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Dropshipping vs FBA: What’s the Difference?

In 2017, the market on Amazon was around $135 billion, and it’s only growing.

If you are interested in tapping into that market, you might be interested in an Amazon FBA. But what about dropshipping?

If you can’t decide, keep reading to learn the differences between dropshipping vs FBA.

What is Dropshipping?

Dropshipping is a solution that you can use where you are the primary retailer and will place the orders directly.

When you drop an item to them, you’ll send them the customer details, and they’ll send that item directly to your customer.

This has become very popular in e-commerce businesses because it saves you a lot of money and is also convenient. Many people also like it because they don’t have to have a large investment, which means that even small businesses can use this.

What is FBA?

On the other hand, you could try Amazon’s FBA option which is great if you’re serving a large audience. It’s easy to scale this as your business grows as well.

The FBA really stands for Fulfillment by Amazon. This means that you’ll be able to store your products in their warehouse and have them ship them as well. Your products could be eligible for Amazon Prime, which means that people could get Free Super Saver Shipping too.

This will really only work well if you are selling a product that will be popular on Amazon and make a product that doesn’t have a lot of competition.

You’ll likely have to sign up for this program and follow all of Amazon’s rules and requirements.

Pros and Cons of Dropshipping

Dropshipping is better for some small business owners because you don’t have to meet Amazon’s inventory requirement for their FBA process.

However, there are many more advantages as well.

Pros

You’ll also hold all of your products in one place, so it’s less likely that they’ll be misplaced.

With dropshipping, you’ll be able to handle how you interact with customers. Your product will go through fewer hands, which means that there are fewer options for something to go wrong.

You can also control what kind of environment you want to keep your product in. If you choose FBA, you’re letting Amazon control all of it, and it could lead to issues where damaged products are sent to your customers.

You’ll also have a freed-up supply chain that can get your orders out on time. You will be more available to the customer even during busy times, like the holidays. You’ll be able to have keep track of how much inventory you have and use your own shipping methods.

If you need more information on different shipping options, click here.

Cons

However, one of the biggest drawbacks is that it’ll be difficult to compete with Amazon on your own. You’ll have to keep up with the shipping speed because Amazon is offering delivery within hours.

In the future, one-day shipping (or faster) will be the norm, and people will want to buy their products and get them as quickly as possible.

You’ll have to decide if you’re willing to spend the money to keep up with the resources that Amazon has. As a small business, you may not be able to spend the money to ship out your products in one day.

Pros and Cons to FBA

One of the best pros to using an FBA is that Amazon will be able to offer Prime deals and shipping on all of your products.

But this is only one of the best pros.

Pros

With Amazon Prime labeled on your items, you’ll be able to market your products to more customers, which will help to market your product to more customers.

You’ll be able to send your items quickly to your customers with one-day shipping, and sometimes even same-day shipping.

This exposure that FBA can offer you will help to improve your sales, which means that your Amazon Advertising Cost of Sales (ACoS) fee will be lower.

It will also make it easier to figure out the logistics for your business. Once you’ve packed and shipped products to Amazon, you don’t have to worry about shipping them to your customers and paying for really fast shipping.

Amazon will do all of that, but they will also handle the customer service. They’ll provide 24/7 access if any of your customers have issues. This can be great for businesses that don’t have the resources to answer all of the customer questions.

Being in an FBA also opens the door and gives you opportunities that are only available to FBA members. You’ll be able to offer your customers the option to Subscribe and Save, which means that they can sign up for recurring purchases of a product.

This is great for items that people order regularly, like groceries or toiletries. You can use this as long as your account is in good standing.

You’ll also be able to use other features like FBA Small and Light and FBA Export. With Small and Light, you can cut down your shipping costs by sending out small items. FBA Export will let you send your products internationally.

Cons

However, one of the biggest cons is that you have to put in so much cost to ship your product to the fulfillment center. For example, you might have to send your products to many different fulfillment centers.

This can start to be tedious and complicated. And, if you mess up and send an item to the wrong place, they may just charge you for the item and get rid of it.

However, if you do send the products to the right fulfillment center, you’ll have to pay even more for Amazon to pack and ship your products.

Learn More About Dropshipping vs FBA

These are only a few things to know about dropshipping vs FBA, but there are many more things to keep in mind.

We know that running a business can be stressful, but we’re here to help you out.

If you enjoyed this article, make sure that you explore our website to find more articles just like this one.

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