Shopify vs Amazon | The Best eCommerce Channel
August 04, 2020
Daunting as it may be, the two eCommerce giants usually pit against each other with an intense rivalry. From a small handicraft shop on the street corner to a multi-million-dollar business like Nestle, there’s hardly an online seller who has not heard of Shopifyor Amazon. Read our guide to understand their major differences, and how (or if) you should choose between the two.
Neither Amazon nor Shopify need any introduction. Founded in 2004 in Ottawa, Canada, Shopify is a hosted eCommerce platform that allows you to connect to millions of customers worldwide. It quickly became popular with more than one million corporations in 170 nations around the world. In June 2019, more than 820,000 merchants used Shopify, making it the third largest online retailer in the US.
What drives its popularity is the ability to set up and market your store the way you want without purchasing or upgrading software.
As the most popular online marketplace based in Seattle, Amazon is continuously evolving. It now has multiple sites, support systems, and feedback centers across the globe. It gets 2.5 billion visitors every month, and third party sellers make up for more than half of all the units sold.
Amazon’s biggest advantage is how easy it is to find products and services. As of 2018, 54% of people started their search on Amazon, compared to 46 percent on Google.
With both having so many features, it can be hard to navigate the many variables you should consider when choosing between the two. They have major strategic differences, and here, we look at some of the most important ones.
Pricing
Pricing sets these two apart considerably. The freedom to set prices depends on many factors including transaction fees, competition, or profit margins.
Shopify has a three-tiered plan, starting from $29 to $299 per month. Lots of features differ between each tier, including access to reports, staff accountants, and transaction fees.
One of its drawbacks is that the Basic plan ($29) does not include user reports or third-party payment providers, but Shopify also offers flexible plans. You can choose Shopify Plus, a customized plan for enterprises that can make your monthly fees a lot more expensive, or Shopify Lite, which comes with no storefront, but lets you sell in Facebook or blog posts for only $9/month.
The icing on the cake? Shopify’s 90-day Free Trial coupled with Shopify Payments (no transaction fees) becomes a perfect recipe for testing an idea for a new store.
Amazon’s Professional plan costs $39.99/month. If you sell less than 40 products monthly, you can go for Individual plans, which have no monthly fee, but sellers pay 99 cents per item.
But transaction fees can quickly add to the actual operating costs.
Based on the plan you choose, Shopify charges anywhere from 0.5–2 percent transaction fees for sales not using Shopify Payment plus credit card fees. To make things easy, Shopify offers a simple calculator for finding your profit margins and adjusting your prices.
Amazon’s per-item transaction fees depend on the categories your products fall under. You’ll also have to pay referral fees that are dramatically different; they can be as low as 8 percent for electronics, for instance, or as high as 17 percent for clothing. For Amazon Devices Accessories, expect to pay 45 percent referral fees.
Both platforms allow you to store the product off-site. If you choose Amazon’s fulfillment services, you’ll have to pay per-unit shipping fee on every order plus warehouse fees per cubic foot of product stored.
Although not as robust as Amazon’s, Shopify is also working on their own fulfillment services. So far, Fulfillment by Amazon has been a popular option for both platforms, but it can be costly, and it gives you less control over storage and shipping preferences.
While Shopify does not charge for shipping, and offers shipping discounts based on your plan, which can go as high as 72 percent, Amazon’s Professional sellers are charged for media items like books and movies, and Individual sellers pay shipping fees for all items regardless of their category.
Both offer a lot of services for the plans you choose, but Shopify has better transparency when it comes to actual costs of running your store and lets you earn higher profits.
Ease-of-Use
Shopify is not only easy to use, but it can also be integrated with other store-building platforms like WordPress or WooCommerce, and yes, even with Amazon. It needs no technical expertise, and it has a mobile- and user-friendly interface. Running your store with round-the-clock email and technical support makes your membership cost worth your while.
With Amazon, you’ll get access to a world of resources, discounts, third-party sellers, and shipping and fulfillment services. You can set up and sell worldwide immediately with zero technical knowledge. It also offers great eCommerce tools for taxing, refunds, and reviews, among others.
But listing and images descriptions can become time-intensive because there are lots of regulations, fees, and back-end logistics you need to familiarize yourself with.
