Amazon vs Shopify: Features, Pricing and Pros & Cons

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Amazon vs Shopify | iTMunch

If you are a small business owner and planning to set up your shop online and confused between Amazon and Shopify, you’ve come to the right place. In this blog, we compare the world’s two biggest e-commerce giants – Amazon and Shopify. In this Amazon vs Shopify blog, we have compared the two ecommerce selling platforms, in terms of what they have to offer. You will also find a pricing plan comparison of Amazon vs Shopify here. 

It is completely okay to feel confused about the question “is it better to sell on amazon or shopify?,” as both are considered equally good platforms. According to a Marketplace Pulse report, Amazon marketplace today has over 9.7 million sellers across the globe[1]. Moreover, as of 2020, Shopify says it powers more than 1 million businesses via its platform [2]. WIth numbers like these, it naturally becomes tough to pick between Amazon vs Shopify. Now, let us start having a look at how the two platforms can be beneficial for your online business.

What is Amazon FBA

The FBA in Amazon FBA stands for ‘Fulfilment by Amazon’. WIth Amazon FBA, sellers can store products in an Amazon warehouse and the e-commerce giant will take care of the packaging and delivery of your orders to customers. Amazon also handles return requests and provides customer service. Basically, if you sign up for Amazon’s FBA program, you automate your orders by leveraging the advanced shipping and fulfillment services of Amazon. 

How Amazon FBA works?

  1. You, as a business, send your products to Amazon
  2. Amazon stores your products in its warehouses
  3. Whenever a customer orders your products, Amazon picks, packs and ships it to the customer
  4. Amazon also tracks the order for you
  5. Moreover, the tech giant also handles returns and refunds

What is Shopify

Shopify is an online ecommerce platform that allows business owners like you to create an online store. It also allows you to manage all the ecommerce functions, including inventory management, payment acceptance along with shipping. It is a leading ecommerce platform that’s designed for all businesses sizes. It is an all-encompassing online commerce solution that helps you sell on social media or through your website. 

How does Shopify work?

  1. First, you design your Shopify store 
  2. Next, you make sure you have an up-and-running website that’s responsive 
  3. Now, you focus on promoting your Shopify store
  4. If a customer purchases your product, Shopify processes the payment and pays you 
  5. Shopify also provides you with real-time insights you can use to understand your audience

Now that you know the basics of Amazon FBA and Shopify, let us get into Amazon vs Shopify and help you pick what’s better for your business.

The main difference between Amazon and Shopify

The main difference between Amazon and Shopify is pretty obvious – While online shopping giant Amazon has the ability to showcase your products to an existing marketplace of millions of customers whereas Shopify simply focuses on helping you design and build your online store from scratch. Every month, over 214.8 million people worldwide visit Amazon’s website [3]. According to a survey conducted by Jungle Scout, over half of Amazon sellers (50%) reached their lifetime sales of over $100,000. Moreover, 22% have exceeded $1 million in lifetime sales [4]. As a result, Amazon can easily attract shoppers to purchase your product and help your business grow exponentially. On the other hand, Shopify is a great platform that equips you with the right tools to build a standalone online store, rather than putting you amongst millions of other sellers.

Amazon FBA vs Shopify: Pros and Cons

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Amazon: Pros and Cons

Pros of Amazon FBA

  • The existing traffic on Amazon: As hundreds of thousands of buyers visit Amazon’s website on a daily basis, you get instant access to an international potential customer base. Your business gets a boost just by simply being listed on Amazon.
  • Amazon’s goodwill: Amazon has already done the hard work of becoming a trusted name in online selling. Customers won’t worry about payments and shipments as it is backed by Amazon.
  • Access to extra features: With Amazon FBA, your business does not have to worry about shipping, returns and customer service. All of this comes at a cost, of course.
  • Sales report insights.
  • Setup easily and start selling immediately.

