Dropshipping vs Amazon FBA – Which Is Better?
Short Answer: Amazon FBA
Long Answer: It's complicated…
I have years of experience with both drop shipping (9+ years) and Amazon FBA (3+ years) and I can tell you that both are phenomenal business models and very empowering to be self-employed or make money as a side-gig.
During high school, I used to make about $2,000/mo PROFIT with drop shipping, and then people started to catch on. It is scalable, but you will always run into issues. The most likely problem is the rat race to the bottom; this is an endless pursuit where margins get slimmer and slimmer, since you don't control your product and there are always competitors.
With Amazon FBA, I am able to make over $13,000/mo with significantly less effort than drop shipping, with higher margins. This is because, unlike drop shipping, I control my product and my brand--which means I control my price. Though, you will face competition with similar products (think iPhone vs. Galaxy phones).
How much do you need to start?
Drop shipping requires $0 to start
Amazon FBA requires $300 to start
MVP or minimum viable product is your key to starting. You can easily start both with zero capital, however for Amazon FBA this is more unlikely. I recommend $500 to start with Amazon FBA (although you might be able to get away with $300), whereas drop shipping--you can still start with zero.
Both of these businesses are incredibly competitive now, and to be successful--you have to do the research.
I always say money is in the research, and I truly mean that. All of my decisions are driven by data, and I know they will succeed.
Overall, I recommend learning everything you can about a business model before diving in. If you need to get started with selling on Amazon, we offer a free 10-day email course which will teach you all of the basics.