Dropshipping is a special kind of business model that fits under the FMB category because you don’t actually own the product. Instead, you just post it for sale, wait for it to sell, and then transmit the order to your supplier. It so just needs a small initial outlay of funds. Lets discuss everything about Shopify dropshipping vs Amazon FBA in detail. Also, we are going to suggest which one to choose for your business.
What is FBA on Amazon?
Fulfillment by Amazon FBA, is a service that Amazon offers sellers that takes care of all order fulfillment, storage, returns, and customer support. With 89% of sellers using the service, Fulfillment by Amazon is by far the most popular option for merchants.
FBA is an excellent way to manage your Amazon business and dropshipping sourcing and fulfillment agent. Regardless of whether you sell private label goods, resell goods through retail arbitrage, or sell goods wholesale.
Advantages and Disadvantages of FBA
With so many benefits for merchants, Fulfillment by Amazon (FBA) is a very potent service. Using FBA has benefits, but it also has drawbacks. Now let’s discuss what are those:
Benefits of Amazon FBA:
Easy to Use
Merchants bring their stock to Amazon’s fulfillment centers, whereupon Amazon takes care of the selection, packaging, and delivery.
Top Product
Your products will automatically display the Prime shipping logo on your listings when they are sent by Amazon.
Customers’ Trust
When customers see the Prime emblem, they will have greater faith in your goods. The buyer is aware that their purchase will arrive in two days.
Disadvantages
Standard fees are a drawback of FBA. Depending on the dimensions and weight of your merchandise, FBA fees can add up.
Storage Costs
Sellers must additionally pay monthly storage fees and maybe long-term storage fees if merchandise is kept for more than 365 days, in addition to FBA fees.
Limits on Restocking
You might not be able to send in as many goods as you would want because Amazon has refill limits for each type of storage.
Lost Stock on Hand
During the receiving process, Amazon might lose some of your inventory. But don’t worry, they’ll pay you back for any missing goods. These are all the drawbacks of Amazon FBA that you need to consider.
What Does Dropshipping Mean?
Dropshipping is the practice of an online retailer listing a product for sale and having it sent directly from a manufacturer or supplier without having to buy any inventory upfront.
- Due to its simplicity of setup and low initial cost, dropshipping marketing is a popular business strategy among Amazon, eBay, and Shopify vendors.
- There are tight rules that drop shippers on Amazon must abide by, or else Amazon will suspend your account. As an illustration, Amazon forbids merchants from dropshipping orders from other stores, including Walmart.
- All packing papers, invoices, and external packaging must list the seller’s name only without mentioning the manufacturer or supplier that sent the goods.
Benefits and Drawbacks Of Dropshipping
The low initial investment required for this business strategy attracts a lot of aspiring e-commerce entrepreneurs. However, there are a few factors to take into account before determining whether or not to dropship. Let’s discuss the benefits and disadvantages of dropshipping.
Benefits of Dropshipping
Low Prices and Low Initial Costs
There are no large orders or thousands of dollars upfront like with private label or wholesale business models.
Minimal Entrance Requirements
Starting is simpler because you may locate things from a source and post them right away on Amazon (or another platform). Dropshipping is permitted by Amazon for sellers, but please make sure you abide by their policies.
Drawbacks Of Dropshipping
1. Fierce Rivalry
There is also a lot more competition because dropshipping is considerably simpler to begin.
2. Delivery is Slow
Delivery times may be sluggish, depending on the manufacturer or provider you are using.
3. Inadequate Quality Assurance
There is no way for you to maintain quality control over the things you are selling because they will be transported straight from the supplier or manufacturer. Before choosing to employ your provider, we advise you to order samples.
What Is The Difference Between Dropshipping And Amazon FBA?
The only real difference between these two fulfillment strategies is who the owner of the goods is. With both, a different business handles customer order fulfillment, freeing you up to focus on other tasks. Dropshipping Vs. Amazon FBA is everything that you need to cater to while shipping internationally.
Who is the Inventory’s Owner?
Dropshipping and Amazon FBA differ significantly in that the former uses Amazon’s fulfillment network to process orders while you retain ownership of the inventory. For example, if you are selling private label goods, you will order a sizable quantity of inventory in advance from a supplier and ship it to an Amazon fulfillment center.
When Does the Order Ship From the Supplier?
When you dropship, you don’t have to pay for any inventory until a consumer places an order. After listing a product for sale, all you have to do is place an order with your supplier, who will ship the item to your consumer as soon as you have an order.
Who is in Charge of Customer Service?
Another distinction is that when you use FBA, Amazon will take care of returns and customer service.
What Happens to the Returns?
Dropshipping keeps you using Amazon FBM fulfillment business process, which means that you, the seller, are still in charge of returns and customer support. You are unable to send returns to the manufacturer or supplier.
Which Business Model is Most Appropriate for Your Company?
Since we at Runto Agent strongly believe in amazon FBA, that is what we advise. Naturally, the choice of which business plan to use when selling on Amazon belongs to you.
Conclusion:
If you are deciding about Dropshipping vs. Amazon FBA, drop shipping offers minimal initial expenses but gives you less control over the quality of your products and slow delivery periods. Meanwhile, with FBA, your listings will receive the Prime Shipping logo, and Amazon will take care of all fulfillment and customer support.