Shopify vs Amazon: Wondering why I was so bold to say you should choose Shopify as your #1 option?
Seat back and put your feet up.
In the next few minutes, I am going to tell you why Shopify may be a better option for your business.
Here is a quick sneak-peak of the main points before we jump right into the Shopify vs Amazon face-off.
- Key Differences Between Shopify and Amazon
- Shopify vs Amazon: 10 Reasons Why You Should Choose Shopify?
- Over to you
Now that I’ve given you a bird view of what I’ll be covering, let’s jump into the meaty stuff. Shall we?
Not so fast. Let’s quickly get this one out of the way.
Key Differences Between Shopify and Amazon
Most people have heard about Amazon, you would agree, right? What about Shopify? Well, not so many.
And that isn’t surprising to me. And here is why:
- Shopify hasn’t been around long enough. Unlike Amazon, it’s very young. How young? Founded in 2011, so about 9 years while Amazon is as old as I am – 28 years old. I know I am ancient 😊.
- The biggest difference of all is that Amazon is a marketplace while Shopify is an eCommerce platform or online store builder. What’s the difference, you ask?
Well, think about it this way:
Amazon helps businesses sell their merchandise on their store while Shopify helps businesses build their own online stores to sell merchandise.
To put it more frank, someone said:
Marketplaces don’t exist to help you, but to help themselves. They want the focus to be on the products, not the sellers.
One is content with being behind the scenes while the other likes taking the center stage.
Which explains why one is so famous and another is still something of a mystery. But, make no mistake about it, it’s often the unsung that makes the difference.
Now you may be thinking: “Well, It kinda sounds like you’re comparing apples and oranges?” To that I say:
Shopify vs Amazon: 10 Reasons Why You Should Choose Shopify?
Now that we’ve got the differences out of the way. Let’s get to the real reasons we’re here:
Pricing puts everything else in perspective, right? So let’s start with it.
Selling costs on Amazon come mainly from three variables: selling plan, product category, and fulfillment strategy.
- With regard to the selling plan, you’ve got one of two poisons to choose from, you either pay a monthly subscription of $40 or pay $0.99 for every item sold.
- And then we have what they call referral fees, which depends on the category you’re selling. Most categories are between 8% and 20%.
- Another pain in the pocket? Fulfillment fees. This is where it gets nasty and pricey. There is a laundry list of fees to consider such as shipping, storage, inventory, return fees, etc.
Look, I understand that for companies as big as Amazon you can never have one size fit all kinda setting but their fees are so absurd.
Because of this, there are two types of products you should never dare to sell on Amazon: products with low profit-margins and anything that Amazon sells (called Amazon Basics).
To put it lightly, it makes no sense at all to sell low mark-up products.
Here is the hard truth:
If you don’t have adequate profit margins, your business is as good as dead. What’s the magic number, you ask? Less than 30% profit margins are pretty low. When considering selling on Amazon, avoid daily-demand goods (hygiene products, household chemicals, etc).
Amazon Basics? You simply cannot compete with Amazon when you’re selling a similar product to their product lines. You cannot undercut them without your bottom line drowning in red. While they can simply charge much lower prices and still turn a profit.
Shopify, on the other end, simply lets you build a well functioning store for only $29/month. For that little, you get almost every feature Shopify has to offer.
Though I have to mention other additional fees like transaction fees. You can expect to pay a maximum of 2.9% + $0.30 per each transaction and that gets even lower on high-end plans.
Third-party app costs are all optional. For most beginner stores you probably wouldn’t need them. Should you need them, you can expect to pay between $5 – $50/month.
Then there are the shipping costs. But don’t worry, Shopify made it so much easier to ship products to your customers. Plus, when you use Shopify Shipping (available in the US and Canada) you can enjoy discounted shipping rates of up to 75%.
The kind of tools that Shopify provides at this price is what makes it so accessible to so many small business owners and solo entrepreneurs. And that’s what makes it so awesome.
2. Fierce Competition
Amazon controls the marketplace, not as a passive spectator from the sidelines, but as one of the competitors vying for customers’ pretty pennies.
They’re are the kind of competitors that has all of your customers’ data while you don’t. They know your pricing, profit, and sales volume. They know what customers search and buy. They know current trends and best sellers.