Notable Features
Shopify has great built-in features, with 70 themes with a free subdomain to get your store up and running. With the thousands of Apps you can use from its App market, you’ll end up with a super customized store.
Another popular feature is its eCommerce University, with tons of guides and training resources. It takes care of any technical hurdles you might run into.
With Amazon, you can sell anything (even services), and you can add images, but the overall design remains notably Amazon’s.
On the plus side, it offers great shipping options and discounts. Amazon’s most notable feature is the FBA and the vast range of products you can list on the site. It provides great protection for customers with easy refunds, so you don’t have to worry as much about establishing trust or loyalty with customers.
Ownership and Branding
Listing your products is only half the way. The real work involves making customers aware of your products and services.
This is another major difference between the two. You should weigh in on your brand identity, growth strategy, and business plan to understand which works best.
Amazon gives you a lot of exposure because it is already a well-known “brand” in some ways. While you can have a custom Amazon domain and display a store name, there is little control on making your store stand out. If you favor having a unique, individual brand, you will find Amazon very restricted.
As a fiercely competitive market and an entirely saturated platform, Amazon can be uninspiring for some. But unlike Shopify, Amazon has its own product line, which offers sellers the opportunity to create a competing product with Amazon if they are making profitable sales.
But while you forgo branding to some extent, it is very easy to start selling on Amazon, with much less marketing efforts like SEO (although still important), logistics, or customizations. It does offer advertising options, however, to increase visibility for your products.
If you are an inexperienced retailer or have fewer resources for marketing your brand, Amazon seems much more convenient. Shopify is the complete opposite.
A big thumbs up to Shopify in that it keeps you entirely in control of your shop. You not only design your store from scratch but also have access to great marketing tools on Shopify’s App market, which you can use for your next Google Ads, Facebook Ads, or email campaigns. Shopify lets you be in the market on your own terms.
Although it offers useful recommendations for different marketing tactics, prepare to do a lot of leg work for your brand awareness, customer engagement, and keeping your loyal customers.
But if you are a self-motivated seller who prefers individual brand identity, Shopify becomes a clear winner.
Security
Both Shopify and Amazon operate on a worldwide scale, which means both deal with speed and security very well. Shopify gives you SSL certificates, ensures smooth browsing, and offers great customer service.
Amazon also offers a secure environment with a host of solutions like secure Cloud solutions, encryption, backup services, and risk management services. On the customer’s end, it’s also very reliable with refunds and payments. But you still have to look out for scams and fraudulent seller accounts, which can happen quite often.
Scalability
Shopify appeals to not only small businesses or independent sellers but also to giant organizations like Nestle and Tesla. Because it’s a fully-hosted platform with great customization and support, it becomes a hassle-free solution for growing your business.
Amazon, too, is very appealing for both small and large sellers. Small businesses who can’t afford selling on large platforms are drawn to Amazon’s reputation, its international market, and millions of potential customers (they get 150 million views a month just in the US) a few clicks away.
It takes a no-brainer to know that Amazon enables you to reach different locations worldwide. Their cataloging system makes searching for products super easy, and a great thing about such retailers is that they increase the potential of exposure for new, unknown brands. Customers are there to find a specific product, not necessarily a brand name, which means chances of connecting to a new seller are very high.
But ironically, this is also Amazon’s drawback. Because it highlights products and not dealers or brands, it has specific restrictions on what and how you can sell your product. If you don’t abide by their rules, which includes a lot of competition-oriented policies, you can easily risk suspension.
Growing your business with Amazon means overcoming negative reviews, undercutting tactics by competition, and price fluctuations.
Do you really have to choose?
Of course, you don’t have to choose one over the other. You can connect your Amazon’s account with Shopify to drive traffic or use Amazon’s fulfillment services. This way, you get the best of both worlds.
Regardless of whether you choose to integrate, your decision to go with one or the other depends on how much control you like to have on your store’s design and profits, your timeline for success, whether you are hands-on or hands-off with marketing, and even your personality. You should strategize wisely to be successful in either platform.
If you'd like any help with the decision, feel free to contact us. You may also find some of other platform comparisons interesting: