Amazon FBA (Fulfilled by Amazon) — private label model: 1. Research and source a product (typically from a manufacturer in China via Alibaba or a domestic supplier) 2. Brand the product with your own logo and packaging 3. Ship inventory to Amazon's fulfilment centres 4. Create an Amazon listing; Amazon picks, packs, and ships orders to customers 5. Amazon deposits revenue minus fees every two weeks
Dropshipping: 1. Choose a supplier (AliExpress, Spocket, CJ Dropshipping, or a domestic wholesaler) 2. List the supplier's products on your Shopify store or Amazon at a markup 3. Customer places an order on your store 4. You forward the order to the supplier 5. Supplier ships directly to the customer under your brand name (ideally)
| Amazon FBA (Private Label) | Dropshipping | |
|---|---|---|
| Inventory investment | $1,500–$5,000+ | $0 |
| Platform/tools | $39/month Seller Central + research tools | $39/month Shopify |
| Product samples | $50–200 | $0–50 |
| Professional photography | $200–500 (or AI with Sellable) | Supplier images only |
| Total to launch | $2,000–8,000 | $0–500 |
Dropshipping's near-zero startup cost is its most cited advantage. You can test product concepts without committing capital to inventory. FBA private label requires real upfront investment but that investment builds a proprietary asset.
| Amazon FBA Private Label | Dropshipping | |
|---|---|---|
| Typical gross margin | 30–50% | 10–25% |
| FBA/platform fees | 15–30% of sale price | 3–5% (Shopify Payments) |
| Net margin range | 15–30% | 5–15% |
| Customer acquisition cost | Can offset with organic rank | Higher (mostly paid traffic) |
FBA margins are meaningfully higher because you buy at manufacturer prices and sell at retail. Dropshipping margins are compressed because you buy at near-wholesale and must sell competitively against other dropshippers using the same supplier.
Sellable turns a single product photo into studio-quality images, UGC-style video ads, and on-brand campaigns — in under 60 seconds.
Try Sellable free →Amazon FBA private label builds a brand asset. Your branded product, reviews, and keyword ranking have tangible value — brands built on FBA have sold for 3–6× annual profit multiples to aggregators like Thrasio and Perch. The business has defensible IP (your brand, packaging, product improvements) that a competitor cannot simply replicate overnight.
Dropshipping builds no proprietary asset. The supplier's product is available to any other dropshipper. Your competitors are selling identical products, creating price compression and eroding margins over time. Dropshipping businesses are very difficult to sell because there is no IP, no supplier exclusivity, and no customer relationship that doesn't depend on ad spend.
Dropshipping makes sense for: testing product-market fit before committing inventory capital, building audience or marketing skills with zero risk, or running as a side operation while validating a niche.
Amazon FBA private label makes sense for: building a sellable business asset, operating in a product category with clear demand, or committing seriously to ecommerce as a primary income source.
The most common path for successful sellers: use dropshipping to validate a product concept (does it sell? at what price? to which audience?), then launch the private label version on FBA with real branding and superior product photography to take market share from the dropshippers they competed with.
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