Turbo-Charge Your Revenue!
You’ve probably already considered selling on Amazon but its way easier than you think.
Call Us Now
If you intend to start an ecommerce business, you may already be working on your business plan and figuring out which ecommerce model will work best for you. You may have stumbled on two top-rated ecommerce business models - dropshipping and Amazon FBA.
Both models have become very successful in ecommerce and are now considered the most preferred, especially for startups.
With both models, sellers can transfer the responsibility of storing goods and fulfilling orders while focusing on other aspects of their business.
But as a startup, how do you choose between dropshipping and Amazon FBA? Which will work best for your business?
To make the right decision, it is important to know what both models are and how they work.
In this article, we will explore dropshipping vs Amazon FBA differences as well as their pros and cons to help you decide which will work best for your ecommerce business in 2025.
Dropshipping is an ecommerce business model where the business owner does not keep physical inventory or purchase stock in bulk. As an ecommerce business owner, you buy products from a wholesale company or manufacturer and have them send the products directly to your customer. All you have to do is advertise your products on an online marketplace like Shopify, eBay, or other suitable platforms. This ecommerce model allows you to operate without the need for a physical warehouse or inventory management system. You can focus on other aspects of your business, such as marketing, customer service, online store management, and so on.
When a customer places an order, the retailer forwards the order details to a third-party supplier, who then ships the product directly to the customer. You charge your customer while the wholesale company charges you. You won’t have direct contact with the products you sell. This means you only get to pay for the product when you get paid.
Over the years, dropshipping has been seen as a fast and easy way to make money. However, just like any ecommerce business model, you need to devise strategies on how to generate more income for your business.
Amazon FBA has built quite a reputation for being one of the best fulfillment networks.
FBA, which stands for Fulfillment by Amazon, is a service that allows online retailers selling on Amazon to simply send their products to an Amazon FBA warehouse and have Amazon handle the rest. All you need to do is enroll your products in the FBA program and have your products stored in Amazon's fulfillment centers.
When your customer places an order on Amazon, Amazon picks, packs, and ships the product from the FBA warehouse directly to your customer. In addition, they handle customer service and even returns. This model is perfect for business owners looking to cater to a large audience. It is also known for being incredibly scalable.
There are a few differences between dropshipping and Amazon FBA.
With Amazon FBA, you do not have to handle customer service or product returns. On the other hand, with dropshipping, you may have to deal with returns and customer queries yourself.
One major difference between dropshipping and Amazon FBA is in the sourcing and payment of inventory. With FBA, you have to source and pay for your inventory (which will be sent to Amazon fulfillment centers) ahead of time. On the other hand, with dropshipping, you never have to take ownership of your inventory. Payment is made to your supplier after accepting confirmed orders.
With both dropshipping and Amazon FBA, you are exempted from the responsibility of order fulfillment. However, you are responsible for marketing your products and taking customer orders.
To help you choose the right business model for your ecommerce business, let’s look at some of the pros and cons of dropshipping vs Amazon FBA.
What products are better for dropshipping or Amazon FBA? Well, this depends on various factors, including your budget, your desired level of control, market access, and the nature of the products you intend to sell. However, let’s look generally at products that are best suited for dropshipping and Amazon FBA.
Now to the question you've been waiting for. Which is better in 2025? Which is right for your business? Dropshipping or Amazon FBA?
As we've explained earlier, Amazon FBA is a fulfillment service where sellers can hand over the responsibility of picking, packing, and shipping orders to Amazon. With this service, you can focus on other aspects of your business while Amazon handles order fulfillment and even customer service. You can monitor your orders on your Amazon Seller Central account and know when you need to restock at the FBA warehouse.
What's more, you can leverage Amazon’s large customer base to get your products in front of millions of customers across the globe, increase sales, and grow revenue with Amazon. However, it is important to note that all these benefits come at a price.
