Whether you’re an experienced business owner looking to expand your sales channels, or want to start selling online, you’re destined to come to a point where you evaluate if it’s better to sell on Amazon or Shopify.
This post focuses on the things you need to know before deciding between Shopify and Amazon for your eCommerce business.
Amazon is a marketplace while Shopify is essentially a shop. Think of it like the difference between the stores in the mall vs a modern bazaar.
Amazon is like the bazaar with many vendors. Where you walk in to buy something, but don’t exactly know who will be there selling the product you are looking for.
Shopify is like the stores inside a mall. If you walk into that store, chances are you know the brand and have made a conscious decision to walk in there.
That is essentially the difference between a marketplace like Amazon and an online shopping cart like Shopify.
As you evaluate the two, you would want to keep in mind the following factors. These are important things you need to compare between Amazon and Shopify before making your decision.
1. Convenience
Shopify is easy to use right off the bat. You are able to set up an online store in a matter of hours. Shopify also easily integrates with a large range of apps. You can choose to fulfill products yourself, or get a third-party logistics to fulfill them for you.
Amazon FBA (Fulfilled by Amazon) allows you to easily set a system to store your products, list them on your website and make a sale. Amazon takes care of the process of picking, packing and shipping your products.
With Amazon, you also have the option to fulfill orders yourself. Amazon stores and lists your products, and everytime a sale is made, you take care of shipping the products to your customers.
Both options are fairly convenient for small businesses. Which means your decision will depend on other factors.
2. Access to Customer List
Chances are, part of your CRM strategy involves retargeting previous customer base and turning them into buyers again at some point in the future.
Shopify allows your full access and control over your customer list. This allows you to send out coupons and sales messages to help you build customer loyalty.
With Amazon on the other hand, you are unable to retarget customers who have previously bought your products. For the simple reason that Amazon sees them as their customers and not your own. Unable to retarget to your past customers means you are more likely to resort to running Sponsored Ads on the Amazon marketplace portal.
3. Customization
With Shopify, you are free to do whatever you want. It’s your own online store. You can create as many stores as you want, having the freedom to create different stores for different brands.
In comparison, on Amazon, you don’t have that sort of freedom. To open a second store, you must request permission from Amazon. You’re like a vendor on Amazon’s platform and you must adhere to their ‘very strictly enforced’ rules, terms and conditions.
4. Payments
Shopify easily integrates with a large list of payment processors. Whether it’s Shopify Payments, Paypal or FattMerchant, Shopify seems to have done a great job at integrating with a ton of payment platforms. With regular batch payouts of every two to four days, you simply plug in the payment app you want and watch the payments roll in.
Amazon has its own payment processor. When your payments are made is decided only by Amazon. You receive your payment every two weeks. Compared to Shopify, Amazon holds on to your money for a quite a long time.
5. Visibility
Both Shopify and Amazon require you to actually have a marketing strategy. So it’s not enough to simply have a product up for sale. You need to have a plan about how you want to market to potential customers in getting them to buy your product.
The only exception to the rule is if you are selling a unique product on Amazon. Since most people check Amazon first when they look for something, having a unique product that doesn’t have any competition that actually gets you sales without much marketing at all.
6. Costs
For $39/month, Shopify lets you have a website that serves as your online store. If you’re an established seller and are generating over $1000 in sales per month, Shopify Plus offers you more customized solutions with sales tax collection functionality.
With Amazon, the charges are not as straightforward. Amazon charges you a monthly fee of $39/month. You are also charged short-term and long-term storage fees.
With Amazon FBA, the total fees can be approximately 25 percent of your total revenue. Without Amazon FBA, you are still looking at a hefty 15 percent of your total revenue.
Although Amazon’s fees are significantly higher than Shopify, if you have a high-margin product to sell, you’d enjoy Amazon’s streamlined process of taking care of you packing and shipping your products. You only worry sourcing a product and shipping it to Amazon. The rest of the sales process is handled by Amazon.
7. Risks
Selling on Shopify is fairly risk-free. Infact, the risks are incredibly low, unless you do something really terrible. It’s common to see sellers running multiple stores on Shopify.
Unfortunately, the same can’t be said about Amazon. Amazon can suspend seller accounts anytime. There have been cases in the past of people unable to log into their Amazon seller account one day because it was shut down. And when that happens, the seller is given only one chance to convince Amazon that their account was closed mistakenly.
Sometimes, sellers who have had their account closed have no idea why their account was closed. So if you are generating good revenue from Amazon, it’s always a good idea to invest in insurance.
The Winner: Which Ecommerce Platform is right for you?
You should consider selling on both platforms. Shopify will help you create a nice brand. You have no risk of arbitrarily being shut down.
The biggest advantage of Amazon is that their marketplace is usually the first place people go to when they want to buy something. Hence you should definitely have a presence there.
You can also choose to sell on Shopify but store and fulfill your products with Amazon. Depending on your structure and strategy, this can be a great option.
