Anyone looking for a way to make money online has surely come across these two words: Dropshipping and Amazon FBA.
In this article, we want to examine the differences between selling in dropshipping and selling with Amazon FBA, the two different business models, and we want to suggest the best solution for you.
- How does Dropshipping work?
- How does Amazon FBA work?
- Dropshipping or Amazon FBA: which one is more suitable?
How does Dropshipping work?
As we have previously explained, Dropshipping allows you to sell products without physically owning them, and then pay them to the supplier only after making the sale.
You can have a dropshipping business on your ecommerce site or, alternatively, on marketplaces such as Amazon and eBay.
The advantages are various, here are some of them:
- You don’t need big initial investments
- You don’t have to stock up and you can easily expand your catalog
- You pay for the products only after you have sold them
- Maintain a direct relationship with your customers, who will become part of your database
- You can create your own site and your own brand, making them acquire value over time
Is Dropshipping right for you?
Dropshipping allows you to sell products online without having them stored in a warehouse: a wholesaler or a third party supplier will ship them to the end customer after the order. Selling in dropshipping is an excellent solution if you don’t want to invest too much budget to get started and if you want to test different products without risk.
Remember, however, that having an ecommerce site or publishing your products on a marketplace is not enough: you will have to work every day to sell by doing marketing campaigns, taking care of customer service and planning the best offers throughout the year.
Furthermore, you will have to spend a lot of time finding the right supplier: the choice of the dropshipping supplier influences the success of your business. Many inexperienced sellers think they can solve the problem by making arrangements with Chinese suppliers, but this is a mistake to avoid!
This practice was very popular when dropshipping landed in Italy, but today it is not the right solution, especially in light of the recent price increase of raw materials. Users are increasingly used to receiving goods quickly, which is not compatible if your suppliers ship from China.
We advise you to select products to be sold in dropshipping that have a high demand from your audience, by choosing a reliable supplier that can guarantee safe and rapid shipments: with BDroppy, for example, you can sell products by the best fashion brands shipped to your customers all over the world!
How does Amazon FBA work?
Selling through Amazon FBA (Fulfillment by Amazon) allows entrepreneurs to send a stock of products to Amazon warehouses and take advantage of their efficient logistics system. The products will be uploaded to the Amazon marketplace and, every time you receive a customer’s order, Amazon itself will prepare and ship the package.
Amazon also deals with many other management aspects, such as customer service and returns management. Unlike dropshipping, starting to sell with Amazon FBA requires a larger upfront investment.
But what are the advantages of this business model?
- You can take advantage of the traffic generated by Amazon users and sell more
- It will be easier to expand by selling abroad, thanks to Amazon’s international programs
- Thanks to Amazon Prime, your customers receive the goods quickly
- By selling on Amazon you are perceived as a reliable dropshipping supplier
Is selling with Amazon FBA still worthwhile?
To be successful with Amazon FBA, you also need to have skills. First of all, you need to be able to find a type of product that users are interested in: storing all your merchandise in warehouses for too long multiplies the cost of managing Amazon FBA.
Furthermore, there is a lot of competition on Amazon. Today it is very difficult to emerge and you need to be able to position your products in a strategic way. You cannot build a direct relationship with your customers, so it is difficult to retain a user base so that they will also buy your products in the future again.
Obviously, selling with Amazon FBA has a price: there are ordinary costs and one-off costs.
Here are the ordinary costs, which therefore you will surely have to bear:
- Storage costs:
they are calculated on the total amount of items stocked in Amazon fulfillment centers each month, in relation to the volume occupied in the inventory.
- Management costs:
it’s the cost per unit charged for the management and shipment of the order.
Dropshipping or Amazon FBA: which one is more suitable?
Up to this point we have seen the advantages and differences of the two business models. But we haven’t answered the question “Dropshipping or Amazon FBA?”
The truth is, there is no universal answer. Each business model adapts to the different needs of sellers, but still pays attention to the substantial differences that we summarize below:
- both solutions ensure that you do not have to deal with shipments. With Amazon FBA, however, you will have to anticipate the cost of the goods, which you will ship to their warehouses for management. Customers will not be your customers, but Amazon’s customers and you will have to incur some fixed management costs;
- with dropshipping instead you can start selling online without having to anticipate any cost of the goods, customers will be direct customers of your store, they will become part of your database and you will pay for the products only once they have been sold.
We recommend that you subscribe to BDroppy to start selling designer fashion without worrying about shipping and without having to anticipate the purchase of the goods! You will have all the tools to get started, by taking advantage of a simple and intuitive platform and of the integrations to the main platforms and marketplaces.