Should I use FBA or Dropshipping on Amazon in 2022?
The dilemma between using Fulfilment by Amazon or Dropshipping has been debated for many years.
Both methods have their pros and cons for online businesses looking to sell products without storing and distributing them themselves.
Before we look at the arguments from both sides, it’s important to understand fully what each system entails.
With Fulfilment by Amazon (FBA), you have Amazon handle the storage, order processes and customer service for the product you have chosen. FBA is by far the most popular fulfillment method amongst Amazon sellers, with a reported 89 percent using the service. This article explains in more detail what is Fulfilment by Amazon (FBA).
Dropshipping is a slightly different business model - you never take ownership of a product, and instead you list it for sale, wait for it to sell, and send the order to your supplier. As a result, it requires only a minimal upfront investment.
Here, Thompson and Holt managing partner Stuart White picks out the positives and negatives of both approaches.
Fulfilment by Amazon Positives
* Amazon handles the picking, packing and shipping of all of your inventory.
* You receive the coveted Prime Shipping badge on your listings automatically, potentially boosting sales significantly.
* With the Prime badge comes customer trust and a sense of reliability.
* If items have to be returned, Amazon deals with what can be a time consuming process.
* Sellers can now use FBA to fulfil order on other sites.
Fulfilment by Amazon Negatives
* Amazon does have stocking limits which could mean you’re not able to send as much inventory as you’d like.
* Costs can become an issue, depending on the size and weight of your product, which is how the figure is calculated.
* You have to pay storage fees on top of the FBA fees, which is worth bearing in mind when making a decision.
* The start-up costs are much lower than FBA and of shipping products yourself, because there is no ordering up front and getting stock in place.
* Because of that the whole start-up process is much more straight forward - basically you just need to find a supplier online and get started.
* Amazon allows Dropshipping on its site although it’s worth checking out their full policy here: https://sellercentral.amazon.co.uk/gp/help/external/G201808410?language=en_GB
* You are totally reliant on the efficiency of your supplier for delivery times and customer service.
* You have no control over the quality of your product because it is being shipped directly from the manufacturer or supplier.
* Because it is easy to get started this way, there is increase competition for similar items, and tracking your rivals will be key.
* Drop Shippers are more likely to receive a Section 3 Drop Shipping IP suspension to reduce this risk consider using ip-alerts.com
Thompson and Holt’s Stuart White added: “It’s important that you look at all angles of this debate before making a decision for your online business, and research will stand you in good stead. But at Thompson and Holt, the pros for FBA outweigh those for Dropshipping, while the latter can also have slow delivery times, and too many issues, including the quality of your product which is absolutely crucial, outside of your control. Given that FBA also brings with it the Prime Shipping badge, and it is the more sensible option for most Amazon businesses.”
If you have received a Section 3 Policy Suspension while Drop Shipping on Amazon, contact Thompson and Holt for a free LiveChat to get your Seller business back online as quickly as possible.