If you are thinking about launching a dropshipping business, then you need to choose an eCommerce platform to host your online store.
While there are many eCommerce platforms on the market, arguably the two biggest and most popular ones are Amazon and Shopify.
Each with their own unique benefits and, of course, a few drawbacks, let’s take a closer look at both of these eCommerce giants and find out which one is better for eCommerce businesses.
What is Droppshipping?
Before you explore the best platform for dropshipping, it can be useful to delve a little deeper into what it entails and the benefits of this specific type of business model.
To the uninitiated, dropshipping enables entrepreneurs to sell products that are manufactured, warehoused, and shipped by a third party, known as dropshippers.
In most cases, you are only charged when you make a sale which makes this a great business model for those who are worried about investing in too much stock or who want to grow their customer base gradually.
If you are new to selling online, then dropshipping is probably your best option, as there is less risk involved, and you can try out new product ideas to see what works and what doesn’t without having to make any upfront investments.
Now, you are ready to explore the pros and cons of Amazon and Shopify for your dropshipping business so that you can pick the perfect platform for you and your business goals.
Dropshipping on Amazon
As the largest online marketplace in the world, Amazon is incredibly popular with dropshipping businesses and with good reason.
When dropshipping on Amazon, there is definitely money to be made as long as you know what you are doing.
The first thing you need to be aware of about Amazon dropshipping is that it is completely free. As mentioned above, you only need to pay your dropshipping provider when you make a sale which means that there are zero inventory costs involved.
Furthermore, Amazon also offers an individual seller’s account, which allows you to dropship products onto any Amazon listing with no fees. In fact, compared to pretty much every other eCommerce platform on the market, Amazon is arguably the cheapest for Amazon sellers who are looking to get started.
How Does Amazon Dropshipping Work?
Getting started Amazon dropshipping is simple. Amazon will partner you up with a dropship wholesaler and then they will ship products directly to your customers. This is also known as Fulfillment by Amazon (Amazon FBA).
In terms of price, you determine a price point with the selected wholesaler that you are both happy with and then you are good to go.
Once you have this agreement in place, this is what happens next:
- The consumer places an order on Amazon for your product
- You forward the Amazon shipping details to your supplier and pay the agreed upon price for the product
- The dropship supplier packages and ships the order to the customer
- You keep the difference between the selling price and the wholesale price, minus Amazon transaction fees
It is worth noting that Amazon has a strict code of conduct that you must adhere to, or you risk no longer being allowed to sell on Amazon.
What Are the Benefits of Amazon Dropshipping?
There are many reasons why you should choose Amazon as the dropshipping platform for your eCommerce business.
1. Amazon is a massive marketplace
If you want access to a vast number of potential customers, then Amazon is the obvious choice. In fact, Amazon has over 50% of the market share for the entire eCommerce sector, meaning no other platform will deliver more users.
2. Amazon dropshipping is simple to set up
If you are new to dropshipping, then you will be pleased to hear that it is very easy to get started with this on Amazon. You do not need any specific technical skills or your own website. All you need to do is set up an Amazon seller account, and you can immediately start selling.
3. Amazon requires no upfront investment
For those who are risk-averse, Amazon does not ask for any money upfront, which means that you only pay when you make a sale, making it ideal for small businesses that have little capital.
Are There Any Drawbacks of Dropshipping on Amazon?
- You have to pay Amazon selling fees
- There is a lot of competition
- Returns can be tricky
If you need any help with setting up a dropshipping business with Amazon, then an Amazon seller consultant is just what you need to get you started.
Dropshipping With Shopify
Shopify is another hugely popular eCommerce platform that offers dropshipping services and works in much the same way as dropshipping with Amazon but with a few key differences.
As with Amazon, Shopify is simple to use and you can easily build your own store with very little technical expertise or experience. You also have access to a whole host of dropshipping and eCommerce tools to help you get started and make more money.
How Does Dropshipping With Shopify Work?
In a nutshell, Shopify works as a foundation for your eCommerce store. It is a great choice for entrepreneurs who want to set up their own online business with very little upfront investment needed.
Again, there is very little risk with Shopify as you only order enough inventory to meet customer demand.
Plus, if you don’t want to set up your own dropshipping business, then you can buy an existing one via Shopify’s Exchange website.
What Are the Benefits of Dropshipping With Shopify?
Some of the most notable benefits of dropshipping with Shopify are the following:
- Very little upfront investment is needed
- It is easy to set up
- You can customize your online store
- You have access to a wide range of dropshipping tools
- There are multiple Shopify payment options to choose from
Are There Any Drawbacks to Dropshipping With Shopify?
There are a few reasons why you may not want to launch your dropshipping business with Shopify, including:
- Shipping can be complicated if you are working with multiple suppliers
- Shopify’s monthly selling fees are a little high
- Profit margins may be low in the early days
- You have limited control over inventory and supply issues
Ryan Flannagan is the Founder & CEO of Nuanced Media, an international eCommerce marketing agency specializing in Amazon. Nuanced has sold $100s of Millions online and Ryan has built a client base representing a total revenue of over 1.5 billion dollars. Ryan is a published author and has been quoted by a number of media sources such as BuzzFeed, CNBC, and Modern Retail.