In short, they know everything they need to know to put you out of business. And they do that through their white label product line called AmazonBasics.
Through AmazonBasics they exploit and undercut third-party’s best-selling products, and it’s a well-documented fact. Unfortunately at this rate, it’s not a question of if but when for a lot of sellers.
Besides Amazon’s unfair advantage, that’s not the only “competition” you have to worry about.
There are hundreds of other sellers vying for the same customers. Some are decent and ethical, others not so much.
Here is what I mean:
Highjacking isn’t only limited to roads, it happens on Amazon too. It’s one thing to have multiple sellers listing similar products, it’s called competition. It’s another when copycat sellers list counterfeit products under other sellers’ ASIN (item number) on Amazon – to steal sales and market share.
Sounds like a far-fetched plot from a sci-fi movie, right? Wrong. This happens daily on Amazon. As if that wasn’t enough, they’d hijack other sellers’ listing while doctoring and upvoting negative reviews on your listings. Wham!
Your best chance for a lifeline on Amazon is selling products with a unique value proposition or are exclusive to your store. Besides that, you’ll be in for a tough competition.
3. Store Ownership
I have briefly touched on this one earlier on. I am gonna say it again. Amazon has full ownership of customer data and lists.
Now when you’re starting out that may not sounds like a big deal but when sales start coming in and you want to scale, that will easily become your biggest hurdle.
For example, email marketing is one of the most cheapest and effective ways to engage and retarget your customers.
In fact, according to HubSpot, the customer list is among one of your most important digital assets.
Another example, without data, you can’t run Facebook retargeting campaigns to customers who have interacted with your business, a marketing strategy that has been said to improve the conversion rate by 203% compared to regular ads.
Simply put, data is the new gold and without it, you sure are leaving money on the table.
Contrary to Amazon, Shopify gives full ownership of all digital assets. That means you can capture and store customer data and store analytics to use that information for marketing campaigns.
4. Sales Channels
With 2B+ monthly visitors to Amazon, it can be easy to assume that’s as much traffic as it’s ever gonna get.
Far from it. There are dozens of other traffic sources with enormous traffic.
Which comes to your mind? Are you thinking what I am thinking: Google. How can we forget the most powerful search engine on the planet? What about YouTube – the 2nd most powerful search engine. Facebook, Instagram, Twitter, Snapchat, eBay, Etsy, etc.
What am I saying? Shopify gives you the tools to easily and conveniently sell on these channels. They are so effective that you can manage and easily fulfill orders, sync inventory, run marketing campaigns right from within Shopify’s dashboard.
There is one channel I haven’t mentioned that Shopify also allows you to sell on and it’s big:
Did you know that? Through Shopify’s integration with Amazon, you can manage orders and sync inventory right from your Shopify’s dashboard. How awesome is that?
Honestly, for me that’s one of the biggest reasons why Shopify may be a better option – you can integrate it with Amazon and sell on their marketplace. While Amazon doesn’t allow you to do that.
5. Brand Building and Customer Relationship
I have one admission to make:
Jeff Bezos’ business model works brilliantly for him, it is no wonder he’s the richest man in the world, officially.
I know what you’re thinking: aren’t entrepreneurs salespeople? Yes, they are. But salespeople aren’t entrepreneurs.
And here is why: when you’re selling on Amazon, you don’t own the customers data and relationship – that belongs to Jeffrey Preston Bezos, all of it. You cannot remarket and sell to them in the future, unless you want your seller account banned overnight. With this kind of limitations, it’s very hard to build an independent brand and establish long-lasting customer relationship.
Now enter Shopify. A place where you will have full ownership of your store design and customer data & relationship.
Granted, there will be no immediate traffic to your store that Amazon may provide. Do not miss “may” because that’s still not guaranteed. However, if you position yourself well within your niche and provide a unique value proposition to your customers, you will stand a good chance of building an independent brand that your customers love.
Make no mistake about it, your success will be a devident of your sweat.It will certainly also cost you money to build a brand online, but in the end, it will be all worth it.
Most likely you will not replicate Amazon’s success, but I can guarantee you there is a place and a market for your product. Trick? Positioning your brand really well.
