Dropshipping has lower upfront cost — you do not buy inventory until a sale is made. FBA requires purchasing inventory in advance, paying for prep and shipping to Amazon FCs, and paying storage fees while inventory sits.
FBA margins are typically higher per unit because you buy in bulk at wholesale prices and sell at retail. Dropshipping margins are thinner because you pay per-unit supplier pricing with no volume discount.
Operational complexity favors dropshipping at the start. FBA requires supply chain management, prep coordination, inventory forecasting, and Amazon compliance management. Dropshipping is simpler to launch.
At scale, FBA wins almost every time. Inventory control, faster shipping, Buy Box eligibility, and Prime badge access are structural advantages that compound over time. Most successful Amazon sellers eventually migrate from dropshipping to FBA.