Dropshipping vs. Amazon FBA

Dropshipping vs. Amazon FBA: which eCommerce business model is right for you? That's a question that many entrepreneurs ask themselves when starting in the world of online retail. Both dropshipping and Amazon FBA, fulfillment by Amazon, have their pros and cons, but what's the best option for you? Before you can make that decision, it's best to look at what each option entails.




What is Dropshipping?


Dropshipping is a business model in which eCommerce entrepreneurs sell dropshipping products without having to carry any inventory. When a dropshipper receives an order from a customer, they simply contact the supplier, who will then ship the products directly to the customer's doorsteps. Dropshippers don't have to worry about storing products or fulfilling orders; all they need to do is market their online store and make sales.

Dropshippers commonly work with wholesale vendors. Wholesalers are manufacturers or distributors selling bulk products at discounted prices. Many dropshippers source their products from AliExpress, a marketplace where suppliers from around the world list their products for dropshippers to find.

It can be tricky to find the right wholesalers for your dropshipping business. You'll want to find suppliers who offer products that are in high demand, have good profit margins, and dropship to your country.

Dropshipping is a great business model for entrepreneurs who are just starting. It's a simple business model to set up and run and doesn't require a large upfront investment. You can also run your dropshipping business in your spare time – you don't need to quit your job to start a successful store.


What is Amazon FBA?


Fulfillment by Amazon (FBA) is a program that lets sellers store their products in Amazon's warehouses and fulfill customer orders on Amazon.com. When an Amazon FBA seller makes a sale, they simply send the product to one of Amazon's warehouses, and the company will handle the rest, including shipping the product to the customer's doorsteps.

Another step further, the Amazon FBA storefront doesn't need to worry about order fulfillment. They can use the FBA program similar to an Amazon dropshipping model. Amazon handles everything, but your storefront, including customer orders, customer support, and they ship products.


This is an excellent option for entrepreneurs who want to focus on building their brand and growing their customer base without having to worry about fulfillment and customer service.

You'll receive a Prime Badge when you run an FBA eCommerce store. This badge lets customers know that their orders will be fulfilled quickly and efficiently. Because of this, your products are more likely to be seen, and you're more likely to make a sale.

What's the Difference Between Amazon FBA and Dropshipping?


While these two models sound incredibly similar, and both rely on supply chains, there are some main differences.

Dropshipping is an eCommerce business model in which you sell products sourced from a supplier. When a customer places an order in your store, the supplier will ship the product directly to your customer's doorsteps. You can sell different products and have a Shopify store, which is relatively low-risk.

Amazon FBA is a fulfillment method in which you send your products to Amazon's warehouse. You don't need to worry about shipping costs or inventory management. Once your products are stored in Amazon's fulfillment center, they will handle all the shipping and customer support for you.

The main difference is that dropshipping is a business model, while Amazon FBA is a fulfillment method. While you can run both as a side hustle, a dropshipping business may be easier to build. With an FBA store, you'll need to invest in inventory upfront, which can make a costly initial investment. Additionally, FBA fees can add up when selling on Amazon Marketplace.



Pros and Cons of Dropshipping


Dropshipping is a great business model for entrepreneurs looking to start an online store with little upfront investment. However, there are some downsides to dropshipping that you should be aware of before getting started.

Benefits of Dropshipping:

  • Low startup cost: You don't need to invest in inventory upfront, which means your startup costs can be very low.

  • Flexible location: You can run your dropshipping business from anywhere worldwide as long as you have an internet connection.

  • Easy to start: You can launch a dropshipping store in a matter of days or weeks, whereas it can take months or even years to launch a traditional brick-and-mortar store.

Cons of Dropshipping:

  • Low profit margins: Because you're not buying inventory in bulk, your profit margins will be lower than if you were to source products yourself.

  • High competition: There are many dropshippers out there, which means the competition is very high. Shopify dropshipping is becoming more and more popular, making it a competitive online business to start.

  • You're reliant on suppliers: If your supplier makes a mistake, it could reflect poorly on your business.

  • You need to build trust with customers: Dropshippers often have to work hard to build trust with their customers, as they're not selling products they have in stock.

Pros and Cons of Amazon FBA


Amazon FBA can be a great fulfillment model for entrepreneurs looking for a lucrative side business. You can use Amazon's extensive fulfillment network to sell your own products. However, there are also some potential downsides to Amazon FBA that entrepreneurs should be aware of before getting started.


Pros of FBA:

  • You can make a lot of money: With Amazon FBA, you can potentially make a lot of money if you play your cards right.

