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Shopify Dropshipping Vs Amazon FBA Business in 2022

February 16, 2021

You wanna be a Gymnast or a Strong Man?

If you are lookin to sell products on the internet, you've got two places to choose from: Shopify (aka the Gymnast) & Amazon (aka the Strong Man), the other options are really just bench-warmers.

So here's the deal:

In this post, I'll show you the ins and outs of both platforms, how easy or weazy they are to use, as well as their pros and cons. 

My aim?

To save you some time (and maybe some dough)

 Instead of getting stuck in the research rabbit hole (like I did), you can just do some preliminary evaluation and then just start building. 

With Shopify, you've got 2 whole weeks to practice on the platform before you've got to drop a dime. 

With Amazon, a lil bit more plannin' is involved, so you'll probably want to visit my how to sell on Amazon page before committin' your cold hard cash.

Sometimes you just gotta bite the bullet and try something, 'stead of gettin all up in your head about it. 

Why would I recommend that?

Here's a bit about me so you can understand where I'm comin' from

A lil bit about me... My name is Ippei...

In 2013, I'd been outta college for a few years and was gettin' real sick of the 9-5 grind at the car parts store, so I began to spend my nights doin' deep dives on Google & YouTube, tryin' to find ways to bring in 'nuff dough to enjoy my life instead of givin' it away to the man. Feel me?

Well, long story short, I looked into FBA and couldn't afford to get in the door, as it cost 7 grand at least (products, shipping, Amazon fees, etc.).

Then I checked into dropshipping since the big initial investment wasn't there, but every niche I looked into was swamped, filled to the brim with competitors (even more packed than the metro during rush hour).

Clicking my way through the big G, I bumped into this pointy haired sales guy tellin' me that I could make money by buildin' & rankin' these lil websites.

Exhausted from my search, I talked with the guy and took a leap into the unknown, 7 months of hustlin' later, I kissed the 9-5 grind goodbye, and I ain't never looked back.

If you wanna learn more about my journey, hit the green "yeah, show me how" button below. Or keep scrollin' to learn 'bout FBA & Dropshippin'

Overall, since in both these business models, you are sellin' physical products online, there's scores of similarites. 

But there are also dungeons of differences in between Shopify and Amazon FBA.

These two methods of bankin' some online dough require a lotta knowledge about the best strategies and tactics to bank the most in both the short term and the long haul. 

Ask anyone and you'll find out for y'self that everyone and their brother have very different opinions about which one is better.

eCommerce gurus love to shoot their mouths on the subject, and each of them thinks they are right.

Perhaps it just depends on your Myers Briggs type or where you fit on the DISC Assessment.

Your personality and unique business goals might fit better with Dropshipping.

Or maybe you have the exact skills required to succeed in the world of Amazon FBA.

Amazon FBA vs Shopify Dropshipping

Here's the good and the bad of each one

Pros and Cons of Amazon & Shopify

Pros and Cons of Amazon FBA
Amazon FBA Pros
  • Simple: Pretty Straight Forward Process to Selling on the Platform
  • Semi-Passive: Can Earn Money While You Sleep
  • No Fulfillment: Amazon Sends Products to Customers (so you don't have to)
Amazon FBA Cons
  • Competition: Pretty Competitive Since Can Make Money While You Sleep
  • Dependent: Reliant on Manufacturers
  • Lack of Control: Amazon can suspend your account in a second
Pros and Cons of Dropshipping
Shopify Pros
  • Entry: Easy to Get A Business Started
  • Style: Build a Cool Online Store
  • Clock: Not Time Intensive to Get Up and Running
Shopify Cons
  • Others: Super Competitive Since Low Barrier of Entry
  • Sourcing: Easy to Get Scammed When Working with Suppliers
  • Stigma: Many Suppliers Gag on Hearing "Dropshipping" 

What's the Difference Between FBA & Shopify?

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This section provides an in-depth description on starting a business on each platform to give you a picture of what it's like selling products using either one.

But here's a quick summary of the overall distinction between the two ecommerce models:

The overall difference between Amazon FBA and Shopify Dropshipping is ownership. When dropshipping, you don't buy products before your customer orders. Alternatively, selling on Amazon, you invest in products and then list them. Amazon sends you a check for your gross sales every 2 weeks, minus their percentage.

What Is Dropshipping?

how dropshipping works infographic

This is a deceptively flexible business model (hence the gymnast) that has plenty of advantages.

As a Dropshipper, you’re selling other people’s products.

You make a deal with a manufacturer regarding how much you’ll pay for each product, and then you’ll sell those same products to customers for a marked up price.