You will need to pay Amazon tons of FBA fees to enjoy this convenience. If you have enough capital and want to expand your ecommerce business, Amazon FBA may work best for you. It is also important to calculate how much Amazon will be getting on each sale and ensure your profit margin is positive.
On the other hand, dropshipping is a low-risk, low-capital business model that allows you to start your ecommerce business even without capital.
You can run your business from any part of the world and diversify your products with little investment. If you are just testing the waters, perhaps you just started your ecommerce business, and you may want to play it safe with dropshipping.
While dropshipping may seem like the cheapest and easiest business model, it requires strategic planning. You need to put in the work to pick the right products to sell and find reliable partners that can deliver the goods to your customers promptly and with few mistakes. Dropshipping takes away the responsibility of handling or even seeing your products. However, the downside to dropshipping is the high competition and low profit margin.
With both business models, you don't get full control of your business. If you are using the FBA service, you will need to comply with Amazon's rules and regulations.
With dropshipping, a large part of your business will be controlled by your supplier or partner, coupled with little flexibility and low profit margins.
In choosing between dropshipping and Amazon FBA, it all comes down to how much capital you have and the risk you are willing to take.
While Amazon FBA has similar benefits to dropshipping, Amazon will not be responsible for purchasing inventory. You cannot directly use Amazon FBA for dropshipping in the traditional sense because Amazon FBA requires sellers to purchase and send inventory to Amazon's fulfillment centers, whereas dropshipping involves ordering products from a supplier as they are sold to customers without the seller ever holding the inventory. Amazon only stores already purchased inventory in their FBA warehouse.
Can you dropship on Amazon? While you cannot directly use Amazon FBA for dropshipping, you can dropship on the Amazon platform.
With Amazon dropshipping, the seller lists products on Amazon and works with a supplier who agrees to fulfill orders directly to customers. When a customer places an order, the seller forwards the order details to the supplier, who then ships the product directly to the customer. However, you will need to abide by the following rules:
You can check out Amazon's dropshipping policy.
Pros
Cons
So that's it! The decision is now up to you. If you are looking to grow and expand your business, considering the high cost and risk, you can use the Amazon FBA model. On the other hand, if you want to play it safe, dropshipping could be just the right model. However, you need to consider several other factors in your business. You can go through the pros and cons of each model as listed above and make an informed decision.
The better between dropshipping vs FBA depends on factors like your business goals, budget, and risk tolerance. While Amazon handles storage, shipping, and customer service, FBA fees can eat into your profits. Dropshipping involves low startup costs, which means you don't need to buy inventory upfront. However, you have less control over your product quality and stock availability.
In general, if you have capital and want a scalable, long-term Amazon business, FBA is better. If you want a low-risk, low-investment model and are okay with lower margins, dropshipping might be a better starting point.
No, Amazon does not allow dropshipping via FBA (Fulfillment by Amazon). FBA is designed for sellers who own their inventory and send it to Amazon’s fulfillment centers, where Amazon stores, packs, and ships the products on their behalf.
Amazon allows dropshipping, where sellers are responsible for their own shipment. Even here, sellers must abide by strict rules. For example, you cannot purchase products from another retailer (e.g., Walmart) and have them shipped directly to the customer. You will need to comply with their Dropshipping Policy to avoid account suspension.
Several business models are more profitable and sustainable than dropshipping because they offer higher margins. Some of these business models include:
Amazon and Shopify can both be highly profitable, but the best choice depends on your business model, marketing skills, and risk tolerance.
Amazon is more profitable in the short-term because it get instant access to millions of buyers without spending much on marketing. However, Amazon fees eat into profits, and you have less control over branding.
On the other hand, Shopify is more profitable in the long term if you build a strong brand. You own your customer data, set your own prices, and avoid high marketplace fees.
To make the most of your selling experience and increase profits, you can sell on both Amazon and Shopify. You can use tools like Sellbrite to sync inventory across Amazon and Shopify.
You’ve probably already considered selling on Amazon but its way easier than you think.
Call Us Now