Dropshipping and Amazon’s FBA, What should I pick?
Online marketplaces and online stores have become a trend that all internet users at least heard of. With the advantages of online selling, it is an opportunity for everyone who wants to capture a piece of the large marketshare and build a business.
With these two e-commerce models, droppshiping and Amazon’s FBA, anyone can be an online seller! But what exactly are they and which of them is more suitable for you?
What is dropshipping? What is Amazon’s FBA?
To simply explain, both terms are e-commerce solutions that online sellers can choose to outsource their logistics process.
With dropshipping, online store owners can place orders and give the customers’ details directly to manufacturers or wholesale companies, and they will ship the products to the end customers according to the information given.
However, there are risks of bad product quality due to the limited ability of sellers to oversee the products, which may be sourced from various suppliers.
As a dropshipping seller, you can only rely on the information you receive from the manufacturers to respond to the customers. This information may not be sufficient to address any problems that may arise, and there is a chance that you will receive complaints from customers.
On the other hand, Amazon’s FBA, which stands for Fulfillment by Amazon, provides warehouses and shipping services for online sellers, including customer service and returns.
However, it requires the additional step of shipping the products from the manufacturers to Amazon’s warehouse. This process may lead to cost conditions such as buying in bulk to lower logistics fees per item.
With the limited capital for new online sellers, having to balance the cost and profit might not allow them to pick high-ticket products and might force them to buy cheap items that make less profit.
With these distinct pros and cons of dropshipping and Amazon’s FBA, we highlight the various aspects of each model that you should consider point by point, so that you can decide which one is the best for you.
Dropshipping
- Smaller investment, low overhead fee
- No need for storage since you can buy the product after you receive the customer’s order
- Products can be sold on different channels.
- Build a customer base and trust from scratch
- Little control over the inventory, since you don’t own the products
- Perfect for low-scale sellers and internet-based storefronts
Amazon’s FBA
- Bigger investment: shipping cost from suppliers to Amazon warehouse, Amazon’s service fees
- You buy the products first, and then rent Amazon’s storage (risk of leftovers)
- Products are limited to Amazon’s platform
- Gain customer trust through the Amazon brand
- More accurate inventory management
- Perfect for large-scale sellers with a good amount of audience
It is possible if you want to sell on Amazon with dropshipping method. However, you must adhere to strict guidelines in order to avoid account suspension. For example, dropshipping orders from rival retailers like Walmart, Target, and Costco are not permitted on Amazon.
Which is better? Dropshipping or FBA?
Coming down to the final question of dropshipping vs Amazon’s FBA: It totally depends on you and your business goal. If you are new to e-commerce business with limited capital and want a lower-risk choice to start with, then dropshipping is your answer.
Amazon’s FBA is a better match for online business entrepreneurs who have enough capital to invest and are aiming to scale up their businesses. With bigger investments, there is a higher chance of growth and profit as well.
Whichever solution works for you, Revam can guide you through your online business journey!
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With Revam, you will never be lost spending hours and days finding the right products. Our platform also offers calculating tools for you to oversee the whole investment and maximize the profit.
If you don’t believe us, try it out for yourself!
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