But here’s the best part of Dropshipping – you’ll never have to buy any inventory.

When your customers choose to buy one of your products, the manufacturer is notified and the product ships.

Your profit margin is basically the amount you chose to mark up the price.

You won’t have to worry about shipping or inventory storage.

All you may need to end up doing is creating an awesome online store that draws people in.

You’ll also have to worry about the marketing side of the business, and this is
probably the greatest challenge.

All in all, it’s a business that doesn’t take a whole lot of work, time, or initial
investment. You’re dealing with a low-risk business that’s picture perfect for newbies to get into.

The only-stick-up-your-butt will be customer service. Because you’re running your very own online store, you’ll have to actually interact with customers.

This means handling returns, complaints, or any other concerns your customer might have. This is a lot more work than most people realize.

In addition, Dropshippers almost always rely on impulse shoppers.

These are people shopping online that don’t bother to look around for the best price.

What happens when they do look for a better price?

They’ll probably find your product for cheaper since your whole business revolves around marking up products significantly.

This all means that Dropshippers sell products that people buy without really thinking twice.

What Is FBA?

Known simply as “FBA,” Fulfilled By Amazon is a business model that makes it easy to sell products online through the eCommerce giant, Amazon (hence, the strong man).

FBA Sellers put in a lotta reps, but they enjoy a few key advantages.

First of all, they don’t have to worry about shipping.

All they need to do is get their products to their local Amazon Warehouse, and Amazon handles it from there.

FBA Sellers also benefit from tons of special treatment from within Amazon’s store and ranking system.

Products sold by FBA sources almost always appear higher in the search results page.

They’re also more likely to be recommended by Amazon’s algorithm, and you’ll probably see your products in the crucially important “buy box.”

Amazon favors these products because they know they can control them to a higher degree.

Since Amazon is shipping those products personally, they’re relatively confident that they’ll arrive on time.

Amazon also has the benefit of personally inspecting these items before they’re shipped.

FBA Sellers also don’t have to worry about Customer Service.

This is also handled by Amazon, which is a pretty huge advantage.

This also contributes to Amazon favoring these products more than others on their site.

They know they can fully control the customer’s experience with the product and service.

Even though Amazon takes care of a huge chunk of your business, you can still collect cartloads of cash.

You get to decide the price per unit, and you can even design and create your own products.

Finally, all FBA products ship automatically with Amazon Prime, which means you get to take advantage of two-day, next day, or even SAME DAY shipping.

There’s no denying that customers absolutely love this feature.

Direct Comparisons Between Amazon & Shopify

1. How Easy is Each Platform to Use?

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Both Shopify and Amazon Seller Central have dashboards, interfaces that allow the sellers to manage their businesses on the platform. 

Some venders call these dashboard their "back-office." 

Let's look at how hard it is to add a product to each one:

Navigating Shopify

Once you make your account, you'll have a dashboard like this

When you go to your product collections, you'll be able to edit your item listings. The format is very intuitive:

If you are selling items that come in different sizes or colors, you can add them in the "variants" section.

All in all, navigating around Shopify is pretty simple. 

Now lets take a look on Amazon and see how it compares.

Navigating Amazon Seller Central

Once you login to your Amazon Seller Central Account, you'll come to a dashboard like this:

Notice the line of categories on top? How about the 6-pack of frequently used features boxed at the bottom?

It's pretty simple to add a product on the biggest ecommerce platform in the world. 

Step 1: Click add a product and you'll come to the screen below

Let's say you are selling private label (aka your own brand), you'll need to add your product to Amazon's catalog, by clicking "I'm adding a product not sold on Amazon."

When you do, you'll come to this page and choose a category (step 2).

Once you select your category and sub-category, you'll enter your specific product information (step 3). 

Once you click "save and finish," your product will be added into the Amazon Catalog (step 4). 

2. Platform Customizability

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When you are selling your own product, it's nice to make your own store to go along with it (so everything is picture perfect). 

Between Amazon and Shopify, the latter is much more customizable. 

Here's a customized shopify store:

Think of it like with Amazon, you are getting an apartment in a mega-complex, but with Shopify, you are getting a house in the burbs. 

One (Amazon) you can really only change up what you do with the interior and what shows through the windows (aka your listing's photos and words), the other (Shopify) you can make completely your own, since you own everything from the ground up (aka from the "www." up).

3. Platform Pricing & Fees

All things considered, Amazon and Shopify are pretty equal when it comes to selling fees, the main difference  being Amazon's additional fees for fulfillment. 

