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Dropshipping Vs Amazon FBA – Which is more profitable for business?

Are you planning to start your business right now and are confused between the two most beneficial measures:  Dropshipping Vs Amazon FBA? Okay, then you have reached the right place. Here we will explain the whole concept of Dropshipping vs Amazon FBA that will help you in taking the right decision for your e-commerce business.

What is Dropshipping?

By its term, “drop” and “ship”, the retailer orders directly items from the dropshipping and wholesale company by “dropping” the order to them and they will ship the items directly to the (your) buyer.

Dropshipping is one of the hottest types of retailing business tools which is more cost-effective, convenient and easier.  It has been used widely by UK retailers for many years, a more familiar term being ‘direct fulfillment’. It’s now becoming more and more available to the smaller trader, though.

Dropshipping is an extremely beneficial method for Internet-only storefronts, small retail shops. A display item may be on the shelves or in the catalog, but the real product purchased could be in the warehouse of the factory several miles away.

What is Amazon FBA (Fulfillment by Amazon)?

Amazon’s FBA program is a great opportunity for a large audience of entrepreneurs. Especially what is happening in the form of a man’s shop, what is remarkable with Amazon FBA is its scalability.

FBA means “Fulfillment by Amazon” which makes it a complete fulfillment company. It provides storage and shipping services for its customers’ products. The FBA is unique because Amazon is the market for those items, which have an active interest in selling items. What makes the FBA even more extravagant is that its products are also eligible for Amazon’s shipping promotion, including Free Super Saver Shipping and Amazon Prime.

Now, the question that comes up is that which one of the both is a better option for upraising your sales – Dropshipping vs Amazon FBA. So let us go for the Pros & Cons of both when deciding: Dropshipping vs Amazon FBA.

Pros and Cons of Dropshipping:

Pros

  • Less capital

No need for a concrete establishment for starting your business. It saves you from making huge investments for beginning your business which is a tedious burden for any new businessman.

  • All the Responsibility of the Supplier

When you receive an order, what you have to do now is that it is a hierarchy with the third party wholesaler or supplier, no matter what happens and your responsibility is over. The supplier will pack up all the products, ship them and handle the returns for you.

  • Negligible Risks

Need not maintain a huge inventory stock. So, if your trade did not turn up so good, the loss is not that much big. You had only incurred the expenses to start your website.

  • Multiplicity

As you know, the more the diversity of anything, the better it becomes. Had you started your business with the task of purchasing your own inventory, it was not possible for you to sell a variety of products as you had to purchase a few products in large quantities.

  • Saves Time

Don’t have to indulge in packing the products, shipping them, and look after your inventory. Most suitable for those who want to save their precious time.

  • Location – independent

You don’t need to be in and around a particular area to keep your business operations smooth going, just keep on contacting your suppliers and customers.

Cons

  • Less Profit

Though DropShipping doesn’t require much capital in case of revenue also, the returns would be less because you are not the one actually who sold the goods. You must be ready to bear fluctuations in profits.

  • Scant Information

The supplier may not have provided you with detailed information about the product. Therefore, you might not be able to answer the general queries of your customers.

  • Customer Service problems

DropShipping can free you for a lot of weight, but when it comes to answering the customer’s questions, then you rely on the supplier because you do not really know whether the product has been described or timed Has reached or not.

  • No Good Deals

We can’t expect to get good deals and discounts as we are not making any bulk purchases while DropShipping.

  • More Competition

Competition is certain. Numbers of sellers are selling the same products that you are trying to sell.

Pros and Cons of Amazon FBA:

Pros

  • Focus on business is crucial

Amazon packs our products deliver them and provides customer care services. So, you have enough time to focus on our business.

  • Successive Goodwill

You don’t need to establish a brand name for yourself. Thanks to the honored goodwill of Amazon.

  • Wide Customer Base

Gaining customers for your business is really hard but with Amazon, you can get a good customer base.

  • Returns And Replacement -All Sorted

No need to worry about anything. Shipping, returns and customer services are their entire task now.

  • Your Customers Will Pay More For The Same Products

The same products which you were not able to sell profitably can be sold at even higher prices on Amazon.  Again, the credit goes to Amazon.

Cons

  • No Record Of Your Inventory

The unsold stock would get accumulated and once it will become so large that you will not be able to maintain a proper record of your inventory.

  • High Competition

You can’t take the sole advantage of the FBA service. There may be many. So, it is not that easy to have a lottery ticket that you may win or lose.

  • No guaranteed profit

You must be careful regarding the selection of the products you are selling because every item will not provide profits.

  • Shipping Problems

Strict ban on the delivery of flammable goods.

  • Blind Dependency

What if Amazon suddenly changes its procedure or removes your store. You can do nothing to make it work.

  • No Direct Contact With The Customers

Amazon has a complete record of your customer information and you don’t have. What will happen if you have to sell the same products to the same customers down the road?

  • Basic Needs

You can’t start your business using FBA without any initial capital. You need to pay a fixed amount to Amazon in return for their service.

So In Dropshipping Vs Amazon FBA, which is better? – The Conclusion

If I was asked for my opinion then, I would surely go with dropshipping. The reasons behind this are:

  • It is quite simple.
  • Does not require much investment and if I am a beginner and don’t possess much initial capital
  • No need to bear greater risks

No doubt, Amazon can render huge returns on investment but

  • You need to make huge investments before that.
  • You will have to find a suitable supplier who can make your products available at the Amazon and then pay you huge profits.

So, if you want to save your money and are not prepared for greater risks, in the beginning, go on with dropshipping.

Happy Dropshipping!

2018-01-17 13:46:01

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