaining full control over the branding and production of said products. When it comes to selling online, Shopify dropshipping isn’t always as straightforward as it first appears.
The brand tag typically belongs to the supplier, meaning you won’t be able to fully reap the benefits of having a custom-made product (e.g., better customer retention). Furthermore, with bulk purchasing & customization options available with PL branding, building a name for yourself becomes much easier – potentially resulting in a flip of the asset later on for up to 30-40x multiple of the monthly profit.
Cons of Amazon FBA
Complex logistics and inventory management
Amazon FBA (Fulfillment by Amazon) is a very complex system that requires a lot of time and effort to set up. Not only that, but if you aren’t willing to put in the extra effort, then Shopify dropshipping would be a much, much better option for you. With Amazon FBA, you need to deal with getting your product’s weight and dimensions right so shipping costs can be accurately calculated. Then you’ll have to hire a freight forwarder who will ship the product inventory to an Amazon warehouse, where it will then be scanned and cleared by amazon before being shipped out to customers.
When selling on Amazon, your scalability options are limited. You cannot use FB ads or other platforms to get customers and you’re left with the Amazon platform’s own PPC, which only targets its own customers.
High upfront costs
It is important to have at least 100 units in stock so that you can start selling on Amazon without any hassle. Additionally, pay close attention to Amazon’s shipping fees as they can quickly add up. Moreover, remember to factor in other costs such as Amazon’s commissions.
You’re Dependent on Amazon’s Policies
There is a high risk involved when selling on Amazon. The platform has a history of changing its policies at any time, which can lead to business disaster for sellers. Not only this, but you will also have to pay monthly fees even if you don’t sell anything! Furthermore, they have been banning sellers left and right on the mere suspicion that their reviews might be manipulated. If you’re unlucky enough to fall into their radar, prepare to lose everything in an instant – your store, customers base and most importantly, your livelihood.
How to choose between dropshipping vs. Amazon FBA
When it comes to starting your own business, dropshipping vs. Amazon FBA are two of the most popular options out there. FWith dropshipping, you own and operate the entire business – this can be great if you have the entrepreneurial spirit! Nevertheless, you will have to rely on continuous ads to get customers; the moment you pull the plug on ads, your sales will drop to literally zero.
On the other hand, with Amazon FBA, you outsource most of the work – this is perfect if you don’t have time or want more control over your business. It’s also an already established business with a massive customer base so you don’t always rely on PPC ads. However, it requires higher starting capital.
The final verdict? It mostly depends on what kind of business you’re looking to start and how much involvement you want/need in that process. There are pros and cons to both options, so it’s important to do your research before making a decision.
Where to Source Products For Your Store?
If you’re looking to populate your store with trendy and incredibly affordable products, try My Depot. The platform hosts manufacturers and suppliers from around the world who are ready to offer lower than market average prices without compromising quality.
They have a massive variety of home and furniture products that you can sell for massive profits and build a following of loyal customers thanks to the awesome quality of products.
The reason for low prices is the direct connection with the manufacturers instead of relying on middlemen present on platforms like Alibaba or 1688.