But I'm sure you're interested in specifics so here's the details. 

Shopify's got 3 pricing tiers:

As I said before, Amazon FBA fees similar, but here's the details (tap the titles to see specifics)

Subscription Fees

These fees are what you put out for the type of seller plan you want:

  • The Professional Selling Plan has a flat fee of  39.99.
  • The Individual Selling plan costs 99 cents per item.
Selling Fees

These kinds of fees are charged per product sold, and they include referral fees (aka Amazon's commission of the selling price) and variable closing fees (but they are only charged if you're selling  media items). 

Shipping Fees

If you fulfill orders yourself, these are the fees that Amazon charges you. 

FBA Fees

For products that you sell, but Amazon sends to your customers, there are fees for order fulfillment, storage, and other optional services.

4. Traffic & Customers

Getting Traffic on Amazon: To put it simply, with Amazon, your customers will come to you, as there's over 150 million people with Prime memberships on the platform, not to mention the millions who browse without Prime. (source)

Your main objective is to optimize your listing to appear on the first page of search results (so study up on Amazon SEO).

Getting Traffic on Shopify: With Shopify, since you are essentially setting up a whole new storefront, you'll need to drive traffic to your store, which you can do via paid traffic (using Google or FB pay-per-click ads) or you can optimize your store to appear for free on Google, using search engine optimization. 

Another way you can move traffic to your Shopify store is by literally putting your products on Amazon. 

And no, it's not a super difficult process, as there's a shopify app that you install and simplifies the product import. 

5. Platform Support

Both Shopify & Amazon have pretty good support, all things considered. 

Here's how to get support on each platform

Getting Support on Amazon

Hit the "Help" in the upper right corner

Choose the Kind of Help you need. 

Or search for your issue via the query bar

Note: Amazon sometimes gets a bad rap for eliminating their seller support phone back in 2018. 

When I did some research on why they did this, it wasn't to be an a** (aka making it harder to for sellers to get their needed support), rather it was an optimization, as it forced sellers to describe their issue better, so less time was wasted, both at Amazon and on the part of the seller. 

Now lets see how to get support on Shopify

Getting Support on Shopify

Getting support on shopify is pretty simple. 

Here's exactly how simple it is:

Step 1: Search "Shopify Support" on Google

Step 2: Log in to your store

Step 3: Choose Your Support Method (1. Search, 2. Documentation, or 3. Community)

Similarities Between FBA & Dropshipping

While these businesses have their differences, they’re also quite similar in many respects.

Both tend to lean towards passive income – at least when everything is set up and firing on all cylinders.

In an ideal world, both FBA Sellers and Dropshippers are able to step back from their businesses, relax, and watch the cash roll in.

In reality, there’s tons of work which is required before that can happen. But
many entrepreneurs have made this a reality, and yes, both these businesses can be considered passive income if you play your cards right.

In addition, both businesses are perfect for people who want to get a feel for the eCommerce world. FBA isn’t the full eCommerce experience, and neither is Dropshipping. With both business models, you can test out this industry without diving in headfirst.

Reasons Why You Might Favor Each Platform

Why Choose Shopify Dropshipping?

Shopify Dropshipping Shark Onesie Case Study
So why should you choose Dropshipping over FBA?

Profit Margins might be relatively small compared to selling your own product, but there is also greater potential for selling more product right out of the gates.

You can also set your own prices in the world of Dropshipping, and sometimes you can get away with some seriously high markups. It’s not unheard of for Dropshippers to sell a $2 item for $20, for example.

And since these items are almost always impulse buys, shoppers rarely shop around for a cheaper option.

Dropshipping also requires much less work than other forms of eCommerce – including FBA in many cases. Since you’re pretty much focusing solely on creating an amazing online store, you don’t have to worry about as many details.

And because the workload is much less, it’s possible to run a successful
Dropshipping business while only working a few hours per week.

Why Choose Amazon FBA?

On the other hand, why should you choose FBA?

With this business model, you’re stepping further into the world of eCommerce.

Successful FBA businesses often create their own products, which allows them to build a brand and ship products with their name on it.

This isn’t always the case, but it’s an example of what’s possible with a successful FBA business.

With this business model, you’re in control. You don’t feel dependent on manufacturers, which is something Dropshippers often struggle with.

You’re forging your own path, and you get to make your own rules.

However, you’re still not dealing with the risk of managing an entire warehouse filled with product.

You also don’t have to be required to worry about shipping, and you don’t even have to deal with customer service, either.

