What is Amazon FBA: A Beginner’s Guide

Basically, when it comes to trading on Amazon, there are two fulfillment options:

• Amazon FBA
• Amazon FBM

Amazon (FBA) stands for Fulfillment by Amazon. It is a service that takes the responsibility of product warehousing and shipping process for the business along with order fulfillment.

Amazon FBA, enables the eCommerce store owners to send the product to the Fulfillment center instead of their own warehouse. The order is checked, packed and shipped from Amazon Fulfillment center. This reduces the hassle of the store owner. The order fulfillment requirement is the responsibility of Amazon. This is a popular model among sellers. If you sell private label products or resell products wholesale, it is a great way to run your business.

What is Dropshipping?

The other model of Amazon is Fulfilled by Merchant (FBM), where there is a  choice either the store owner or a third party will be responsible to handle the storage and order fulfillment. 

Dropshipping falls under Amazon (FBM)

In dropshipping the store owner will receive the order, and will directly place an order with the wholesaler. The wholesaler will fulfill the order by shipping the items directly to your customer. It is one of the easiest business models for entrepreneurs as it requires no investment. 

The most important thing is to learn about listing and advertising your products through 

Shopify store, or Amazon, eBay marketplace, or any other e-commerce platform. It enables you to sell specific products that are stored with wholesalers at different locations.The store owner needs to pay for the product once the payment is received by the customer. One has to plan his work strategically with the right suppliers for a successful e-commerce business.

Amazon FBA vs. Dropshipping: Know the Difference

Both the platforms are of Amazon, however the way they work is quite different. The responsibility of logistics lies with a third party. Even adapting each pathway has its own pros and cons. We will be diving deep into the pros and cons of Amazon FBA.

Pros and Cons of Amazon FBA

Amazon FBA provides you with more control over your online store than dropshipping. Other benefits include:

Brand Recognition

Your brand will get recognized through Amazon in a short span of time.

Accommodating Vast Audience

Online E-commerce enables one to deal with a vast audience.

No Hassle

The responsibility of logistics is with Amazon. This leads to fast delivery without the hassle of logistics.

Management Service

Smooth customer service management by the Amazon team.

Less Inventory Struggle

Less struggle with inventory.

Fast Growth of Business

Growth of your business with ease with Amazon FBA.

Cons:

Some of the drawbacks of Amazon FBA might include:

High Competition

The competition is high

Solo Channel

There’s only a solo channel to sell.

Lack of Customer Information

The customer information is not provided.

Strict Amazon Rules

Strict rules has to be followed by store owners for Amazon FBA

Amazon FBA allows you to fulfill orders placed on Amazon only. They have the Multi-Channel Fulfillment (MCF) option, which allows you to fulfill the orders on any of your channels, also your own website, through your Amazon Seller Central account.

Lastly, the entire process from order placement to customer delivery is handled through Amazon’s platform. They have all the details of customer data, that includes email addresses, through marketing strategy such as newsletter signups or social media. 

Are you still confused between Amazon FBA vs Dropping? Well, Amazon FBA is beneficial for the business but the challenges that a business might face using FBA should be kept in mind while choosing the method. Let dive into the pros and cons of Dropshipping that will help high competition make decisions.

Pros and Cons of Dropshipping

Dropshipping is one of the most convenient platforms for E-commerce entrepreneurs. As this requires less investment but still there are few things you need to consider when deciding if you should go into drop shipping or not. Let’s go over the pros and cons.

Pros of Dropshipping

No Investment

Dropshipping attracts as there is no investment required as compared to other business models such as private label or wholesale. No bulk purchase of products and millions of spending.

Easy to Startup

It is easier to get started with dropshipping. As you can find products from a supplier and list them on Amazon immediately. Amazon allows sellers to dropship but be sure to follow their dropship policy.

Low Risk Business

The store owner does not have to purchase the stock prior to the order. It helps from the risk of stucking the investment.

Flexible

Dropshipping method allows the storeowner to work flexibly from anywhere. You don’t need a physical space to manage your business. All you need is the contact with suppliers and the platform through the internet and phone. Dropshipping E-commerce is an excellent business for a digital literate person.

Cons of dropshipping

Since it is much easier to start dropshipping, there is also much more competition.

Slow delivery

The logistics are not in the hand of the store owner. There are chances for slow delivery depending on the wholesaler you are working with.

Lack of quality control

The products you’re selling are shipped directly from the manufacturer to the client. This way makes it difficult for you to control the quality of the product each time. It is suggested to order samples from your supplier before you start to work with him.

Either you aim to establish your business on Amazon FBA or Dropshipping. The best practice is to begin with a team of professionals. We at Worth IT Solution offers a wide range of services from Amazon Seller Consultation, Amazon Advertising, Amazon Private Label, Amazon EBC and Storefront, Amazon Dropshipping and various other marketing services.

Contact us to discuss your business idea and the team of our professionals will help you to scale your business on the next level. Let us learn and grow together.

Which Platform Shall I Choose For My Business?

Both platforms provide an excellent opportunity to establish and grow your business. However, Amazon’s FBA gives you more control over your customers with order fulfillment. It allows excellent product quality and delivers within the times.

The Amazon FBA is responsible for supplying and preparing all inventory to be stored at the Amazon fulfillment center before it’s sent to customers. This ensures the product quality before delivery. However, this option is not available with dropshipping.  Amazon FBA provides fast delivery and takes care of returns and customer service requests.

Dropshipping is suitable for new entrepreneurs in the market of e-commerce industry. It gives the perks to manage your business with minimal efforts and create brand recognition. Amazon FBA vs Dropshipping both are beneficial models. However, choose the model according to your resources.

Frequently Asked Questions

How does dropshipping work?

Dropshipping works when a customer places an order through your website, the sales automation software routes to your dropshipping wholesaler to be packed and shipped. The order will be delivered to the customer and payment will be made to the wholesaler after delivery.

Is dropshipping a profitable business?

Yes, dropshipping can be profitable for entrepreneurs. It is a low-risk business model that enables trading without incurring huge amounts. It is a suitable and profitable model for beginners who aim to start their ventures.

Amazon FBA vs Dropshipping, which is better?

Amazon FBA vs Dropshipping! Both are popular means these days. It entirely depends on  the business and its goals. Amazon FBA  is most suitable for online wholesale store owners. On the other hand, if you aim to create and grow your brand with less hassle of inventory and minimal resources dropshipping is for you.