There are two types of logistics to get products into the hands of buyers: seller-owned logistics (FBM) and Amazon FBA Logistics.

As a seller, we can choose whether we want to ship our products ourselves or, on the contrary, we prefer Amazon to ship them for us.

We are going to explain the difference between the two models and the advantages and disadvantages of each of them.

Fulfillment by Amazon (FBA)

Unlike the FMB model, amazon FBA  box labels allow the seller to not have to worry about managing shipments. It simply requires you to create a shipping plan for a certain volume of stock, print labels with the identifier and send the inventory to the Amazon fulfillment center. From here, Amazon is responsible for storing the products, shipping them to the buyer, and managing customer service.

Advantages:

We will spend less time on inventory control and on ensuring that all shipments are made on time, since everything is handled by Amazon’s logistics centers. In addition, returns and customer service will no longer depend on the seller, but on the Marketplace itself.

• It allows you to reduce costs related to transport and messaging management that can be invested in other important aspects such as marketing strategy and advertising campaigns to increase sales volume.
•  Possibility of accessing special services such as “Amazon Prime” or the “Managed by Amazon” icon that help us both to get the Buy Box and to improve the conversion of those users who enter the producer’s profile because they are “Prime”. Speed ​​and the fact that shipping costs are not paid are factors highly valued by users of this Marketplace.
• You will enjoy access at a European level. Thanks to Amazon Logistics, your orders will reach European markets such as the United Kingdom, France, Germany, Italy, Spain, among others. Remember that depending on the country, the monthly storage fee and VAT may vary.

Disadvantages:

• Additional costs are monthly fees for storing the product in the logistics centers and for handling shipments and returns. The fees will vary depending on the sizes and weights of our products and how long our merchandise is stored in the warehouses.
• With the FBA model, the seller has less control over the status of their merchandise and any possible damage that the products may suffer in warehouses.
• Compliance with the strict conditions set by Amazon regarding the labeling and packaging of our products. If these conditions are not met, Amazon will not accept our merchandise and we will have to prepare another shipping plan.
• In this case, customer service management is less close, as Amazon is responsible for processing incidents with predetermined messages.

Vendor Based Fulfillment (FBM)

In this case, the seller assumes full responsibility for the storage of its products and the shipping of orders to buyers. They are also responsible for providing customer service and processing returns.

Advantages:

There is no additional cost:

Since the seller takes care of the entire process, you save the cost of Amazon fees.

Greater control over stock and shipment execution:

This program offers us total control over the status and updating of inventory, which translates into greater flexibility when checking stock and setting inventory replenishment deadlines.

Freedom to choose a transport company:

With this model we can choose whether we want to work with one or more carriers and implement measures to reduce shipping costs to improve profitability.

Personalization and branding in packaging:

Having control over shipments allows us freedom of choice in packaging, both in terms of material and shape, as well as its customization. It allows us to include the brand name, logos, and messages for the consumer inside the package, etc. This plus is only possible with this type of logistics.

Avoid having to adjust to Amazon logistics policies:

Which are often subject to changes or modifications?

Disadvantages:

Customer service, incident and return management. 

We will need to invest more time in customer service-related tasks.

In general, this logistics model is usually suitable for companies with a lower volume of shipments, companies with experience in logistics that want to improve profit margins or companies that want to differentiate themselves by having a close relationship adapted to each of the buyer profiles

What is Dropshipping?

Dropshipping or direct shipping consists of placing an order with a supplier chosen by you; in most cases, this is a wholesale company, and they then send the products to the customer once you receive an order .With dropshipping you play the role of an intermediary, so you will never see the product as such. Sometimes these products will be completely unknown to sellers, who will only be able to see them through an image.Many times you will need to find a reliable supplier, and it may be a well-known company.

AliExpress is usually the most used for direct shipping, reaching a fairly large community.However, we do not recommend using Aliexpress as these products are located in China, which makes the shipping time very long. This is one of the most popular sales methods today since you only invest. when a customer places an order, so it usually does not entail a large initial expense or cost.
Differences between Dropshipping and Amazon FBA

Below, we will see certain differences between Dropshipping and Amazon FBA, among which the following stand out:

The investment in Dropshipping is lower In comparison, dropshipping will be cheaper for you because you only make an investment when you receive an order from the customer.

The profit margin is higher with Amazon FBA

Profit margins on dropshipping are typically lower, due to the nature of dropshipping, which is selling pre-made products to new customers, meaning the manufacturer has already built up their profit margin.This is because more must be added to the consumer’s cost to be profitable

Dropshipping vs Amazon FBA: Which is better?

If you’ve been wondering which type of business model is best for you, today we compare Both business models have their differences; but before we get into the subject, we remind you to take our amazon FBA label service in Spanish from My Dream FBA. You will be able to achieve your sales goals in no time!

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