You may be a new Amazon seller or an experienced seller. You may do wholesale business or retail business. But finding the right strategy to adopt is quite a challenging task.
In this blog, let me explain the difference between Amazon FBA and Dropshipping.
Amazon FBA
Amazon FBA is a bright opportunity for sellers who cater to a larger set of audience. It also has remarkable scalability.
So it is one of the most soughed business solutions when it comes to Amazon business.
Let's have a quick glance at what is Amazon FBA. In FBA, Amazon offers warehousing, shipping, and customer management service to your business. You should just stock your products in Amazon warehouses.
Dropshipping
Comparatively, Dropshipping is also a profitable model. ' Dropshipping ' may sound new to some people. So let me give a quick intro to it.
In dropshipping, the retailer will place an order with the vendor or a wholesaler. Then the retailer will provide the customer details to the vendor. The vendor will directly deliver the products to the customers.
Actually, dropshipping is a trending business model in the USA, UK, Canada, and Europe. When you understand the tactics to handle the business, you can master it.
Dropshipping is felt to be suitable for retailers as it is very convenient and cost-efficient. Also, it involves a much lower risk.
Now let's have a look at the major differences between Amazon FBA and Dropshipping.
Difference between Amazon FBA & Dropshipping
Both Amazon FBA and Dropshipping are profitable business models that offer independence in time and location based on online platforms.
In the case of Dropshipping, you need not worry about unsold inventory because you don’t store it. So the cost of storing or the rent of the warehouse has been cut.
The responsibility of shipping, refunds, and returns does not fall on your head. But the profit margins are always fluctuating and sometimes very low.
As you don't have any control over the packing and shipping of the products, there are high risks of product mismatch and damaged products.
It can create a negative impression on the customer's mind and leads to negative reviews. It can also lead to a loss of trust.
In the case of Amazon FBA, Amazon handles customer queries, but for that, you need to send your inventory to Amazon fulfillment centers.
So you need to be cautious while choosing the products and buying them. Because one wrong decision may eat up your budget.
When you take up Amazon FBA you should register as a seller with Amazon. But when you choose dropshipping, you can directly opt for a dropshipping product that has been already listed.
In Amazon FBA, you have the freedom to list any products, whereas, in drop shipping, you should find a suitable dropship supplier.
In the Amazon FBA model, you can track and send shipments. In dropshipping, you have to plan and implement a customer acquisition strategy to have control over the business.
Advantages of dropshipping
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It doesn't require a huge investment to start a dropshipping business. Small entrepreneurs and people who wish to do business in their leisure can do this.
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It doesn't involve much-complicated management. You need not appoint a resource to manage this business. When the customer places an order, all you need to do is just place the same order with a wholesaler.
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You need not bear much expense. You need to spend on maintaining your e-commerce business. You will not incur a heavy loss, as you buy the products at a wholesale price and sell it at a retail price.
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Rather than maintaining your own inventory, you can diversify your product range through dropshipping.
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You can operate this business from anywhere at any time. But you should maintain proper communication with your suppliers and customers.
Advantages of Amazon FBA
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As Amazon handles the logistics part, you can focus on scaling your business.
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Amazon has a huge customer base. So your product will have wide access to 300 Million active customers of Amazon.
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When you list your products under Amazon FBA, they will have Amazon's brand logo on them. It will boost your product's brand recognition.
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The best part about Amazon FBA is, you need not worry about handling returns and replacement of the products.
- You can enjoy better profitability for your products. It will allow you to sell the products at a good profit margin.
Conclusion
I have clearly listed the differences between Amazon FBA and Dropshipping, and its pros.
Before choosing between Amazon FBA and Dropshipping, you have to find profitable products to sell on Amazon.
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