Amazon FBA vs Dropshipping: Which is Best for Your Online Business

There are two main differences between Amazon FBA and dropshipping: with Amazon FBA, you own your products, but Amazon handles storage and shipping for you. With dropshipping, you do not physically own any products, but you can sell items without having to buy them in advance or handle logistics. Choosing the best model depends on your specific needs. Let's look together at the peculiarities of each with practical examples.

What is dropshipping?

Imagine you run an online store that sells phone accessories. You have a dropshipping contract with a smartphone case manufacturer. Whenever a customer buys a case from your site, you do not ship it. Instead, you forward the order to your supplier, who sends the product directly to the customer. You don't have to manage inventory or warehousing. You receive a commission for each sale, such as 20 percent of the sale price.

The positive aspect? You don't need a large initial investment, since you don't have to buy stocks of products in advance. The downside? Your profit margin is often lower and you have less control over the quality of shipping service, which can affect customer satisfaction.

Benefits of Amazon FBA: A practical example

Now, suppose you want to sell technology gadgets on Amazon. With Amazon FBA, you buy a batch of power banks and send them directly to Amazon's warehouses. Once a customer orders one of your power banks, Amazon takes care of everything from packaging to shipping to after-sales customer service.

The advantage? You can offer your products to Prime customers, ensuring fast delivery and reaching millions of users. For example, if you sell a power bank for €30, Amazon FBA allows you to reach a much larger audience than selling only through your website. However, you have to consider Amazon's commissions and storage costs, which could reduce your profit margins.

Dropshipping vs Amazon FBA: Which one to choose?

Let's make a more direct comparison. If you are a small business owner without a lot of capital to invest, dropshipping could be an advantageous solution. You won't have to buy products in advance and you can manage everything from home, or even from a coffee shop, without worrying about logistics. For example, you could start a business selling sunglasses without physically owning even one.

On the other hand, if you already have some capital to invest and want to have more control over your operations, Amazon FBA is a solid choice. If you sell products that require efficient logistics management, such as appliances or clothing, Amazon FBA allows you to quickly scale your business and reach a wider audience.

Which model is right for you?

The choice between dropshipping and Amazon FBA depends on the type of product you sell, prices, and competition in your industry. Dropshipping is perfect if you want to start a business without a large initial investment, while Amazon FBA offers advantages such as better access to Prime customers and more control over prices and service quality.

Breach Prevention and Support for Amazon Account Blocking.

It is important to keep in mind that with both Amazon FBA and dropshipping, violation of Amazon's policies can result in suspension or blocking of your seller account. Some examples of violations include sending defective products, repeated shipping delays, unauthorized product sales, or improper use of descriptions and images. These problems can lead to negative reviews, which affect your customer satisfaction rate, a crucial metric for Amazon. If your account is blocked, you may need to submit an Action Plan to resolve the situation.

We can assist you in the process of reactivating your account, providing professional support to draft an effective Action Plan and ensure that your business is back up and running as soon as possible. Our service provides payment only upon successful unblocking, so you can focus on getting your business back up and running without additional worries.