Many people who step into the world of e-commerce encounter the concepts of Amazon FBA and Dropshipping. Although the structures of the two lines of work are understandable and decomposable, it can be quite tricky for a beginner to understand the difference between the two. Lack of clear information on supply chain provision, investment, time, and stock management can also cause the entrepreneur to be afraid of entering the competition. In this article, we will tell you the difference between the two in plain and unambiguous language.
What Is The Dropshipping?
Dropshipping, which by its most general definition means Stockless sales, is the method by which the supplier you find sends the products directly to the buyer through you. Where you make a profit is an amount you add on top of the supplier fee. In this way, you can start e-commerce without a physical store and warehouse. In this method, where you need to do time management very well, inventory management is also an important issue. Because you must continuously communicate with your supplier and check your stocks.
What Is Amazon FBA?
Fulfilled by Amazon, i.e., Amazon FBA in short. With this system, you can send products that you produce yourself or buy from other countries to Amazon’s warehouse and offer them for sale here. In this method, which destroys the warehouse discovery process, Amazon is also responsible for the shipping process. In this area, where you need to do your stock management well, competition is also relatively high. If you don’t have a reasonable investment budget for advertising and inventory, it’s much harder to succeed at Amazon FBA than dropshipping.
What Are the Differences Between Dropshipping and Amazon FBA?
The stockless sales business you set up when Dropshipping turns into Stockless Sales with the FBA. With Dropshipping, you buy your products from the supplier as soon as the order arrives, and when making the FBA, you offer the products you have already put in your warehouse for sale. In both methods, time and inventory management occupy an essential place. It will be the right decision to start by calculating your investment strength and competition.
Pros and Cons of Dropshipping
- Since it is an Online business line, you can track your sales with laptops and internet connections.
- The cost is low. You only pay for the products you sell.
- You can offer products from multiple suppliers for sale in your store. In this way, you have a wide range of products.
- You have the opportunity to work from all over the world.
- Many people do Dropshipping; you have to prepare a challenging work schedule to stand out among them.
- You may have trouble setting a pricing policy because price competition among thousands of sellers is at the highest level.
- Poor supplier selection could end your brand. If you don’t find a reliable supplier, your store’s score will drop, and you’ll have problems with your customers.
- You always have to keep your inventory constant by keeping track of your supplier’s stock.
- You’re the only one who can contact customers. So you should know how to remain calm in a possible problem.
- There is a risk that your account will be suspended.
- It doesn’t require complicated capabilities; you can get what you want with the right supplier, the right products, and full support for customers.
- You can expand your product scale as you like.
Pros and Cons of Amazon FBA
- Your registration in the Prime program is made as soon as you start using the FBA.
- Because you have a chance to see products, the returns will be less.
- Profit margins are high.
- You should spend much more extended periods of researching products. You should try to find the best quality goods at the most affordable price.
- In exchange for the service Amazon provides, the FBA charges a commission for the product you make. When calculating income and expense, you must also calculate this commission.
- The initial cost is high, as you will get all the products you will sell in the first place.
- You should carry out regular checks to keep your stocks up to date.
- There are no administrative tasks you need to do.
- You do not need to create a website.
- You have to calculate the shipping cost and the warehouse cost.
Which System Is More Advantageous? How Do I Choose The Appropriate System For Myself?
Whether Amazon dropshipping or the FBA is more advantageous is a purely relative matter. You have to have adequate capital to start the FBA, and you are likely to be affected by changing rates because you will get the overall value of the products in the dollar. Also, the cost of products and advertising and marketing fees could be hurt if the FBA doesn’t move forward with the right strategies, and Amazon doesn’t get on the front page. If you have little capital to start with, it would be most reasonable to start with dropshipping. If you have enough capital, you can start with Amazon FBA if you want, then switch to dropshipping. Dropshipping is a method that minimizes risk, so you can travel anywhere in the world and take care of your Amazon store.
To sum it up, deciding whether dropshipping or Amazon FBA is the right step for e-commerce is no easy task. Your decision depends entirely on your ability to take risks and the capital you have. Considering these two situations, you can decide which one to continue with. When starting e-commerce, where competition is at its peak, you can get help from Pirahas.