If you’re starting your dropshipping business and not sure whether to choose Amazon FBA or Shopify, this comparison guide will help you.
In this guide, I will do a deep comparison between Amazon FBA vs Shopify platform for dropshipping in terms of:
- How each platform works (with pros and cons)
- Fulfillment and shipping advantages
- Platform charges and fees
- Features, integration options, and control
Let’s start this.
👉 Before you start, I have an important announcement for you:
Qikink allows you to start your dropshipping business at no cost and even integrates with Shopify— which means you can design, list, and sell your products to customers with Qikink. Qikink handles the delivery and shipping tasks for you so you can spend time on finding the best dropshipping products.
What is Amazon FBA?
Fulfilment by Amazon aka Amazon FBA is a fulfilment service by Amazon, helping businesses to store, pack and ship customer orders easier and faster.
In simpler terms, think of Amazon FBA as a storage and delivery service for online sellers. Instead of storing and shipping them yourself, you send your products to Amazon’s warehouses. When a customer orders, Amazon picks, packs, and ships it to the buyer, even handling returns and customer service.
This frees you up to focus on finding and selling products. Plus, using FBA often means faster delivery and access to benefits like Prime shipping, potentially boosting your sales.
How does Amazon FBA work?
Here’s a simple breakdown of how Amazon FBA works.
⤷ You send your products to Amazon: You package and ship your products to one of Amazon’s fulfilment centres.
⤷ Amazon stores your products: They safely store your items until a customer orders them.
⤷ Customer orders, Amazon fulfils: When someone buys your product, Amazon picks it from the shelf, packs it, and ships it to the customer.
⤷ Amazon handles customer service: They answer any questions customers have about your product and manage returns.
Amazon FBA pros and cons
Here is a side-by-side comparison of the pros and cons of using Amazon FBA to manage your online store.
Pros | Cons |
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What is Shopify Dropshipping?
Shopify dropshipping is a service provided by Shopify, where the e-commerce platform lends you inventory and fulfills your logistics. Shopify dropshipping is a business model where you run an online store using Shopify’s platform, but you don’t hold any inventory yourself.
Essentially, you act as the middleman, connecting customers with the supplier’s products. You handle marketing, customer service, and order processing, while the supplier takes care of inventory, packaging, and shipping.
Overall, Shopify dropshipping can be a way to start an online business with low upfront costs. But it requires careful planning, effective marketing, and competitive pricing to succeed.
How does Shopify dropshipping work?
Here’s how Shopify Dropshipping works.
⤷ You list products in your Shopify store: You choose products to sell from a dropshipping supplier, add them to your store with descriptions, and set your own prices.
⤷ Customer places an order: When someone buys a product from your store, you receive the order notification.
⤷ You forward the order to the supplier: You purchase the product from your dropshipping supplier at their wholesale price.
⤷ The supplier ships directly to the customer: The supplier packages and ships the product directly to your customer, often with their own branding.
Shopify dropshipping pros and cons
Let’s weigh the pros and cons of Shopify dropshipping to learn if it is a good business model for you or not.
Pros | Cons |
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However, all of these cons can easily be fixed if you partner with the right supplier. |
Amazon FBA vs Shopify— Fulfilment and Shipping
If you are still confused between Amazon FBA and Shopify dropshipping let us tell you more about their order fulfilment and shipping procedure. We have also attached public reviews and experiences for both users so you can judge better.
1. Fulfilment and Shipping on Shopify
Shopify makes dropshipping a viable option for online businesses through its platform and app integrations.
Here’s how you can start it.
1. Find a dropshipping supplier:
Research and identify reliable dropshipping suppliers who offer products you want to sell. Consider factors like product quality, shipping times, and minimum order quantities.
We recommend picking suppliers who have a platform integration with Shopify for an easier experience. For example, Qikink’s seller dashboard has integrated Shopify, so you can list your products directly.
2. Set up your Shopify store:
Create your online store using Shopify’s user-friendly platform, design your storefront, and configure essential settings.
3. Import products:
Connect your store to your chosen dropshipping suppliers and easily import product listings with descriptions, images, and pricing.
With suppliers like Qikink, the process becomes easier. But apart from that you need to use third-party tools like DSers, Sprocket etc.
4. Market your store:
Implement marketing strategies to drive traffic to your store and generate sales. This could involve social media marketing, search engine optimization (SEO), or paid advertising.