  • It's convenient: Amazon takes care of storage, shipping, and customer service for you.

  • You have access to Amazon's massive customer base: Amazon is a trusted platform with millions of active users. One of the biggest benefits of Amazon FBA is that you have access to Amazon's huge customer base. This gives you a big leg up on the competition.

  • Prime shipping: Customers who are Amazon Prime members get free 2-day shipping on all FBA orders. This can give you a significant advantage over dropshipping businesses that have to ship their products using slower, more expensive methods. Prime customers tend to spend more and shop more often on Amazon.

Cons of FBA:

  • It's expensive to start: You must pay for storage and shipping fees with Amazon FBA. These can add up quickly, especially if you sell large or bulky items.

  • You're at the mercy of Amazon: Amazon is in control of your business when you use its fulfillment services. This can be a good thing or a bad thing, depending on how you look at it.

  • There are potential storage and shipping issues: With Amazon FBA, there is always the potential for storage and shipping issues. This can be frustrating for entrepreneurs who are used to having more control over their businesses.

  • You'll need to compete with other sellers: There are many sellers on Amazon, making it difficult to stand out from the crowd.

  • More complex business model: The Amazon FBA business model is more complex than dropshipping. There are more moving parts to keep track of, and you'll need to be comfortable with technology to succeed.



How to Get Started Dropshipping


To get started dropshipping, you'll need to do a few things. While it's easier and quicker to start than with Amazon FBA, there are still moving parts you need to get in order before making your first sale.

You'll need to find a supplier who is willing to work with you. Dropshipping directories can help you find suppliers, but it's always best to contact them directly to inquire about working together. You can find suppliers like AliExpress and Spocket that dropship products to your customers.

You'll also need to create a store. You can use an ecommerce platform like Shopify or WooCommerce to create a dropshipping store. Once you have a store, you'll need to add products and connect your payment processor. One of the most essential parts is setting up shipping rates. You'll need to set shipping rates so that your customers are charged the correct amount for shipping.


When you're ready to start selling, you'll need to market your store and drive traffic to it. One of the best ways to start marketing your store is by creating social media accounts for your new business. You can provide store information, products, and direct links so new followers can find you. Another smart digital marketing move is writing compelling content to rank in search engines. You can write anything related to your store - maybe a highlight of your favorite product or how to use your products. This is great for building SEO and a strong online presence.

How to Get Started with Amazon FBA


There are a few more steps to start selling with Amazon FBA. First, you need to sign up for an Amazon seller account. This is an easy process; you'll need a business name, phone number, email, and credit card.

Now you need to create listings for the products you want to sell. This is where you'll input all the information about your product, including photos, descriptions, prices, and more. You'll also need to choose which Amazon fulfillment center will store your inventory.


You can send your products to an Amazon fulfillment center or use Fulfillment by Amazon (FBA). With FBA, Amazon will handle storage, shipping, and customer service for you. This is a great option if you don't have much experience with ecommerce because it takes a lot of the work off your plate.


Once your listings are created, customers can find and purchase your products on Amazon.com.

Dropshipping vs. Amazon FBA


So, what's the difference between dropshipping and Amazon FBA? The most significant difference is in the upfront costs and profitability. Dropshipping is a very low-cost business model for beginners, while an Amazon FBA online store can be a bit more expensive to get started with.

However, dropshipping businesses often have lower profit margins than Amazon FBA businesses because of the competition on dropshipping platforms like Shopify and eBay. This means that it can be harder to make a dropshipping business profitable.

The other big difference is in the customer base. Dropshipping businesses tend to have a smaller customer base than Amazon FBA businesses because dropshippers often rely on social media and online ads to get customers to their stores. Amazon FBA businesses, on the other hand, can rely on Amazon's massive customer base to generate sales.


Finally, dropshipping businesses are typically easier to set up and run than Amazon FBA businesses. This is because you don't need to worry about warehousing, storage fees, or fulfillment when you're dropshipping. Instead, your dropshipping supplier will take care of shipping orders directly to your customers.

At the end of the day, it's all about your business goals and expectations. Dropshipping might be the right model for you if you're looking for a hands-off business that can be run with minimal effort. If you're aiming for high profits and are willing to put in the work, Amazon FBA could be a better option.

No matter which model you choose, starting an ecommerce business is a great way to make money online. With some hard work and dedication, you can build a successful online store that will generate income for years to come.


Need some help getting started? Check out our How to Start a Dropshipping Business in a Few Easy Steps blog for helpful hints.