SHOPIFY: WHY NOT SELL DIRECTLY ON AMAZON? – Shopify Drop Shipping Tutorial
Today, I’m going to explain to you why I’m selling on Shopify using Facebook ads instead of selling directly on Amazon.
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Shopify: Why Not Sell On Amazon Directly?
That’s a question that I get all the time. People ask me why I don’t sell my products directly on Amazon. I used to do it. When I started with online marketing, I started with Kindle publishing which is the e-book version on Amazon. Then I started to use Amazon FBA. So I know how it all works.
Let me get this straight – I’m not bashing Amazon. Amazon is an AMAZING marketplace. You can make tons of money with Amazon FBA. However, what I’m doing now is drop shipping using Facebook ads, Instagram ads, etc using Aliexpress on my Shopify store. The reason why I choose to sell using those I mentioned is that the margins on what I sell are way better. I’m making way more money by doing that than when I was doing Amazon FBA.
Amazon FBA vs Drop Shipping
With Amazon FBA, what you have to realize that you have to buy a lot of inventory upfront, then you have to send it to Amazon warehouse, and then start selling your products. However, you have to rank super high for your keywords. In order to do that, what most people would do is they give a discount for a lot of their units to get verified reviews, and then get a lot of sales. That’s the time you start to rank well for your keywords. That’s the overview of how you do Amazon FBA.
With drop shipping on Shopify using Facebook ads, I don’t need to buy any inventory upfront. When I sell a unit, my supplier sends it directly to the customer. What I found out is I make more margin by doing that.
Another thing you have to realize is that, on Amazon, it’s literally a race to the bottom in terms of price. People are competing on price. Of course, you can have a better product with better features and quality. If you’re able to rank better than the other people for your keywords, people don’t go to page two or three. They buy the first four products that they see. They enter a keyword and the first four products get about 90% of all of the traffic.
People go to Amazon to buy products as cheap as possible. Most of the people like to compare prices of sellers. It’s not only that you need to rank super high. You want to sell a little bit lower than other sellers. And a lot of people do that. If you know how to do Amazon FBA, you know that the way to get more sales is to add value to your product and rank super high.
But let’s be honest. Those people selling you these courses on how to do Amazon FBA tell you that that’s the way you have to do it, etc. In reality, if you’ve done Amazon FBA, you know that most of the sellers are going to try to compete on price. So you’re going to complete with a lot of people that are selling the same item for s cheaper price than what you’re trying to sell it. That’s one of the things that I don’t like about Amazon FBA.
What I’m doing now is drop shipping. When I drive traffic from Facebook ads, the people end up on my website. They are on their Facebook page or news feed, they see my product, they click my ad, and they get directed to my Shopify website. Most people are going to buy no matter what the selling price is as long as they like my products. However, I still lose some sales because some people think that the prices are too high.
Consider your margin or profit
I have tried both Amazon FBA and drop shipping. What I found out by trying both ways is that my margins are way better with drop shipping than it was with Amazon FBA. I can get away with drop shipping and again, I don’t have an inventory upfront. That is a HUGE plus! I don’t have to order 500 units and wait for 1 month for all my units to reach the warehouse before I can start selling them.
With drop shipping, I can just test the product today. If I make a sale, my suppliers from Aliexpress will send the product to my customer. You can move super fast with that method. Let’s say I sell a product for $50, I buy it on Aliexpress for $10. So I’m making $40 before paying for the Facebook ads. Let’s say Facebook ads cost me $10 per purchase, so I’m making $30 profit. It’s really hard that kind of margin on Amazon FBA because people are competing on price.
I must warn you – not every product is going to work well with Facebook ads. What works well with Facebook ads is impulse buying. When people see something, they don’t really know what it is or if they know what is it and they really like it, then they click on it. Most people don’t go searching other websites to see the price. They just want it now, they click on it, and then they buy it.
Whereas, when people go to Amazon, they can see other sellers’ products and prices. People can compare and choose what they like the most. The gurus are going to tell you that you need to brand yourself as the high-quality product. Even if you do that, your margins are going to be lower on Amazon FBA compared to drop shipping.
Again, Amazon FBA works super well and you can make a lot of money. However, in my opinion, drop shipping is much better. You can make higher margins, you can drop ship so you don’t need to buy any inventory upfront, and you can test a product super fast.
Testing a product is better in drop shipping
Testing a product is another issue with Amazon FBA. If you want to test a product, it will cost you at least $1000. The gurus may tell you that you can start testing with $200. But it’s really not how it works. For example, you contact someone on Alibaba to order 100 units to test. It may just cost you around $200 including the shipping fee. But you have to wait for 3 weeks to 1 month for all of your inventory to reach the Amazon warehouse. Let’s say you’re not ranking for your keywords. So you have to give discounts and get verified reviews in hope that your product is going to sell. That just takes so much time.
Let’s say your product is selling, your margin is probably not going to be that great. So if all your 100 units are sold, you have to order more units and wait again for another 3 weeks. But now you’re out of stock, so you lose your ranking. You have to start from the beginning again.
Because of all of these reasons, I don’t do Amazon FBA right now. Maybe in the future, I’m going to return to that method. But as of right now, 90% of my energy goes to drop shipping using Facebook ads, and Instagram ads and lead all of the traffic to Shopify. By doing that, I make way more margin on the products that I am selling.
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