5. Process orders:
Once a customer places an order, you purchase the product from your supplier at their wholesale price and pay any additional shipping fees. The supplier then ships the product directly to your customer under your brand name.
The benefits of dropshipping include that it requires low upfront cost, and gives scope of scalability without physically managing your products.
2. Fulfilment and Shipping on Amazon FBA
Fulfilment by Amazon (FBA) is a service where Amazon handles the storage, picking, packing, shipping, and customer service for your products sold on their platform. You simply send your inventory to Amazon’s fulfilment centres, and they take care of the rest.
Here’s the process of enrolling for Amazon FBA
- Enrol in FBA: Sign up for FBA through your Seller Central account.
- Prepare your products: Package your products according to Amazon’s guidelines, including labelling and barcodes.
- Create a shipping plan: Use Seller Central to create a shipping plan, specifying the fulfilment centre and quantity of each product you’re sending.
- Ship your inventory: Print the provided shipping labels and send your products to the designated fulfilment centre.
- Order fulfilment: Once a customer orders your FBA product, Amazon picks, packs, and ships it to the customer.
The benefits of using this service include reduced workload, faster delivery and better customer satisfaction. However, you still need to be mindful of certain things.
- There are various FBA fees, including storage, fulfilment, and pick & pack fees. It’s crucial to calculate these fees to ensure profitability.
- You’re responsible for managing inventory levels and ensuring you have enough stock to meet demand. Running out of stock can negatively impact your sales and customer satisfaction.
- Not all products are eligible for FBA. Check Amazon’s guidelines to ensure your products are allowed.
Let’s take a look at what previous FBA users have to say about it.
You can read more such reviews and experiences of FBA on Quora.
To learn more about Amazon FBA, you can also check out Amazon’s official website.
Amazon FBA vs Shopify— how much does it cost?
Let’s do a cost breakdown to understand how much you need to invest in each of the business models.
1. How much does it cost to start on Amazon FBA?
It is difficult to mark down the exact cost as it varies and depends on factors like what products you sell, the volume of sale etc. However, The cost of using Amazon FBA in India can be broken down into three main categories:
- Amazon FBA Fees: These include fulfilment fees and storage fees.
- Referral Fees: A percentage of the selling price charged by Amazon on each sale.
- Product Cost & Other Expenses: This includes the cost of your product itself, packaging, shipping it to Amazon, and any other business-related expenses.
Here’s a detailed breakdown of each.
1. Amazon FBA Fees:
- Fulfilment Fees: These cover picking, packing, shipping, and customer service for your orders. They typically range from ₹20 to ₹70 for standard-sized items, with additional fees for oversized, heavy, or bulky items.
You can find more details and use the fee calculator on Amazon Seller Fee Calculator: https://sell.amazon.in/fees-and-pricing.
- Storage Fees: These are charged monthly based on the cubic feet of space your products occupy in Amazon’s fulfilment centres. Rates start around ₹45 per cubic foot.
You can choose between selling plans of $ 0.99/ item sold or $ 39.99/ month based on what suits you better.
2. Referral Fees:
This is a commission Amazon takes on each sale. It varies depending on the product category, typically ranging from 6% to 45%. You can find the specific fee for your category on the Amazon Seller Fee page.
You can learn in detail about their referral fee on their official website.
3. Product Cost & Other Expenses:
This expense includes-
- Product cost, which is the cost of acquiring or manufacturing your product.
- Packaging cost, as you’ll need packaging that complies with Amazon’s guidelines.
- Inbound shipping costs for getting your products to Amazon’s fulfilment centres. There’s a free trial for new sellers with limitations.
- Other expenses which could include marketing, advertising, or any other costs associated with running your business.
Suppose you sell a product worth ₹1000 through FBA, this is what the expense and profit might look like.
Note: Please note that this is an arbitrary representation and the profit percentage can vary greatly depending on factors like production cost and referral fee.
2. How much does it cost to start Shopify dropshipping?
The cost breakdown for Shopify dropshipping in India differs slightly from Amazon FBA.
The two main expenses you’ll have are the Shopify fees and dropshipping costs. Let’s take a closer look at both.
1. Shopify Fees:
- Shopify Plan: Monthly subscription fees for your online store. Options range from the Basic Shopify plan at ₹1,994 per month (yearly plan: ₹1,499) to the Advanced Shopify plan at ₹30,164 per month (yearly plan: ₹23,332).
These plans offer various features like unlimited products, online store builder, abandoned cart recovery, and support for multiple sales channels.