For me, electing to generate leads for local businesses is the top business model on the planet because…

  • Results: lead gen results are long term and here to stay because people always need local services like plumbing, roofing, etc and its not a fad like some physical products, local services are purchases that come from some major need, not some unpredictable impulsive buying behavior
  • Passive Income: my lead gen properties are much more longterm and hands-free, like I have lead gen sites that I built in 2014 that still makes me great money every month and I haven’t touched it since I built it
  • Simplicity: There's no buying and selling of products. You don't have to worry about profit margins. Or shipping. Or returns. Or any of the other problems associated with selling physical products. EVER!
  • Control: You have more control over your organic traffic unlike Amazon which relies heavily on product reviews
  • Free Traffic: Building your business with Google’s free traffic means you’re building the mean in which you can earn income around the clock 24/7 on auto-pilot
  • Online: Its completely digital so no headaches of dealing with physical product which requires more work to maintain sales plus you have significantly slimmer profit margins
  • Simple: ranking local lead gen site is so much easier than trying to get on Amazon’s front page which are often times completely dominated by products with thousands of reviews for many categories
  • Relationships: get to work with real people, I’ve built amazing relationship with my local business clients over the years
  • Deeply Rewarding: you get to change other people’s lives, not just sell another thing that other stores are already selling.
  • Passive Income: It provides you with a passive income. THAT'S the golden ticket!

However, our lead gen coaching program is really the only platform of its kind that is introducing extraordinary approaches to realistically achieving time and financial freedom to ordinary citizens – just like you and me. 

Click "Yes, Show Me How" to learn more today!

Best & Worst of Dropshipping

The Best Parts Of Dropshipping

The best part of Dropshipping is pretty simple. There’s virtually no risk.

You can start this business with pretty much no money in your bank account, which immediately makes it an attractive option to tons of different people.

But even though it’s a low-risk business, the rewards are actually pretty high. You
might not be investing millions of dollars into this business to start with,
but you could easily earn seven figures within your first year.

There aren’t many businesses like that.

And if you can build an attractive, cool online store that draws people in, that’s
half the battle.

Not only is this business cheap to start up, but you can get the ball rolling in just a
few hours – as long as you know what you’re doing.

The Worst Parts Of Dropshipping

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Since you’re so reliant on manufacturers in the world of Dropshipping, you really
have to keep an eye out for risky and/or potential sources of danger.

It’s really easy to get scammed in this line of work. There are now tons of people
out there who are trying to deceive those who are new to this business. It’s
absolutely paramount that you keep your eyes peeled for these criminals.

The best tactic is to work only with reputable brands and companies. But these are sometimes hard to find, and even harder to negotiate with.

This is also a very competitive industry. There are sufficient amounts of people out there who are trying to do exactly the same thing as you, so you need to be
smart in order to succeed.

In addition, Dropshipping might have a negative stigma attached to it in certain
circles. Some Dropshipping veterans even recommend that you don’t even use the
word “Dropshipping” when you’re looking for potential deals and connections.

Best & Worst of Amazon FBA

The Best Parts Of FBA

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By far, the best part of running a successful FBA business is the fact that you can make money while you sleep.

Believe all the hype – if you set up your business right, FBA really is passive income.

Sure, you’ll have to work very hard at the beginning. But when you’ve broken into the market and your products are selling like hotcakes, you can sit back and relax.

The best FBA Sellers are always looking for ways to increase their sales, and you can do this with the following marketing techniques 

  • Facebook Advertising (Amazon Loves External Traffic to Their Website
  • Social Media Campaigns
  • Product Giveways
  • Lightning Deals

But implementing these should only take a few hours every single week to manage.

Amazon FBA also enables you to build your own brand. Creating your own asset is a benefit that seriously can’t be underestimated.

Building a brand means that you’ve got something that has real potential. If given a lot of investment (both in time and money), the sky is truly the limit... if you can avoid several roadblocks, such as:

Selling someone else’s products always makes you reliant on that company or
manufacturer. And to experience true entrepreneurial freedom, you need to break free and forge your own path.

With FBA, there’s also nothing stopping you from building your own online store or selling on other platforms. You’re not confined to Amazon. That means that you can experience a lot of the benefits of Dropshipping, while still creating your own products and brand.

But on the other hand, Amazon can be a tricky business (with their rules & terms of service) to wrap your head around, but it’s also filled with opportunities (if you avoid a lot the saturated, uber competitive niches.

Bottom line about the potential of Amazon FBA is this: If you can lock down a niche that no one else is exploiting, all things considered, it’s actually pretty simple to build an entire brand around that niche.

