As for the drop shipping vs Amazon FBA debate, the following pros and cons will allow you to clearly check out which business model suits your needs the best.
Pros of Drop shipping
It is important to weigh out the pros of both drop shipping against those of Amazon FBA. Here are the pros of drop shipping that you need to know and how its can be a amazon passive income source.
1. Lesser Investment
Drop shipping doesn’t demand a hefty amount of capital, neither it require a need for a concrete establishment for starting your own business. It is pocket-friendly and saves you from making huge initial investments which can be a huge burden for many new sellers.
2. Lesser Responsibility
When your customer places an order with you on your online store, all you need to do is place the same order with your supplier. Your supplier will not only prepare the order but will also ship it to your customer as well as handle any returns for you.
3. Negligible Risks
As a drop shipping business owner, you don’t need to maintain a gigantic inventory stock. If your transaction did not turn up so great, there is hardly any loss. The only expense you need to bear is to start and maintain your online store.
I’m sure you understand the higher the diversity of anything, the better it becomes. If you began your online store with the job of purchasing your own inventory, it would not have been possible for you to sell a number of products. Why? Simply because you would then have to purchase a few products in large quantities.
This is my favorite aspect of drop shipping. Although every business requires time and dedication, with drop shipping, you won’t have to indulge in product packing or shipping process or managing your inventory. It is an ideal solution for entrepreneurs who desire to save their precious time.
6. Location – Independent
Another amazing benefit of drop shipping is that you don’t have to be in or around a particular area or city. You can smoothly run the operations of your online store by just remaining in touch with your suppliers and customers.
Cons of Drop shipping
Where there are pros, there are cons as well. Here are some cons of drop shipping for a better comparison with those of Amazon FBA.
1. Lesser Profit Margin
Although drop shipping doesn’t demand a high initial investment, the returns in terms of revenue are comparatively less. You cannot sell a $10 product for $50. It makes no sense and the customer will search for other retailers who offer a cheaper price. Do remember, you are not the only one who is selling those products. The market is competitive which is why you should sell a $10 for $15 max. There are drop shipping products that can generate higher profits for you however, the laymen do not have such a great purchasing power, which is why you must be ready to experience fluctuations in profits,
2. Scant Information
There is a possibility that your supplier may not have provided you with detailed product information. Therefore, chances are high that you might not be able to answer all the queries from your customers about the product they show interest in.
3. Customer Service Issues
Drop shipping allows you to enjoy a lot of freedom, but when it comes to answering customer concerns, then you heavily rely on the information provided by your supplier. It is their product and you do not really know whether they have described the product accurately or not.
4. Lack of Good Promotional Deals
As a drop shipper, you cannot offer amazing promotional deals or discounts as you are not purchasing any product in bulk. Nonetheless, you can always offer bundle offers comprising of various products from your online store in order to reap higher sales.
5. Intense Competition
When it comes to drop shipping, competition is quite fierce. There are a huge number of drop shippers who are selling the same products that you are trying to sell. Some may even offer these products at a cheaper price while compensating for their profits from elsewhere.