- Transaction Fees: Shopify charges a transaction fee for each sale, depending on your chosen plan. The Basic Shopify plan has a 2.0% fee, while the higher tiers have lower fees (Standard Shopify: 1.0%, Advanced Shopify: 0.5%).
2. Dropshipping Costs:
- Product Cost: The price you pay the dropshipping supplier for each product. This cost can vary depending on the product, its quality, and the supplier you choose.
- Supplier Fees: Some dropshipping suppliers may charge additional fees for services like order processing, packaging, or custom branding.
But with Qikink, there is no such thing. You also don’t need to worry about minimum order quantity (MOQ).
Apart from these two, you might also have some other expenses like registering your online store’s domain name. This typically costs around ₹500-₹1,000 per year.
Plus if you choose to go with a premium theme on Shopify for a more professional look, that would cost you extra.
The marketing and advertising costs also fall under the optional costs and can vary depending on your strategies.
Amazon FBA vs Shopify dropshipping—which one is better?
If you are looking for a dropshipping solution, Shopify dropshipping would help you better compared to Amazon FBA. However, the answer can still vary depending on your business and needs.
1. Amazon FBA is better than Shopify dropshipping when:
You are the supplier/ manufacturer or want more control over your product. For example, if you own a business of homemade gluten-free snacks and want to focus solely on your production, you should go with Amazon FBA.
You simply ship your products to their warehouse and they’ll handle the rest, while you only need to think about keeping your product in stock.
2. Shopify dropshipping is better than Amazon FBA when:
You are reselling products and don’t want to get into the hassle of inventory management, packing and shipping.
For example, you own a POD t-shirt brand. You can set up your online store on Shopify and integrate it with your supplier and fulfil your orders without doing anything.
You upload your designs and specifications once and list them on Shopify and your supplier takes care of everything else whenever you receive an order.
It is great if you are inexperienced or just want to focus on the product aspect of your business.
Can I use both Shopify and Amazon FBA?
Yes, you can use them both separately. However, since March 31, 2023, Shopify has discontinued its facility of built-in FBA integration.
But there’s still a way. You can still install an app from the Shopify App Store and use it for managing Amazon’s Multi-channel Fulfilment orders directly from Shopify.
This means, your supplier will pack and ship your products to Amazon’s warehouse.
If you are planning to start a dropshipping business and are curious how all of this is going to work, you can experiment for free by creating an account on Qikink.
Final words
Amazon FBA and Shopify dropshipping are two popular e-commerce models. Both these models have pros and cons, and choosing the right model depends on your business needs and goals. Shopify is a better option for businesses wanting complete online store control. In comparison, Amazon FBA is a better option for businesses that want to benefit from Amazon’s reputation and fulfillment services. Whatever option you choose, make sure that you do your research and select the e-commerce model that suits your business needs.
Read more
- How to Start Dropshipping on Shopify: A Step-by-Step Guide
- Your Ultimate Guide to Shopify Dropshipping: Building a Profitable Online Store with Minimal Risk
- The Ultimate Shopify Dropshipping Guide
- Shopify vs. WooCommerce for Dropshipping
- How to Start Print on Demand with Shopify: A Step-by-Step Guide for Success
Frequently Asked Questions
What is FBA (Fulfillment by Amazon), and how does it differ from Shopify dropshipping?
FBA is a fulfillment service offered by Amazon that allows businesses to store their products in Amazon’s warehouses, and Amazon takes care of the order fulfillment process. On the other hand, Shopify dropshipping requires businesses to handle order fulfillment themselves.
What are the advantages of using FBA as an e-commerce model compared to Shopify dropshipping?
The advantages of using FBA include Amazon’s reputation and customer trust, fast and reliable shipping options, and customer service. FBA also provides businesses with a global platform to sell their products.
What are the key benefits of Shopify dropshipping over FBA for certain businesses?
Key benefits of Shopify dropshipping include complete control over the online store, flexibility in pricing plans, and integration with third-party apps. Shopify is also a good option for businesses that sell niche products.
How do I determine which e-commerce model is the right choice for my specific products and goals?
To determine which e-commerce model is the right choice, businesses should consider product type, budget, target audience, and long-term goals. It’s important to weigh each option’s pros and cons before deciding.
What types of products or businesses are better suited for FBA, and which ones are more compatible with Shopify dropshipping?
FBA is a better option for businesses selling products with high demand and competition. Shopify dropshipping is a better option for businesses that sell niche products or products with low demand.
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