Many novices will struggle with one issue when they are preparing to open a store on the Amazon platform in the early stages - in terms of logistics and transportation services, should they choose drop shipping or Amazon FBA? In fact, the answer to this question depends on many factors such as personal experience, financial status, and product characteristics. We need to understand the essential characteristics of these two modes of transportation services so that we can make a wise decision.

FBA is Fulfillment by Amazon, which means that Amazon opens its platform to third-party sellers, incorporates their inventory into Amazon's global logistics network, and provides them with picking, packaging and terminal delivery services, and Amazon charges service fees.

Drop shipping is also often referred to as "direct delivery" or "transshipment delivery". As a retailer, there is no need to stock up a large amount of inventory, and even zero inventory can be achieved. When there is an order, the order is transferred to the corresponding supplier or manufacturer, who will directly ship it to the customer designated by the retailer. This allows the retailer to have no actual contact with the goods from beginning to end.

FBA has the following advantages:

1. Shorter logistics time and better customer experience. Amazon is responsible for picking, packing and delivery, and the delivery time is relatively fast. In most cases, the delivery time is much faster than the seller's own delivery, which can also reduce negative reviews caused by logistics problems.

2. You can delete negative reviews caused by logistics. When there are problems with products delivered by Amazon, such as delivery delays, product damage, etc., customers can directly contact Amazon to solve them, which will not affect the seller's store evaluation.

3. It can save operating costs. Amazon provides a complete logistics system and customer service support, so sellers do not need to invest a lot of time and manpower to deal with after-sales and logistics issues, and can reduce investment in these areas, thereby saving operating costs.

However, FBA also has some disadvantages:

1. Storage fees need to be paid. Using FBA requires storage fees, which vary from country to country, but are generally higher than domestic storage fees.

2. Relatively high costs. In addition to storage fees, Amazon also charges certain service fees and delivery fees, so the cost of using FBA is relatively high.

3. High return rate. Because Amazon's return policy and buyer protection policy are relatively sound, the return rate of products that support FBA is generally higher.

Drop shipping has the following advantages:

1. Less investment. The biggest advantage of drop shipping is that you don’t need to invest a lot of money in advance for inventory, and you can still make commercial sales.

2. Reduce expenses. Since you don’t need to buy inventory and manage warehouses, your expenses will be very low, which can greatly simplify your business.

3. Flexible location. Drop shipping can be operated anywhere there is an Internet connection. As long as you can maintain smooth communication with suppliers and customers, you can operate and manage your business.

However, FBA also has some disadvantages:

1. Unable to control product quality and logistics speed. Since retailers do not directly control the production and logistics process of products in the drop shipping model, they cannot ensure that the quality and packaging of products meet customer expectations, nor can they effectively control the logistics speed, which may lead to decreased customer satisfaction. ‌

2. High reliance on social media advertising. The drop shipping model often relies heavily on social media advertising such as Facebook to attract customers. Without an effective advertising strategy, it is difficult to achieve natural traffic and sales growth.

3. Low profit margins. ‌Since the threshold of drop shipping is relatively low and the competition is fierce, this may lead to serious homogeneity, which in turn compresses profit margins and reduces profit margins. ‌

It can be seen that these two logistics distribution methods have their own advantages and disadvantages. For sellers, they need to choose according to their actual situation. If you are hesitant, you can seek professional help from Forest Leopard International Logistics. We will provide you with one-stop freight forwarding services and tailor-make international trade logistics solutions.‌