There are many different ways to get started in eCommerce, and two of the most popular
methods are dropshipping and wholesale. Dropshipping is a type of eCommerce where you sell products without actually having to carry any inventory, and with Shopify, it's easy to set up your own dropshipping store. When a customer orders from your store, you simply contact the supplier, and they ship the product directly to the customer.
Wholesale is another popular method of eCommerce. Unlike dropshipping, with wholesale, you will need to purchase products from a supplier in bulk and then sell them in your store.
Amazon Wholesale is a phenomenal option for resellers, as there is a huge selection of products already offered on the site and a clear roadmap to success in the eCommerce realm.
So, which one should you choose? In this article, we’ll compare Shopify dropshipping and Amazon Wholesale to help you decide which one is right for you.
Shopify Dropshipping - What is it, and How Does it Work?
Shopify Dropshipping is a type of eCommerce business model in which Shopify stores order products from suppliers and have them shipped directly to customers. This means that Shopify stores do not need to keep any inventory on hand. Instead, they simply focus on marketing and selling products.
When a customer places an order, the store owner simply contacts the supplier, or with more automated options, an alert is sent directly to the supplier, who then ships the product directly to the customer. Dropshipping is a very popular business model, especially among Shopify store owners, as it is relatively easy to set up and manage.
Plus, it doesn't require a large investment of capital to get started. In fact, many people dropship on Shopify with no money down! You only need a domain name, hosting, and a Shopify plan.
Shopify funds will payout as the order is fulfilled, so there is a potential to earn income and see it directly in your account every business day you make a sale.
Shopify Dropshipping Costs, Market Saturation, Difficulty & Requirements Compared to Amazon
Cost of Shopify Dropshipping
Drop shipping is a great way to make money, but you need at least $500 set aside for
marketing. With drop shipping, you never have to put any money into anything except
marketing. Marketing costs for Shopify Dropshipping can be allocated as such:
● Facebook Ads
● Snapchat Ads
● Google AdWords
● Miscellaneous marketing costs (i.e., hiring a Virtual Assistant, etc.)
Saturation of Dropshipping
Dropshipping isn't a saturated market, so entrepreneurs can feel confident about starting thistype of business. According to recent projections from Oberlo, the dropshipping market size is estimated to be $196.78 billion by 2022 - a rather significant increase of 23.7 percent from the previous year.
Even more remarkably, it's predicted that by 2026 this number will have almost tripled to reach an astounding $476.1 billion.
Difficulty Starting a Dropshipping Store on Shopify
Shopify dropshipping requires a basic working knowledge of product research and marketing.
Plus, you'll need to be comfortable with using Shopify's platform to create and manage your store. While it's not difficult to learn how to use Shopify, it does take some time and effort to become proficient.
Product research is key to success with dropshipping. You need to be able to find products that are in high demand but have low competition. This can be difficult, as it requires you to
constantly be on the lookout for new trends and hot products.
Once you've found a potential product, you'll need to assess whether or not it is actually a good fit for your store. There are a few key factors you'll need to consider, such as:
● Can you find a supplier who can provide the product at a low cost?
● Is the product in high demand?
● Is there a lot of competition for this product?
● Can you create compelling marketing materials for this product?
If you can answer yes to all of these questions, then the product is likely a good fit for your
store.
Requirements for Dropshippers on Shopify
To start Dropshipping on Shopify, you'll need the following:
● A Shopify plan
● A domain name
● Hosting (if you're not using Shopify's hosting)
● A Shopify theme
● Product images & descriptions
● A supplier
● Marketing materials (i.e., Snapchat filters, Facebook ads, etc.)
Amazon Wholesale - What is it & How Does it Work?
Amazon Wholesale is a platform that allows businesses to sell products to Amazon customers at a discounted rate. Businesses can sign up for an account and then list their products on the Amazon Wholesale website.
When a customer buys a product from a business on Amazon Wholesale, the business will ship the product directly to the customer. Amazon Wholesale is a great way for businesses to reach a wider audience and sell products at competitive prices.
The only downside to this style of businesses is that it requires a larger amount of capital to invest in products.
Overall, Amazon Wholesale is a phenomenal platform for businesses that want to reach more customers and sell products at a discounted rate.
Amazon Wholesale Costs, Market Saturation, Difficulty & Requirements Compared to Shopify
Cost of Amazon Wholesale
As far as Amazon wholesale goes, it might be wise to start with $5000 or more. This is because (unlike dropshipping) Amazon Wholesale pays out bi-weekly, and you're required to front the capital for your products.
Whether you're an Amazon FBA business (Fulfillment by Amazon), where the products are shipped to an Amazon Warehouse, then shipped to your customer when ordered, or you choose to have your bulk order shipped to you, there is an added upfront cost.
Amazon FBA sellers can benefit from an automated Amazon store as a more passive way to sell. Buying your products straight from the manufacturer, distributor, or brand will offer the best profit margins, but it will also require more startup capital.
Market Saturation on Amazon
There are over 350 million products available on Amazon, so there is definitely room for new businesses. By far the leading online retailer in the United States, Amazon services accounted for an overwhelming 37.8 percent of the country's eCommerce market, and according to JungleScout, 50% of Amazon third-party sellers make at least $1,000 to $25,000/month.
Difficulty Reselling on Amazon
If you don't have a hand for marketing, you'll find Amazon Wholesale to be a much easier method than Shopify dropshipping.
With Amazon, a lot of the traffic is already there for you.
With over 200 million global Prime members, you're also getting access to a huge customer base that you might not have otherwise.
Requirements to Sell on Amazon
Learning how to sell on Amazon is a much less difficult undertaking than Shopify dropshipping, however Amazon Wholesale does require you to have an LLC and reseller's permit. You cannot sell on Amazon without these.
You'll also need to have your products in hand or, at the very least, have a solid plan for how you're going to get them.
This is where having good relationships with manufacturers, distributors, and/or brands comes in handy.
These are the types of businesses you'll want to form partnerships with so you can get your products at a low cost and have them shipped to you in a timely manner.
Amazon vs. Shopify: Which Option is Better for You?
So, there you have it - a comprehensive guide to Shopify Dropshipping vs. Amazon Wholesale.
Both methods have their pros and cons, so it really depends on your needs as a business
owner as to which one is better for you.
If you're looking for a low-cost way to get started with eCommerce, Shopify Dropshipping is the way to go.
However, if you're looking for a way to source products in bulk, ship them directly to your customers and potentially generate higher profit margins, Amazon Wholesale is the better option.
If you're still not sure which one is right for you, schedule a call with us for more information!
