Dropshipping on Amazon means a supplier holds the stock and dispatches an order after you make a sale. It can reduce the need to buy stock upfront, but it does not remove your responsibility for the customer's experience. Before choosing a supplier, read Amazon's current dropshipping policy in Seller Central.
For UK sellers, the practical choice is between relying on a supplier to dispatch orders, holding and dispatching stock yourself, or sending stock to Fulfilment by Amazon (FBA). None is automatically the cheapest: compare the same product across all three using realistic purchase, delivery, fulfilment and returns costs.
Who holds the stock and sends the order?
| Model | Who holds stock? | Who dispatches orders? | Who deals with returns and customer service? |
|---|---|---|---|
| Dropshipping | Your supplier, until an order is placed | Your supplier | You remain responsible for the customer experience; agree with the supplier how returns and delivery enquiries will be handled |
| Self-fulfilment | You, or a storage provider you arrange | You, or a dispatch provider you arrange | You manage the process, including customer enquiries and returns |
| FBA | You buy stock and send it to Amazon for storage | Amazon fulfils orders from its stock | Amazon handles FBA fulfilment-related customer service and returns; you still need to monitor your listings, costs and any issues requiring seller action |
Dropshipping gives you less direct control over packing and dispatch. Check how a prospective supplier confirms stock availability, reports tracking and resolves damaged or missing parcels. If their delivery estimates prove unreliable, the resulting customer problems may affect your account health.
With self-fulfilment, you can inspect goods, choose packaging and manage dispatch directly, but the daily workload is yours. With FBA, Amazon handles storage and order fulfilment after your stock arrives. You still need to plan purchases and replenishment, and allow for the cost of stock that sells slowly.
Compare cash flow, margin and risk
Dropshipping: You may avoid purchasing a batch before demand is clear, which can ease initial cash flow. In return, a supplier fulfilling individual orders may leave less room in your margin. Ask for the full product and delivery cost, and establish what happens when stock runs out or a customer requests a return. A low quoted product cost is not enough if delivery problems create refunds or extra work.
Self-fulfilment: Buying stock usually ties up cash before sales arrive. You also need somewhere to keep it and must pay for packing materials and delivery. The advantage is greater control over stock checks and dispatch, provided you have the time and capacity to keep up with orders. Include storage, labour and likely returns costs when comparing it with a supplier's price.
FBA: You purchase stock upfront and arrange for it to reach Amazon. Budget for preparation, inbound delivery, fulfilment and storage rather than looking only at the supplier's unit price. FBA can reduce the work of dispatching individual orders, but unsold stock still uses cash and can continue to incur storage costs. Check the relevant costs for your product rather than assuming FBA will improve your margin.
Whichever model you choose, selling fees and other costs can change the result. The fee calculator and the wider UK seller tools can help you organise your comparison; confirm current charges in Seller Central before committing to a product.
Compare the models for one product
Use one product and the same intended selling price throughout. That makes it easier to see whether a model changes your actual costs or merely moves the work elsewhere.
- Record the product details. Note its selling price, category, size and packed weight. Identify the supplier's product cost and any packaging or preparation needed for each route.
- Check selling and fulfilment costs. Use the fee calculator to estimate applicable Amazon selling costs and FBA costs for that product. Verify the inputs and current fees in Seller Central. For the other routes, obtain actual supplier dispatch or self-fulfilment delivery quotes rather than treating FBA costs as interchangeable with them.
- Build a separate cost case for each model. For dropshipping, include the supplier's per-order charge and delivery cost. For self-fulfilment, include your stock purchase, packaging, storage and dispatch costs. For FBA, include stock purchase, preparation, inbound delivery, fulfilment and storage estimates.
- Compare profit and cash tied up. Enter each set of assumptions into the UK profit calculator. Where a calculator does not have a dedicated field for a cost, account for it separately before deciding which route is more profitable. Note when you must pay for stock or services, not just the estimated profit after a sale.
- Test the weak points. Ask how each case changes if delivery costs rise, a parcel is returned, stock sells slowly or a supplier cannot dispatch on time. Choose a model you can operate reliably, not simply the one with the best initial estimate.
Keep your VAT treatment consistent when comparing prices and costs. Check your VAT position with HMRC or a qualified adviser rather than assuming the same treatment applies to every seller or supply arrangement.
Which model should you choose?
Dropshipping may suit a seller who has a dependable supplier and wants to test demand without holding stock, provided the arrangement meets Amazon's current policy and delivery can be managed reliably. Self-fulfilment may suit someone who wants hands-on control and can keep pace with packing, dispatch and returns. FBA may suit a seller prepared to invest in stock who would rather have Amazon handle order fulfilment.
Start with a product you can source and deliver consistently. Compare its full costs, check the supplier and fulfilment arrangements, and revisit your assumptions as you gather real orders and returns data. If you are still setting up your account and listings, see how to sell on Amazon UK before choosing a fulfilment route.