Amazon FBA vs. Dropshipping: What Are the Differences?

Selling goods on Amazon and the web is a lucrative industry for both major retailers and individual sellers alike.

When it comes to the online retail giant Amazon, third-party sales on the popular platform have spiked from just three percent in 1999 to almost 60 percent in 2019.

Before you start selling products yourself, it’s important to know the difference between Amazon FBA vs. dropshipping, so read on to learn more.

Amazon FBA vs Dropshipping: What is Amazon FBA?

The letters FBA represent Amazon’s fulfillment service offered to sellers. You can provide Prime shipping on the Amazon site and take advantage of Amazon’s unique logistics program. This includes storing items at a warehouse at one of their locations throughout the United States.

Not only does the FBA program handle the storage of your items, but it also handles the shipping, too. This gives you the advantages of utilizing an impressive logistics operation without the overhead cost. Of course, you’ll want to do your own marketing to drive customers to your products, so click here to learn more.

Dropshipping Guide

So when it comes to Amazon FBA vs dropshipping, what’s the main difference? This model requires very little capital, and you’ll source your products from various suppliers, then list them for sale online.

The main difference between the two models is that you don’t purchase dropshipping inventory until a sale is made. Once a customer places an order, your drop shipper will then send them directly to the customer, saving you money and time. This option is ideal for small startups or for those with little capital for an upfront investment.

Which is Better?

If you’re looking to purchase and store items for sale, then Amazon FBA might be the better choice for you. Amazon will store your items, then ship them out from their warehouse. The plan also tracks your inventory so you know how much you’ve sold.

With drop shipping, you only pay for the items you actually sell. If you’re short on cash or new to selling goods online, this might be the better choice for you. Make sure you choose a reputable drop shipper service so you’re protected from fraud or other issues. 

Both of these models can generate some pretty impressive revenue. Dropshipping works well for those with less cash to spend or for those who have a low-risk financial tolerance. If you have no issues buying inventory at scale, then Amazon FBA may be a great choice to help you sell products.

Make Profits with Online Selling

When you think about Amazon FBA vs dropshipping, consider the volume of items you plan to sell. Research each of these options carefully to determine which one will work best for your resale goals and needs.

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