Recently I have been surfing on quora where I came across this question,
Should I start selling on Amazon FBA or start a dropshipping?
After spending a couple of sleepless nights thinking about Amazon vs Dropshipping, I came to the conclusion that is; I have an OCD of knowing everything.
That made me conduct in-depth research to go to the basics of this query, which is to find a better platform to get into the ecommerce industry.
Is it private label selling with Amazon FBA or Dropshipping with Aliexpress?
Let’s find out.
I tried to evaluate both programs on some factors that is crucial for the ecommerce business and carefully accessed by keeping the pros and cons of both programs in mind.
Factor # 1: Which one is cheaper to start?
Dropshipping: One of the most significant advantages of dropshipping is that it gives you relief from the hectic of purchasing or manufacturing inventory. You only bought them after your customer makes a purchase.
The expenses in dropshipping business are started by acquiring an online store. Shopify ($29/month plan) is the most famous ecommerce to start a dropshipping business. With Shopify’s product importing App Oberlo, it is very convenient to start your dropshipping store. There are other options as well, such as Wooommerce ($35.88/year).
Marketing and advertisement cost is conditional, well if you spend $5/day for testing the product, it would cost $35/week for P&A.
So, under $500 you can start the dropshipping business right away!
Amazon: To private label product, you need to order the inventory in bulk — that required you to have at least 200 units in your store.
To drive fast traffic, you need to spend further on marketing that includes a free giveaway and coupon codes. Collectively all of that would cost you nothing short of a $1,000 to start an Amazon FBA store.
Answer: Dropshipping business is cheaper to start than Amazon FBA business.
Factor # 2: Which is more comfortable to run?
Dropshipping: It is, without a doubt, an easy way to start but needs a lot of attention to run a successful dropshipping store.
Dropshipping requires a continuous effort in sales and marketing.
You need a constant check on sales and perform topnotch marketing strategies to generate sales.
You are responsible for every single task from ordering the products from Aliexpress to ship it to the customer (not yourself of course) but you must be active in the process to answer the bunch of queries that your customer would be firing away on you which required a great customer service which is definitely not so easy task.
Meanwhile, you’ll need to continue running your Facebook ads to fill up more sales order. Yes, you can hire some assistance once you get the flow but initially, you need to do that all by yourself.
Amazon: Once you made or find the product to sell and ship it to the Amazon warehouse, then there is nothing much more left to do except promotion and advertisement. And why is that because;
Firstly, Amazon fulfillment does all the shipping and inventory packaging hassle by themselves.
When the customer orders your product, Amazon will pick it up from their warehouse and ship it to the customer.
Secondly, Amazon would do marketing work for you as well. You only need to conduct a good launch promotion, once you’ve done it, that means you get higher chances to rank top on Amazon search against your targeted keyword. The visitor searches the keywords, gets into your store, orders it, and Amazon will deliver it to them. While all you have to do is just make sure the availability of inventory. That’s it.
Answer: Selling on Amazon FBA program is much more comfortable and effortless to run than dropshipping.
Factor#3: Which is better to make more money and branding?
Dropshipping: It gives the entrepreneur a relive not to manufacture the product for selling and testing. Dropshippers have the opportunity to test many items without worrying about manufacturing. With Dropsurfing (having multiple suppliers), it becomes a lot easier to make sure the supply of inventory without waiting to manufacture the products.
When you find your winning product, it can scale up your business to earn hundreds and thousands of dollars or even a million dollars in a single year. Since you will be collecting the emails and running Facebook ads by yourself that make the remarketing very efficient with the help of Facebook Pixels and email marketing.
Amazon: In private labeling your products or selling suppliers product, it takes time to scale up the business. You have to go step by step. First, you have to manufacture them then put a private label on them and then ship them to Amazon warehouse.
Amazon also doesn’t give you the customer’s data, that means you could never retarget the potential customer. And, you are selling on Amazon’s website and not yours, that means you do not have any control in scaling up your business as per your desires. Amazon does the upselling of the product, but it is capricious whose product would Amazon upsell, yours’ or competitors.’
Answer: Dropshipping is a sure shot winner in earning more money in a shorter time.
Factor#4: Which is less risky?
Dropshipping: In this, you need to keep testing your products until you find your winning product.
On average, you need to test at least 20 products before you get your hands on that one winning product. But, 20 products are not fixed, It could even take 50, 100 or even more products to get the winning product and without a winning product, chances are lesser to earn big bucks from dropshipping.
So, there are higher chances that you spend the budget on marketing and nothing in return.
Amazon: In this, you already have access to a massive platform from where you can quickly notice what’s working and what’s not. With the product finding tools like Amazon bestseller page and Jungle Scout, you can have complete access to check what selling the best on Amazon. By analyzing the best-selling product of your niche, you can easily get the idea of listing the product and optimizing it.
With the help of data, you can pick your winning product and also launch the product with the help of data (what products need to optimize). This is a successful proven formula, which will surely help to make money with lesser risk.
Answer: Again, we have the obvious answer; Amazon FBA is much less risky than dropshipping.
Well, I know I have not given the specific answer as you thought that I would be able to deliver at the end of this post. But, I have found my answer on what is better, as I evaluated these factors on my priorities.
I will not share my thoughts on what I decided; I will let you choose to choose as per your priorities.
If you want cheap start-up and earn quick money go for dropshipping and if you want a comprehensive and less risky investment go for Amazon FBA private label.