Drop Shipping On Shopify: Amazon vs Oberlo vs Domestic Dropship Suppliers

There's a lot of confusion about the differences between Oberlo, dropshipping on Amazon, and domestic dropship suppliers. But all we’re really talking about is different ways to fulfill orders on Shopify.

The main goal of this article is to show you which dropship supplier is best for building a real brand that provides real value to your customers and to your bank account.

We're not going to focus on building burner stores that will make you some money for a few weeks.

We want to build a dropship business that’s going to grow and compound over the years and still be a business that you'll be proud to call your own 5-10 years in the future.

If you're serious about eCommerce, which I assume you are since you're reading this article... the first question you should ask yourself is, "What's the most important factor in building a long-term brand?"

I get different answers to this question all the time. People say getting good traffic or having good dropship suppliers.

But the key to long-term business success is having happy customers.

When people actually trust you enough to give you their business, they have to actually like what you provide them. This leads to long-term success. Not only because they’ll leave positive reviews, but because they'll talk about your business.

This adds up over the years.

On the other hand, if you're giving people... 

• A bad experience
• Terrible customer service
• Long shipping times
• Poor quality items
• Items damaged on arrival

You'll get bad reviews and people will tell others not to trust you which won't lead to a long-term business. So if you want to have a store that stays around for awhile, you need to keep your customers happy.

The Big Three Dropship Suppliers

Let's give an example of the shopping experience. Let's say our customer's name is Sarah. She's on the internet and sees your ad then lands on your Shopify store.

Once she places her order, we have a few different options to fulfill the order. one of them is Amazon. 

You could go to Amazon, buy the product and have it shipped to Sarah. 

You could also have Oberlo linked to your Shopify store that would be fulfilled from a third party supplier, most likely from China.

The last option is a domestic supplier, which means that they are based in the country you're doing business in.

Using Amazon As Your Dropship Suppliers

First, the buyer will go to your website, place the order, and you get the money in your bank account.

Then you’ll go to Amazon and buy that item for your customer at a cheaper price. This model is called arbitrage.

How Amazon Drop Shipping Works: 

• Buyer orders on yoursite.com 
• You find the product for cheaper on Amazon 
• You place an order on Amazon 
• Amazon ships to your customer 
• You keep the difference 

This model can also use eBay and Walmart, instead of Amazon.

But it isn't sustainable because you don't have relationships with suppliers, so you can't be sure that products will stay in stock, or hold at a certain price.

Arbitrage also has a lot more manual work for small profits. When you order the products from Amazon, you have to private message the sellers and ask them to not include any slips, invoices, and packaging from Amazon.

Otherwise, your customer will receive something from Amazon, becoming confused and angry.

There's also no barrier to entry. If you found something very profitable to sell, you would have a ton of competition because literally anyone can do this at a moment’s notice.

Issues With Drop Shipping From Amazon: 

• Not sustainable (no consistent selling products) 
• Too much manual work for small profits (need to private message all Amazon sellers to tell them not to include packing slips and Amazon packaging) 
• No barrier to entry 
• Customers will occasionally receive Amazon packaging on accident (leading to frustrated and angry customers) 

While this technically still is drop shipping, it has too many issues for it to be a viable long-term solution and I don't recommend it.

Oberlo Dropship Suppliers

You could build a Shopify store and import the products you want to sell from Oberlo, linking those products to your store.

The buyers will find the products on your site and place orders, then you process the order on Oberlo.

Oberlo then sends the product to your customer. But Oberlo isn't a supplier, they're a middleman between the manufacturers and your store.

They have a ton of suppliers, causing a lack of consistency in quality. If you deliver a bunch of defective items the customer will send them back to you, not Oberlo. Then you have to return them directly to the manufacturer.

We call this the 'drop shipping from China model' because most of the suppliers are based in China when using Oberlo.

How Oberlo Drop Shiping Works: 

• You import products to your Shopify store 
• Buyer orders on yoursite.com 
• You process the order through Oberlo 
• The supplier ships the item to your customer 

One of the biggest problems is that you're always chasing trends to catch a hot product for a few weeks. Think of products like fidget spinners. After a short time, your store will fizzle out.

Most the products from Oberlo are both inexpensive and of sub-par quality. Overall, these products lack a lot of quality control. Not all of it's bad but most of the products suffer from inconsistency.

There’s also no pricing control on Oberlo. They don't use minimum advertised price (MAP) which results in pricing wars and little to no profit.

Another issue with the products found on Oberlo is that they’re usually generic with no branding. This may seem like a perk, but at Drop Ship Lifestyle, we believe that being retailers for brands is the key to long-term profits.

Because these items are coming from overseas (usually China), there are long lead times. So even with the fastest shipments, you're looking at 10-days but it's usually more like 20 days for your customer to receive their items. 

Your customers don't want to wait that long for products. This leads to customers having a bad experience, leaving negative feedback, and filing chargebacks.

There's also no barrier to entry, so it's highly competitive and there will always be a lot of people selling the same products.

Issues With Drop Shipping From Oberlo: 

• Always trying to catch the latest trend 
• Inexpensive & offer sub-par quality products 
• No price controls (race to the bottom) 
• No branding whatsoever 
• Long lead times 
• No barrier to entry 
• No quality control assurance (from the suppliers) 

With all these issues I can't recommend this type of drop shipping.

Domestic Dropship Suppliers

When I say domestic dropship suppliers, I mean using dropship suppliers from wherever you're selling. So if you're in Australia and you're selling in that market, use Australian suppliers.

This lowers shipping time down to 3-5 days, resulting in happier customers and more positive reviews for your drop shipping business.

It all starts with choosing a niche and building a store based on that product category. Avoid creating ‘shopping mall’ stores with a lot of different niches that aren't related.

Once you find your niche, you look for people that already sell what you want to sell. These future competitors will have dropship suppliers and you'll get approved to sell their brands.

This is somewhat of a barrier to entry because you have to talk with these brands and get approved to sell with them before you can start selling products. To me, this is a positive thing because it reduces your competition by adding a step.

Once set up, the buyer will come to your site and purchase. Then your dropship supplier will process the order.

The supplier ships the product directly to your customer and you keep the difference between the item cost and your retail price.

Besides much faster shipping times, one of the biggest benefits of the Drop Ship Lifestyle model is that if there are ever defective products, it can be directly returned to the supplier.

How Domestic Drop Shipping Works: 

• You choose a niche & find your "future competitors" 
• You get approved to sell for legitimate brands 
• Buyer orders on yoursite.com 
• Your dropship suppliers process your orders 
• The dropship suppliers ship the item to your customer 
• You keep the difference 

Like the other dropship suppliers, there are a few issues with this drop shipping model. 

Before you turn on your store, you spend a lot of time doing niche selection and market research upfront. 

You'll also have to build your website before you have suppliers so that you can show them where you'll be selling their products. 

There’s a lot of effort put into building relationships with suppliers and you won't likely get approved immediately.

This model is all about building long-term businesses that need time upfront to develop.

Issues With Drop Shipping From Domestic Dropship Suppliers: 

• You need to do market research 
• You need to build a website BEFORE you apply 
• You need to earn the trust of top-tier suppliers 
• Put simply, it takes real work to get started 

Since this builds a real brand that has long-term success, I recommend this model.

Have you tried Amazon or Oberlo dropship suppliers? Let me know in the comments!

Hopefully, this clears up the differences between dropship suppliers. This article is based on a Drop Ship Weekly video I did: