Amazon FBA vs Shopify Drop Shipping – Which One Is Best?
In this blog post I’m going to explain the main difference between Amazon FBA and Shopify Drop Shipping using Aliexpress. Both business models work well and I’ve been using both.
However, if you are just starting out one of these business models is clearly superior to the other one and I’m going to explain why in this post.
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When I started my online marketing career, I started with Kindle publishing. It consists of publishing ebooks on Amazon Kindle and you then make a monthly royalty on the sales you make on the platform.
I then started selling on Amazon using Amazon FBA. FBA stands for Fulfillment By Amazon. The way it works is really simple; you go to Alibaba ( a website where you can buy a lot of units of a product for cheap), then you send these products to one of the Amazon’s fulfillment warehouses. Once your products are at the Amazon warehouse, you will need to advertise your products on Amazon. When you sell a unit, Amazon will ship the package directly to the client (they will take a commission). It seems like the perfect business model right?
Actually it is a super good business model, the only problem is you need a lot of money upfront to make it work. I know that a lot of gurus out there will tell you that you can get started with only $300-$400, but this is simply not true. You will need at least $800-$1000 for your first product.
What they don’t tell you is not only will you have to buy the units from Alibaba, but you will have to pay for the shipping to the Amazon warehouse, AND then you will have to make sure your product ranks well in the Amazon rankings. Don’t expect that as soon as your products are at the Amazon warehouse, it will start to sell like crazy. Only the products on the first few pages on Amazon for that specific keyword will sell. All the other products on pages 4-5-6-7…etc won’t sell a lot of units because nobody goes to the fourth page, to the fifth page, etc to buy products.
This is the Amazon game, you want to rank on the first page for your keyword in order to make a lot of sales. If you are selling a watermelon cutter for example, you want to make sure that when someone makes a search for ¨ watermelon cutter ¨ , the listing for your product shows up on the first page. If you are able to do that, you will make a lot of sales.
Now how do we do that? The Amazon algorithm works in a way in which the more sales that you make quickly, the better your rankings will be. Amazon is a business. This is why if they see that a product is selling a lot, it makes sense for them to rank this product high in their search engine. If they do this, they will make more money.
So the key with Amazon FBA is to make a lot of sales quickly. One way to do this is to give a huge discount for your products until you make a lot of sales quickly and rank well for your keyword. If you sell 200 units at a 70% discount, chances are high that you will rank super well for your keyword after a while. Now that you rank well, you can raise the price and people will still buy because you are on the first page (remember, most people don’t even check past the second page).
The problem with this is IT COSTS MONEY. If you are low on cash and you give 200 units at a huge discount like this, it means you will not make any money on these units, and in some cases you will LOSE MONEY. At some point you will rank well, but you will have to order MORE UNITS from Alibaba and it will take a while for you to receive them, and you will have to spend MORE MONEY to get these units.
This is why I’m saying it is almost impossible to get started with Amazon FBA with less than $1000. And this is only FOR ONE PRODUCT. What if you didn’t do your market research properly and this first product fails? You will have to spend another $1000 to try a new one. Hopefully for you it will work, but there is a possibility this one will not work again and you will have to drop another $1000…
This is why every single time someone asks me if they should start with Amazon FBA, I tell them: HELL NO!
If you are just starting out you need a business model that doesn’t require a large sum of money to get started. In my opinion, Drop shipping using Shopify and Aliexpress is the BEST WAY TO GET STARTED ONLINE RIGHT NOW. Someone can get started with $50-$100 and there is no limit to how much someone scale this business.
With Drop Shipping, you don’t have to buy any inventory upfront! You upload the pictures of the products you want to sell on your Shopify store and when someone buys, you take their money, go on Aliexpress and buy the product for MUCH CHEAPER. Aliexpress is similar to Alibaba, but with Alibaba you have to buy hundreds of units upfront and with Aliexpress you can buy only ONE UNIT.
With this business model, you can test hundreds of products on your Shopify store WITHOUT HAVING TO ORDER ANY INVENTORY UPFRONT. With Amazon FBA, you have to spend about $1000 to test JUST ONE PRODUCT. With Drop shipping using Shopify and Aliexpress, you can test a new product with only about $20 using Facebook Ads. Which one sounds better to you? $1000 to test a new product or $20? Which one sounds better to you: Having to order hundreds of units upfront and having to wait weeks before you can finally sell them, or having to order NO UNITS UPFRONT and you can start testing your products RIGHT AWAY?
This is why in my opinion Drop shipping using Shopify and Aliexpress is the BEST BUSINESS MODEL TO GET STARTED ONLINE BY FAR.
Another thing I ofter hear is how you the margins are better on Amazon FBA than with Drop shipping. It is simply not true. First of all on Amazon FBA you have to factor in all your publicity cost, and the fact that Amazon will take a % on every sale that you make. With drop Shipping using Shopify and Aliexpress, you can sell a product for $100 on your Shopify store and buy it for $3 on aliexpress. Are these low margins? I don’t think so! These margins are actually amazing and this is what I’m doing on my Shopify stores.
What I want you to understand is this: Both Amazon FBA and Drop shipping using Shopify and Aliexpress work. BUT, it is WAY EASIER to get started with Drop shipping than Amazon FBA and there is no limit to how much you can scale this business model.
If you want to learn more about drop shipping, make sure to read this article in which I explain everything in details: http://www.lifefreedomuniversity.com/shopify-drop-shipping-e-commerce-step-step-guide-make-passive-income-online-drop-shipping/
Also, if you want to learn EVERYTHING about drop shipping, check my Step-by-step Drop shipping (Shopify) Video course. It will teach you everything you need to know step-by-step:
If you want to get started with Shopify and get a discount, click on this link:
Please leave a comment below or let me know any questions you have. I’d love to hear what you think!