Are you a new seller on Amazon or a seasoned pro? It can be challenging for you to keep up with Amazon’s ever-changing landscape and make the right decisions possible for your brand’s eCommerce presence. No doubt that there are many different ways to structure an eCommerce business.
You can have hundreds of marketplaces and other platforms to choose from. But the most important thing is to figure out the source products and how you will deliver them to the customers.
This requires in-depth product research that can help businesses find the best-selling products on Amazon FBA. It will let you know what things are in trend that need your attention. In this article, we will discuss which is better for your eCommerce business – Dropshipping or Amazon FBA.
What Is Exactly the Dropshipping?
Dropshipping is an online business model that lets you start an internet-based store and sell items without investing in buying any stock. You can easily make a sale by connecting the end customer with the manufacturer itself.
The manufacturer or dropshipping provider handles warehousing and deliveries to the right customer.
Dropshipping is considered one of the best business models because it involves little or no risk. You can be benefitted a lot by working on this ultimate model.
What Do You Understand By Amazon FBA?
Amazon is one of the largest online marketplaces globally, where you can order the products of any brand. Fulfillment by Amazon, or Amazon FBA, is Amazon’s local delivery and fulfillment program.
With the help of FBA, merchants send their products or items to Amazon’s work centers. Then, Amazon will be responsible for picking, pressing, and delivering the items, just as taking care of client support.
Amazon FBA lets even independent ventures benefit from a gigantic coordinations activity. FBA handles warehousing and picks and packs your orders. You have to transport your items to Amazon simply, and FBA deals with the rest of the process.
Amazon FBA vs. Dropshipping: Pros and Cons
Both Amazon FBA and Dropshipping are money-making strategies that have their upsides and downsides that we need to consider before concluding which one to pick.
- Investment – There is no upfront investment needed if you choose drop shipping strategy because you have to place the same order to the manufacturer that the end customer gives. Rest everything from packing to shipping will be handled by the supplier himself. Whereas in the case of Amazon FBA, an initial significant capital investment is required because you have to buy the products in stock and send them to Amazon for sale.
- Risk Factor – Dropshipping permits you to sell products without involving any risk factor, which is why it’s a popular and safest eCommerce business strategy. Your purchase at the wholesale price and sell at the retail cost. So, therefore the difference between both the costs is your net profit. Whereas, in the case of Amazon FBA risk factor involves an as large amount of capital investment is required for initial start-ups.
- Profit Margin – In dropshipping, the profit margin is less than Amazon FBA because you will only get the difference in the wholesale price and the selling price every time, which can’t be too high. But in the case of Amazon FBA, once you get your brand established, you will get a lot of profit margin as it deals with the bulk of products, not a single product. So, for a start-up business, you should go with dropshipping, but after some time, switch your business to Amazon FBA to get significant benefits.
- Management – In dropshipping, when a client submits a request for a product, you just put in a similar request to the provider. Rest the supplier will manage everything from packing to delivering. But when it comes to Amazon FBA, you have to make your products reach amazon’s warehouse on time. After that, they will manage the shipping of all orders.
- Audience Reach – When it comes to dropshipping, you need to work hard on reaching the customers of the same interest, then you can sell your product. But in the case of Amazon FBA, you will get instant access to Amazon’s worldwide crowd, and it is easy for you to establish your brand by reaching millions of amazon’s customers.
This article aims to assist you with gauging the expenses and advantages of each technique that will help you further in deciding which strategy can provide wings to your online business.
Both the methods have cons and pros, but picking between Amazon FBA and dropshipping will eventually boil down to how much speculation you can make and how much risk you are ready to take. Do a deep analysis of your business and take the decision wisely.