Cons of Amazon FBA

  • Highly saturated: As Amazon is one of the most used  and most popular ecommerce web stores, your business will be faced with extensive competition. It is difficult to distinguish your products in Amazon search results.
  • No design and customization controls: As a seller on Amazon, you get no design or customization options. So, apart from individual product listings, you can’t find areas on Amazon’s website to make your brand name and image shine.
  • Adhere to the rules of Amazon or risk suspension: One of the reasons why Amazon is trusted so much by buyers is its unparalleled customer service. In part, this is because the e commerce giant requires sellers to follow strict standards and policies.
  • Fees payable per sale is pretty high (we’ll explain it in detail in the later sections).

Shopify: Pros and Cons

Pros of Shopify

  • User-friendly interface: Shopify provides sellers with an easy setup and user-friendly administrator interface. Its interface being so easy to use has made it one of the most popular e-commerce platforms available in the market. The platform also offers various free professionally designed sophisticated templates.
  • Unique brand identity: When you create a standalone store using Shopify, you differentiate yourself from the crowd. You create a strong brand identity to go with your business.
  • Design control and flexibility: The store you create on Shopify belongs to you. You get design freedom and control to reflect your brand’s personality. 
  • Language Flexibility: Though administrative options are mentioned in English, Shopify allows you to create your store in any language.
  • Flexibility in payment options: Shopify allows you to pick which payment gateways you want to use. Moreover, it also accepts funds in various currencies.
  • Fulfilment: Shopify has made it easier for businesses to provide excellent fulfilment services. You can opt for working with third-party drop shippers or fulfilment services. You can also choose to fulfil your orders on your own.
  • Top-notch customer service: The ecommerce giant has an in-house customer support team that works 24/7. It also has tools to help shoppers look for answers related to your questions so that you may receive fewer questions from shoppers.
  • Access to powerful ecommerce tools.

Cons of Shopify

  • Might turn out to be more expensive: To make your online store more customer-friendly and business-savvy, you might have to invest in add-on apps and services. So, with every app, you pay more and ultimately end up paying more than what it might cost you to build a shop with Amazon.
  • Marketing efforts required: Shopify, unlike Amazon, isn’t an online marketplace. You don’t get access to a massive customer base just by creating a store on Shopify. You will have to make additional efforts to promote your Shopify store via different marketing channels.
  • Though Shopify doesn’t have a bad reputation, it isn’t as grand as Amazon’s. So, there’s no reputation you can leverage and piggyback off.
  • If you choose to use a third-party payment provider, additional transaction fees may apply.

SEE ALSO: Edge Computing vs Cloud Computing: Meaning, Types, Examples & Differences

Selling costs on Amazon

An Amazon vs Shopify comparison isn’t complete without comparing the costs associated with both the platforms. Selling on Amazon depends on two factors – how you sell and whether you opt for Amazon fulfilment.

1. Individual sellers 

  • This is for sellers that plan on selling under 40 items on Amazon
  • This plan costs $0.99 per sale, plus referral percentages
  • Sellers get the ability to add new items to their Amazon catalogue and option for fulfilment by Amazon

2. Professional sellers

  • Costs $39.99 per month plus referral percentages
  • Includes features of Individual seller plan, ability to sell products across North America, custom shipping rates, bulk listing and reporting tools, eligibility for top placement on product pages and the ability to offer special discounts/promotions.

Amazon’s referral charges depend on the product category. For consumer electronics, it is 8% or 30 cents minimum and for books it is 15% of the sale price. When you opt for fulfillment, you pay per-unit shipping fees and a warehousing fee per cubic foot of the product in the warehouse.

Selling costs on Shopify

Shopify offers 3 pricing plans that range between $29 to $299 per month, in addition to transaction fee per sale. 

