Hello, dear FBA sellers! Welcome to Jerome Basilio! We are continuing our talk about the two most popular business models on Amazon. We have already talked about differences between these two models in the first part of our blog
. Today, we are going to tell you about the advantages and disadvantages of both Dropshipping and Amazon FBA.
Advantages of FBA
When you are doing FBA on Amazon, you are provided with ton of opportunities for building a profitable business on the platform. Among the main advantages are:
- Time-saving service, since Amazon takes full responsibility for lots of aspects. So, you have lots of free time for growing your business.
- Administration-free operation!
- You are provided with a unique opportunity to establish a brand.
- You can be sure that your customer is provided with high quality customer service.
- You do not have to deal with stressful issues like returns and refunds.
- If you are doing everything by the book, you can turn really good profit from your FBA business.
- As an FBA seller, you are not required to contact your customers.
- You can avoid creating a website.
As you can see, Amazon provides its sellers with a chance to focus on growing their business, and gain access to a worldwide audience. Amazon takes full responsibility for tons of duties such as storing your goods, packaging, and the process of fulfillment. The only thing that you have to do as a seller is finding reliable suppliers and sourcing high-demanded products from them.
Disadvantages of FBA
Unfortunately, FBA also has several negative sides that you should consider before choosing this business model:
- Amazon charges fees for storing and shipping on every sale
- You have to adhere to Amazon rules and regulations
- You can face high competition
- You are allowed to sell your products solely through one platform (Amazon)
Of course, no one wants to pay fees; however, by paying Amazon, you can be sure that lots of nerve-wracking processes will be fulfilled by the platform itself. Additionally, by choosing FBA, you drastically reduce the possibility for being suspended by Amazon.
Advantages of Dropshipping
- Dropshipping provides you with an opportunity for an easy start up, since you should not have much money for launching your dropshipping business.
- Another advantage of dropshipping is that you reduce the possibility of losing your capital in case something goes wrong within your business.
- As a dropshipper, you are provided with tons of product options.
- You can save a considerable amount of time, since you do not have to deal with shipping services.
- You can easily run your online business from each corner of the world.
Dropshipping provides you with an opportunity to launch your business on Amazon without any up-front costs; that’s why this business model is so popular among Amazon sellers. Additionally, you should not worry about unsellable stock since you can switch to another product whenever you want. However, Dropshipping also has several cons that you should be aware of:
Disadvantages of Dropshipping.
- First of all, your profit margins will be quite small.
- You can receive fake information concerning your product from your supplier.
- You are not able to offer any deals or discounts to your customers.
- You cannot negotiate your product’s pricing strategy.
- You cannot build your own brand.
- You have to deal with strong competition.
- You have to contact your customers yourself.
- You can easily get suspended by Amazon.
- You have to create your own website, unless you delegate it to others.
According to the abovementioned, you can see that dropshipping is not the best alternative for FBA, even if it has lots of advantages. That’s because by doing dropshipping on Amazon, you are walking on thin ice since Amazon can suspend your seller account at any time. Therefore, it is better to take a closer look at FBA, since in this case you can be sure that everything in your business is done by the book.
If you want to invest your money in an online business which is going to fly on Amazon, and build a powerful brand, then contact Jerome Basilio’s team. We will build a powerful and profitable business for you on Amazon.