We live in such an advanced world that has been ruled over by the internet. What an unreal idea it used to be about a century ago when the invention of the telephone took the world by storm. The idea of the internet came with its pros and cons. Even though the fact that our generation is being way too dependent on the online world is disturbing, the biggest advantage of online employment can’t be overlooked.
A number of people have opted for online businesses especially of buying and selling goods or services using the internet and transferring money and data to carry out these transactions. This refers to the e-commerce business.
The E-commerce business has proven itself to be a profitable business niche and has grown exponentially in recent years. It has generated billions of market transactions. That’s why more and more people are starting to jump into the e-commerce business.
If you are interested in joining the e-commerce business, two of the best e-commerce business models you need to focus on are dropshipping and Amazon FBA.
However, both of them have created confusion of what to choose when it comes to Dropshipping vs Amazon FBA competition. Read on to learn more about the difference between Dropshipping and Amazon FBA
What Is Dropshipping?
Dropshipping is a growing business in the field of Supply Chain Management. The business runs when a small retailer rather than stocking products, take orders from the clients and delivers these orders to the company or manufacturer, or another retailer. These orders are then delivered to the client by the merchant or manufacturer.
It is rather common with expensive products.
The business has gained popularity in recent years because of its easy procedure. A retail website, clients and handling are the only essential requirements. The business has been used by many popular companies and even online auctioned goods are now being distributed through dropshipping.
Fulfillment by Amazon Meaning
Fulfillment by Amazon means an e-commerce service where third-party sellers send their products to an Amazon fulfillment center where goods are stored in a large warehouse for sale.
When an order is placed, an Amazon employee will physically take care of everything including providing storage, handling payment processing, dealing with shippers, packaging, and shipping assistance to sellers.
Considering the popular brand name Amazon, associated with these products, the clients prefer them because of quality assurance. It also allows the sellers an advantage of the latitude that comes with the safety of these warehouses.
Dropshipping Vs Amazon FBA
The best way one can get to decide between two options is to look at its pros and cons.
Pros of Amazon FBA
- Customer Following: Since you are choosing to invest in an already famous brand the stress of getting customers is relieved. You will have a number of customers checking your product without the struggle of convincing them to give your product a try. Through this, the most difficult obstacle faced by every worker can be avoided.
- Customer Service: Since most of your shipping work is dealt with by Amazon workers the quality assurance and customer care are their responsibility, a field in which they have already been unbeatable. Also, the service is time-consuming so you don’t have to worry about that either.
- Profit: As you are buying in bulk, the product is already much cheaper on your pocket. You can put it on twice its price and customers will buy it. Even if your product is not desirable, you can put it on a discount and still gain profit.
- Seller Flexibility: You can buy from one part of the world and sell it into another part, yet being in a different part. One does not have to worry about the visits for assuring product quality or handling.
Cons of Amazon FBA
- The Investment: One of the biggest drawbacks of this business is the lump of initial investment which is comparatively higher. Without the assurance of your product’s demand or its selling success, the investment can be a hurdle. Sometimes, it takes a while longer for the money-making process, thus making it a difficult job.
- Position of The Seller: Once you have invested your position leaves you at the goodwill of Amazon. You might break their strict rules and get your account sealed or may have a similar competition that gets preferred over your product.
- The Products Restriction: Even though there are thousands of articles on Amazon, there are some products that are restricted to be sold. You may not know that your product is not allowed to be on the site unless it reaches the warehouse. Without the details and complete knowledge of such restrictions, your investment can be a huge waste.
Pros of Dropshipping
- The Investment: The best feature of Dropshipping is the fact that it does not require much initial investment. You do not even need a product of your own to start the business
- Easy Management: Since the shipment of the product is the job of the supplier, the management of other formalities is quite an easy job. If you are good with words you can maintain good customer service.
- The Learning: Through dropshipping, you can learn quite well about other online businesses as you are exposed to other aspects of the online world.
Cons of Dropshipping
- Time-consuming: The job can be time-consuming as it requires effort of creating and running a website. Although the investment is not much the process of money-making could be long and tiring unless your website attracts customers and you convince suppliers.
- Costumers: The customers who are well aware of online scams require convincing. This is not an easy job where you have to convince the customer to try your product and then trust you enough to give out personal details like address and credit card details.
- The Products: Now that you have convinced your client, you are at the mercy of the supplier to deliver the exact product that assures quality. Sometimes, the product is out of stock that can affect your reputation as a retailer.
With the online advertisements telling hundreds of success stories through dropshipping and Fulfillment By Amazon, many people are stepping up for pursuing these businesses.
However, if you are a newcomer you must know the details of these, the pros and cons, and your exact business ideas.
Nobody wants to invest in such a thing where they don’t gain any profit or worst suffer loss. With this article, you may find guidance in this Dropshipping vs Amazon FBA conflict and what you want to opt for as both of them has their own grounds.