1. Basic Shopify plan

  • Cost: $29 a month + 2% transaction fees on all sales that do not use Shopify payment + credit card fees).
  • Features: An online store with a blog, 2 staff accounts,  unlimited product listing, manual order creation, round the clock support, SSL certificate, discount codes, ability to print shipping details, abandoned cart recovery, point-of-sale (POS) app for local sales, hardware support and third-party POS.
  • Up to 64% shipping discount

2. Shopify plan

  • Cost: $79 a month + 1% transaction fees on all sales that do not use Shopify payment + credit card fees
  • Features: Everything included in the Basic Shopify plan, 5 staff accounts, professional reports, gift card options, USPS Priority Mail Cubic pricing on eligible shipments.
  • Up to 72% shipping discount 

3. Advanced Shopify plan

  • Cost: $299 a month + 5% transaction fees on all sales that doesn’t use Shopify payment + credit card fees
  • Everything that comes under Basic and Shopify plan in addition to 15 staff accounts, advanced report builder and third-party shipping rates 
  • Up to 74% shipping discount

SEE ALSO: Retargeting vs Remarketing: What’s best for you?

Amazon vs Shopify: Key Differentiating Factors

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You can better understand the significant differences between Amazon vs Shopify for creating your online store on the following key factors.

Ease of use

Shopify has been created with the vision of allowing sellers with the least or no experience build engaging and beautiful ecommerce websites. However, Amazon might be even easier, as instead of creating an entire website for ecommerce, sellers just have to create a few initial set up pages and list their items. Moreover, Amazon offers FBA (fulfillment by Amazon), because of which sellers don’t have to worry about packing, shipping, delivering and tracking.

Customer payment

Shopify payments (Shopify’s payment gateway) eliminates unnecessary transaction fees. Sellers can use hundreds of other payment options on Shopify. On the other hand, Amazon also offers many payment options. However, it doesn’t allow sellers to accept a few payment options like PayPal.

Seller payments

E-commerce giant Amazon collects charges on a per sale basis for individual users and a monthly fee for professional users. Moreover, the fee structure for its FBA might obscure several small fees sellers might have to pay. Shopify pricing plans are also complex. With each app you add, the cost of maintaining your ecommerce store on Shopify increases. This is in addition to the monthly charges and transaction fees.

Customer service 

Though Amazon is known for its unparalleled customer service among customers, sellers do not enjoy this same service. Basically, if a seller is facing an issue with your Amazon listing and needs to get in touch with an Amazon executive, they can’t call them directly like a customer could. Instead, the seller will have to request a call and wait for Amazon’s response. Shopify, on the other hand, offers a 24/7 customer support service along with a live-chat tool to sellers, in addition to advanced support. 

Design flexibility 

Sellers on Shopify get access to lots of customizable online store themes whereas seller pages of Amazon offer very little customization options. So, while the design limitations of Amazon can reduce the total amount of efforts involved in setting up an online store, the customization options in Shopify can be much better for creating your store exactly how you like it.

Final word – Amazon vs Shopify

Comparing Amazon vs Shopify is surely a tough task. Both ecommerce platforms have their pros and cons. Where Shopify requires you to market your store, Amazon provides you with an existing marketplace and audience. However, Amazon limits drastically how much you can control your sales. At the end, you know your business the best and need to determine which platform would better fit your requirements. Several times, businesses also choose to integrate both Shopify and Amazon to get the best of both worlds. If you choose to do so, you’ll have to pay for both.

SEE ALSO: The Social Dilemma: Social Graph VS Interest Graph

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Sources

[1] Marketplace Pulse (2021) “Number of Sellers on Amazon Marketplace” [Online] Available from: https://www.marketplacepulse.com/amazon/number-of-sellers [Accessed March 2021]

[2] Shopify (2020) “Shopify Announces First-Quarter 2020 Financial Results” [Online] Available from: https://news.shopify.com/shopify-announces-first-quarter-2020-financial-results [Accessed March 2021]

[3] Statista (2021) “Most popular retail websites in the United States as of December 2019, ranked by visitors” [Online] Available from: https://www.statista.com/statistics/271450/monthly-unique-visitors-to-us-retail-websites/ [Accessed March 2021]

[4] JungleScout (2021) “The State of the Amazon Seller” [Online] Available from: https://www.junglescout.com/amazon-seller-report/ [Accessed March 2021]

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