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Dropshipping vs. Amazon FBA

Advice from a top Amazon Seller Consultant and Amazon Agency.

Inventory management, inventory forecasting, and order fulfillment are a few responsibilities that can take up a lot of time for Amazon sellers. But did you know that there’s a business model that enables you to sell products on Amazon without actually handling the products you're selling? It's a business model known as dropshipping, and it's one that can offer quite a few advantages.

With that said, though, there are a number of important things to consider before you get started dropshipping on Amazon. From SupplyKick’s perspective, there is no better option, larger warehouse network, or trusted fulfillment process than Fulfillment by Amazon (FBA), so it’s important to weigh your options thoroughly before making a decision, especially as Amazon rolls out new features such as Buy with Prime.

In this Amazon dropshipping guide, we'll cover everything you need to know about the process, including:

  • How dropshipping compares to FBA
  • How to dropship on Amazon
  • How to find dropshipping suppliers
  • How to fine-tune your dropshipping strategy
  • If Amazon dropshipping is profitable for you and your business

How Does Dropshipping Differ From Amazon FBA?

Let's dive into how this unique business model works and how it differs from FBA. Dropshipping and Amazon FBA are similar in the sense that another party handles fulfillment for your products; however, they have some key differences as well. We’ll start with the benefits of both, and then break down differences.

Key Benefits of Amazon FBA

There are several benefits that make Amazon FBA a great choice for many Amazon Prime sellers:

  • Products are automatically eligible for free Prime Two-Day Shipping
  • Multi-channel fulfillment and Buy with Prime
  • FBA Export enables you to sell in 100+ countries
  • On-time delivery is guaranteed for customers via Prime
  • Amazon takes responsibility for delivery issues
  • Returns are managed by Amazon (except for certain categories)

Key Benefits of Dropshipping

Like FBA, there are several benefits that make dropshipping appealing to sellers:

  • Little initial investment
  • No need for a warehouse
  • Inventory tracking isn’t necessary
  • Potential scalability
  • A third party handles all aspects of shipping

The major difference between these two fulfillment options is that FBA requires you to ship your products in bulk to Amazon, while dropshipping suppliers handle all components of fulfillment and do not require any on-hand inventory on your part.

Drawbacks Related to Dropshipping

While there are benefits to dropshipping and FBA, there are potential issues and problems you may encounter with each method: 

  • With dropshipping, you may encounter issues that are difficult to resolve, such as shipping delays, returns, and stockouts. As a seller, you will be placing a lot of trust in your supplier, so you should determine how these issues will be handled before entering into an agreement with them.
  • With FBA, some sellers shy away from the fees associated with the program. Having Amazon take responsibility for shipping, storage, and returns does come at a cost, and it’s important to check your numbers to ensure that joining FBA is profitable for your business. Additionally, there are occasional issues with stock-in and processing times after your products arrive at a fulfillment center.
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How to Dropship on Amazon

Once you have found a quality product that you would like to sell under your own brand, you’ll create an Amazon listing for that product. Rather than ordering bulk quantities of the product that you’re selling, when a customer finds your Amazon listing and places an order, you’ll return to the dropshipping supplier's website and place an order for the product using the customer's shipping information. 

The supplier then picks, packs, and ships the product to your customer in unbranded or custom-branded packaging, allowing you to essentially become an Amazon wholesale seller.

You will need an Amazon Seller Central account to get started, and while there are no specific Amazon dropshipping fees to be concerned about, you will have to choose and purchase a selling plan. You can read Amazon's fee schedule for the cost of their plans and per-item fees. 

It’s important to ensure that you sell products under your own brand if you dropship, and that you are listed as the seller of record. You should check Amazon’s dropshipping policy before you begin selling to ensure that you are abiding by Amazon’s guidelines.

So long as you follow the dropshipping policy and meet all Amazon seller requirements, dropshipping is a strong option for those who want to venture into the world of selling products on Amazon (and if you’re new to Amazon, this beginner’s guide is for you).


Dropshipping Suppliers for Amazon

Dropshipping is a popular business model, and there's a good chance you've purchased a product that was dropshipped at some point. Since dropshipping is touted online as a way to increase Amazon sales and boost sales on other marketplaces, plenty of dropshipping suppliers have emerged, hoping to earn your business.

As a dropshipper selling on Amazon, it’s imperative to work with high-quality dropshipping suppliers. Since you won’t be physically interacting with or stocking the products yourselves, you want to work with suppliers who are reliable, genuine, transparent, highly efficient, and communicate well with you and your team. You also want to be sure their shipping and fulfillment timelines are comparable to Prime shipping, as this will likely impact your seller feedback and customer reviews.


Amazon Dropshipping Courses

If you are looking to gain more knowledge about dropshipping, you may have searched for online courses that go over how to start and run your business. Having so many options to choose from can make it challenging to find the right course for you. 

When you start your search, it's a good idea to steer clear of any Amazon dropshipping course that promises overnight wealth. Dropshipping is not a "get rich quick scheme," and it requires a substantial amount of work and an Amazon marketing strategy to turn into a profitable business.

Instead, the best Amazon dropshipping courses are those that provide a realistic picture of what it will take to create a profitable dropshipping business. Along with covering how to find dropshipping suppliers and set up your dropshipping business, these courses will also cover how to market your products and set them apart from the competition. They can also address questions about how to handle returned products and how to establish a beneficial brand identity. They may also recommend certain services, like an Amazon marketing agency and an Amazon PPC agency, for more complex strategies and issues that you may not want to tackle on your own.

A quality Amazon dropshipping course won’t shy away from the fact that dropshipping on Amazon requires a lot of work and strategy and will seek to provide you with the comprehensive knowledge you need to make your business successful.


Is Dropshipping on Amazon Worth It?

This isn't an easy question to answer. Amazon dropshipping incomes vary wildly from seller to seller. This means that even if you are able to find data on the average dropshipping income, it probably won’t mean much to you personally given how much that figure is impacted by sellers on both extreme ends of the income spectrum.

We know firsthand that selling on Amazon is a lot of work, and working with an Amazon seller consultant like SupplyKick lets you focus on building your brand, while we take care of your day-to-day Amazon management needs and more.

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