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Amazon FBA vs. Amazon Automation: Which is a Better Business?

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There are various ways to make an impressive income by selling on Amazon; eCommerce can be a very lucrative industry, after all. Opening a vendor account and setting up an Amazon store is one of the most common avenues people use to profit from Amazon.

But what does it take to open one of these online stores? Did you know you can set up and operate one of these stores without actually owning a single product for sale or paying for inventory storage? Read on to find out the best way forward for you.

While there are different ways to go about selling on Amazon, we’re going to be focusing on two:

  • Amazon FBA
  • Amazon dropshipping automation

Before the internet days, starting a physical store took a large overhead investment and ongoing maintenance fees. Plus, there was nobody to help you do anything! The complex logistics alone of finding and paying for freight to move inventory from one location to the next was a nightmare every new store owner had to tackle and overcome or die trying. 

Compare and contrast that with today’s smart, personalized online shopping. Now, the process has become more efficient, technologically-advanced, and straightforward. However, if it’s the first time that you’re diving into this business venture, it’s essential to know the best route to take.

How Do Amazon FBA & Amazon Automation Compare?

Amazon FBA relies on Amazon’s cutting edge logistics and fulfillment team to handle the most challenging and expensive parts of the e-sales system: home delivery and returns. On the other hand, an automated Amazon store does not require storing inventory. Instead, the store owner purchases inventory from a vendor when a customer places an order for the product. 

A person doing online shopping on their laptop

Photo via Shutterstock

Many business owners take it a step further and fully automate the process by having the dropshipping store run by an experienced Amazon store management service. This type of store essentially provides passive income for the store owner. The owner provides the investment, and the dropshipping automation service sets up the store, operates it, and generates profits for the store owner. Let’s compare Amazon’s FBA services with the services that NextGen Strategic Investments provides for the store.

Amazon FBA provides:

  1. Logistics
  2. FBA customer support
  3. FBA returns
  4. Analytics

NextGen’s Amazon automation service provides:

  1. Logistics
  2. Customer support
  3. Returns (reverse logistics)
  4. Analytics
  5. Setting up your new LLC
  6. Apply for your federal tax ID number
  7. Applying for your tax exemptions in all 50 states
  8. Getting the business verification on the Amazon platform
  9. Backend setup on Amazon
  10. Uploading Inventory
  11. Ongoing management

Let’s look a bit further into how both of these business models work.

How Amazon FBA Works

To make money through Amazon FBA, you will need to think like a physical store owner minus the headache of dealing with logistics. You will have to invest in research and analytics to find the best products. You will have to spend time finding out about overseas private label suppliers; then, you will have to negotiate with them. 

Once you make your purchase, you organize your inventory; the next step is to send the material to Amazon FBA. Then you will have to create your Amazon listing. 

Amazon FBA rewards its users for handling the business of negotiating with foreign suppliers and getting products into the USA. With this system, you rely on Amazon’s international shipping, handling, and delivery services. 

However, there is no direct contact with the customer – Amazon handles everything, which can be a double-edged sword. It leaves you exposed to the whims of the complicated Amazon bureaucracy.

How Amazon Automation Works

Amazon automation, which uses the dropshipping business model, revolves around branding, customer service, and profitable product categories. It does not require the investor to buy or store inventory upfront. The whole business model consists of researching the correct product, designing the perfect listing, harnessing reviews, and creating a coherent, trusted brand. 

Amazon FBA might not seem as complicated, risky, and stressful as a physical store. Still, it is much more of a full-time job than hiring an Amazon store management service like NextGen Investments to take care of your automated Amazon store. 

With an automated store, you’re not worrying about costs adding up for inventory that doesn’t get sold. Plus, you have experts who know the industry like the back of their hand managing your store. If you are looking for automatic money in your pocket every month, this is one of the best ways to do it.

Which One is a Better Business Model?

An eCommerce store owner on their laptop with packages next to her.

Photo via Shutterstock

The main difference between these two is whether the store owner has to purchase the product they will sell. When you through FBA, there is more responsibility on the store operator. On the other hand, with Amazon automation services, the store owner never actually owns the product they sell— as incredible as it sounds. 

With Amazon automation, you pay a team of experts to create a seller page that will stream revenue straight into your pocket. It is a safe, new form of investment by which an investor sells another company’s products. 

Both are a way of generating income online. Still, unless you are a manufacturer or highly experienced in international business, it typically costs more and makes less sense to go with FBA. 

The main takeaway should be that Amazon FBA carries a lot more risk. 

How to Get Started With an Automated Amazon Store

The first step for anybody looking to get their feet wet in the world of dropshipping is to find the right Amazon automation service. You can get started by investing in an experienced team that will take away the stress of figuring out what to sell and how to build sales, allowing you to enjoy a passive income stream.

Schedule a Consultation

Hands-free passive income is easier than ever with the right strategic investments. NextGen Investments creates, manages, and optimizes your Amazon store so you can make money while you sleep. Schedule a free consultation today!

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