Is Amazon FBA similar with Dropshipping?
This is the question I am always asked every time I mention Amazon FBA.
The quick answer is NO but there are follow up questions. What are the differences? Which would you prefer?
To completely answer this, let me step back and define first these terms in the context of eCommerce. Amazon FBA and Dropshipping are types of fulfillment. Fulfillment is the process of getting your product from your store/manufacturer to the customers. The process does not stop when the customer received it because there is possibility that it will be returned. Fulfillment should always provide a way for the customer to return the product.
I have already talked about Amazon FBA on my first blog post.
So what is Dropshipping? Dropshipping is a type of fulfillment wherein the product is shipped directly from the supplier or manufacturer to the customer. The supplier will only ship a product if it is sold and paid. The seller will not have inventory and this one of the advantages of Dropshipping. You can also easily set this up because you do not need an upfront capital.
However, since shipping is handled by the supplier, the seller is dependent on them. If the product shipment is delayed, the customers will not have good experience. The seller needs to invest manpower and time to monitor the suppliers and the product shipments.
Having experienced both, I prefer Amazon FBA. It helped our own online store to scale up. I am not saying that Dropshipping is not profitable, sellers do make a profit if they have good system.
If the core business is making your product and brand, Amazon FBA is the solution for your fulfillment requirements. It will allow you to focus on what your strength which is building and creating the product.