What is the best way to make money online? Is it Amazon FBA Private Label or is it Dropshipping? In this video, I will go over the Pros and Cons of both of these methods and help you decide which one is right for you.

Amazon FBA Private labeling

Private Labeling is where you find a product that a manufacturer is making, make your own branded version of that product and sell it on Amazon.

Pros
1. Amazon handles the tough part – Amazon sends out the shipment, handle all the returns so you can basically live anywhere, work anywhere and work on your own schedule.
2. Better margins – This means you make more money for each sale you get. The reason is with Private Labeling, you are working directly with the manufacturer, you’re basically creating your own product while with dropshipping, you’re selling someone else’s product.
3. You don’t need to build your own website – You need to create your own website and drive traffic to your website with dropshipping while Amazon FBA, you can just create a pretty simple product page.
4. People Trust Amazon – People may hesitate to handle their credit card websites to unknown website while Amazon is something they already know and trust.

Cons
1. Takes money to start – I do have a trick where you can get your first production run completely paid for but for typical private labeling method, it cost a decent amount of money to get started.
2. Amazon can ban you. – They can kick you off when you violate rules and it is scary because you don’t own the platform.

Dropshipping

Pros
1. Easy to Get Started – All you have to do is to find a manufacturer, create a website and you can pretty much sell in the next few days. With private labeling, you need to buy your first production run, sent over usually from China and other processes that take time.
2. Cheaper to Start – You have to pay upfront to get your product manufactured with the traditional Private Labeling approach as to compare with Dropshipping where you don’t have to pay that much money upfront.
3. Easy to Test – You can try selling a bunch of different products and see which one actually sells. You don’t want to test a lot with private labeling because if your test fails, you are going to lose a lot of money unlike with dropshipping which is low cost.
4. Dropshipper handles the tough part – Making and sending out the final product.

Cons
1. Slow Shipping times – The shipping times are very long usually, depending on what of dropshipping models you do. This means you might get a lot of complain.
2. You are just a middleman. – This means you are not adding a ton of value to the world which in general means that it’s less likely that you are going to make a ton of money from the world.
3. Tons of competition – There’s nothing stopping someone else to sell the exact same product as you. It’s easy to get started that means it is also easy for other people to get started.
4. Do you buy from dropshipping stores? I feel like the future is moving away from the Dropshipping model.

Before I tell you which one is the winner, let me tell you more about private labeling. It is a bit of a spectrum, on the lower part of the spectrum is private labeling junk products. It’s finding things that sell, slapping your brand on it and just selling them. This can work and you can make money doing it but it’s not the best way. In the middle of the spectrum is Branded Private Labeling where you niche it down and creating a special brand around your product.

Finally, what I recommend is creating a unique product or what I like to call is a Passion Product. This is where you create a product that is something unique, something that does not exist yet. This is what I do on Amazon and what I taught my girlfriend Arianna to do on Amazon. The beauty of this method is you don’t need almost any money to get started. That’s because you can run a Kickstarter and you can raise money for your first production.

Which one of these is the winner? The answer is, it depends on what you want to do. If you just want to dip your toe in the water and test out if e-commerce is for you, then Drop shipping is an easy way to get started. If you want to make real money, create a real business, then Amazon FBA private labeling is by far the best method. I recommend not just doing a typical private labeling method but create a brand around your product or much better, creating your own passion product. Remember, it’s easier to make money when you really believe in the product.