6. Design Flexibility
This goes along with the brand building above. I have mentioned earlier that marketplaces do not put sellers center stage but rather the product they sell. While that may sound like a perfect arrangement, it’s important to remember that your brand is more than the product you sell.
With this kind of arrangements it’s hard to build a brand even while you may be getting sales, which unfortunately may not be forever.
Contrary to Amazon, Shopify puts you in the captain’s seat. Both your brand and product take center stage. And with that kind of arrangement, the only limit is really your imaginations.
7. Complex Data Feed
Amazon is like the landlord and you’re the tenant. And that relationship looks something like this:
Among many requirements, one of the most intensive is updating product data every single day, and they’re very strict with this one.
There are only three ways you can add products to Amazon:
The first one may be manageable if you have few products. But otherwise you may have get familiar with spreadsheet and Amazon API and a laundry list of other things to learn.
Granted, Shopify also has about the same options when it comes to adding products to your store. You can either do it manually or via a CVS file or even automatic submission via third-party integrations.
The difference, however, comes down to product update and syncing. Once products are added, you would never worry about painstacking manual inventory update.
8. Order Management & Fulfillment
Granted, Amazon is an incredible selling machine. You can buy virtually anything from their catalog of a whopping 350 million products. What’s even more impressive is how they’re able to use their in-house fulfillment networks to ship and fulfill these orders, from their 100+ warehouse locations dispersed throughout the US.
Hint: they don’t achieve this through being nice. In fact, quite the opposite. If you’re selling on Amazon you have an option of either self-fulfilling orders or using Amazon FBA.
Each has its benefits and disadvantages, but one thing is clear: there are strict measures in place you have to adhere to when it comes to order management and fulfillment. Some are painstakingly manual and long while others are hard to measure the impact on the bottom line.
For example, if you’re fulfilling orders yourself, you gotta have to worry about downloading orders from Amazon, shipping and reporting back to Amazon. And so if you don’t have an advanced inventory management system, you could possibly sell products that are actually sold out.
Shopify, on the other end, makes inventory management and order fulfillment a breeze. Once you upload your orders, you can easily automate shipping and syncing across multiple locations and platforms. Better yet? You can even use FBA as your fulfillment service provider, right from within your dashboard.
9. Seller Protection
In the world of Amazon marketplace, Amazon is judge, the jury, and the executioner.
This terrifies the sellers, in fact, they’re more worried about a case being opened on Amazon than in an actual court.
One seller put it this way:
It was crazy, I felt like I was in prison for a crime I didn’t commit, and the only way out was to plead guilty.
Amazon is in the business of satisfying buyers, not sellers, and they do so at all costs. There are all kinds of attacks sellers have to guard against (if that’s even possible) and some I have mentioned but one of the most lethal used is called five start bomb.
Usually that may sound like a good thing, right? No so fast. With a fiver start bomb, a competing seller pays someone to write an obviously fraudulent five start review and hopes Amazon cracks down on it. And believe you me, Amazon’s judgement is swift and terrifying.
10. Fun Factor
Surely with all that I’ve covered there is nothing fun about that, right? Right. I mean even if doesn’t happen to you, but the nagging thought of always having to worry about it, it’s simply just not pleasant.
With Shopify, you wouldn’t have to worry about any of that. The only thing you’d constantly worry about building your brand and establishing customer relationship – that’s the core of every successful business.
Yes it isn’t easy but if you love your product and your brand, then it’s gotta be fun to build it. That’s why I love the independence that comes with starting on Shopify.
Over to you
Well, I’ve said a mouthful, didn’t I?
Here is a takeaway:
I am not here saying it’s not smart to sell on Amazon. In fact, in some cases it makes perfect sense to do so. If you don’t – when you should – guess what, someone else can wholesale your products and sell on Amazon for themselves – stealing profits that would otherwise be yours.
What I am saying is do not limit yourself only to Amazon. Build your own brand and customer list. Have your own online store. Take control of your supply chain. Expand your reach to other sales channels (Facebook, Instagram, etc). In short, be in charge. And Shopify (or any of its alternatives), allows you to establish that from the word go.