The Worst Parts Of FBA

We previously stated that once you’ve got the ball rolling, Amazon FBA requires
almost no work.

But sometimes, this can actually be a disadvantage. Since Amazon takes control of a huge part of your business, there’s not much you can do to improve certain
aspects. Put simply, when selling FBA, you’re just not in control.

In addition, Amazon doesn’t provide the best data when you’re trying to analyze
your sales and boost your numbers. You'll need to find external tools that help you tap into the ecommerce giants data.

In the end, it can sometimes feel like there’s a bit of a glass ceiling with Amazon.

There are more limitations to contend with, however. Unlike Dropshipping, Amazon FBA requires a pretty big initial investment. Most FBA veterans recommend starting out with a minimum of $7000 cash.

This means that you’re taking a pretty big risk, especially if you’re a total newbie
to the world of eCommerce.

And in order to succeed in the world of FBA, you have to be willing to do tons of
planning and research. This is important in any business, but with FBA you need
a seriously analytical mind.

Before you even choose a product, you need to crunch the numbers, analyze the data, and spot the trends. Expect to examine tons of graphs and tables. You’ll also
need to communicate heavily with manufacturers in order to figure out prices,
shipping costs, product weight… the list goes on and on.

Deciding Factors

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In many ways, the best choice depends completely on you.

Factors to Consider are:

  • 1. Initial Investment (Cost of Entry)
  • 2. Control (Can anyone shut your company down?)
  • 3. Time (What level of passivity can be achieved?)

Maybe you don’t want to go through all the stress of building your own brand. Maybe you don’t have 7 G's lying around to invest.

If that’s the case, then Dropshipping is probably your best bet.

Although, on the other hand, you might love the idea of creating your own products and making a name for yourself in the eCommerce world.

You might want to set your own prices, and take more control over the way your business operates.

If this sounds like you, then definitely choose FBA.

But what do we think about this debate?

Well, we’re going to have to choose FBA. Looking at this competition purely based on potential profit, we’re pretty sure that FBA can reach heights that Dropshipping isn’t capable of.

Sure, there are some exceptions. But building your own brand always seems like a more solid business plan. You’re not reliant on manufacturers for your livelihood,
and you have way more control over things like prices and your overall business

For these reasons, we’re going to have to go with FBA on this one.

The Business Model that Freed Me from My 9-5 within 7 Months

Selling Products Online is OK, but Lead Gen is Better, Here's Why

Amazon FBA

  • Market Saturated - Only 6000 niches
  • Expensive to Start (Need 7,000 dollars)
  • Low Barrier to Entry (Anyone can duplicate product)
  • Low Profit Margin (~30%)
  • No Control - Amazon can Shutdown Account
  • No Passivity - Lots of Moving Parts (Shipping, Ads, Launches)

Lead Generation

  • New Opportunity in Every Zipcode
  • Affordable to Start (few hundred dollars)
  • Requires Skills to Rank on Google
  • Little Overhead, High Profit Margin
  • Complete Control - You own the Website
  • Passive once Ranked - Just Deposit Mailbox Money

You can make money online in about a billion different ways in 2020.  How do you filter the worth-while ones from the time-wasters?

In 2014, my standards for building more income streams were having complete control over my business, and I wanted a high level of passivity (aka I wanted to build an asset that would continue to make money for me for years to come). 

The business model that meets my requirements is local lead generation. 

This site has made me money since I built it in 2015.

Here's the proof

In 2014, I refused to get stuck in my research phase and pushed through to job killing money, and onward to life-changing income, but even more so, life-changing relationships.

I was there in 2014 when I started this business model – and I’m sitting at 45
lead gen sites that amass a consistent and passive income upwards of $52,000.00
per month as of September 2020. 

And they’ll happily pay you a sliver of their profits and/or marketing budget to
have you continue feeding them more clients.

One of my first lead gen sites – a tree care site from Grand Rapids, MI – is a prime
example of this business model; it’s raking in $2k per month (whether I want it
to or not), and it has required zero maintenance efforts so far to keep the
cash flowing:

Our lead gen coaching program walks you through what it takes to have anywhere from $750 to over a few grand per lead gen website for doing nothing more than bringing more buyers to local businesses. 

But don't just take it from me, here's Patric

Learn how you can create your digital assets today by clicking "Get Started with Lead Generation" below.

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Ippei Kanehara

$52K per month providing lead generation services to small businesses is for digital hustlers, industry leaders and online business owners.

His #1 online business recommendation in 2022, is to build your own lead generation business.

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