E-commerce is a very modest, undramatic term to describe an unprecedented retail phenomenon. Online selling has been with us for over 20 years but it is only in the last three or four that we’ve seen it skyrocket. The graph was already climbing steadily when the Coronavirus hit the world and from that point, the acceleration was breathtaking.
Just look at a few numbers. In 2019 the value of UK online sales alone was £693 billion, let alone US and the rest of the world. By November 2020 e-commerce accounted for 36% of all retail sales, almost double the year-on-year figure. In 2020 online purchases were made by a staggering 87% of the population. At the same time, over 17,500 chain store outlets closed during 2020 with the trend continuing at the rate of 50 stores a day.
It has never made more sense than it does today to enter the world of online retailing. The industry has matured beyond recognition since Jeff Bezos set up a virtual bookstore in the garage of his Seattle home. It is now simple for any business to set up an online shop and the brainchild of Bezos has played a significant part in that. There are a myriad competing e-commerce options available to the ambitious retail entrepreneur but at the moment the industry is dominated by two giants, both offering entirely different models but both with much to recommend them.
They are of course Shopify and Amazon. The tools are there for anyone to use. But what are the similarities and differences, the advantages and disadvantages? Essentially, which should you choose?
First, let’s establish the fundamental differences. Shopify is an e-commerce platform. Amazon is a marketplace. Shopify helps you build your own shop. Amazon leases you a stall at the market, where you vie with competitors and Amazon itself for business. Shopify is a cloud-based platform that is suitable for everything from one-person businesses upwards. In fact, scalability is one of its key selling points, and huge international brands like Nestle and Budweiser use Shopify to power their online retail operations. Amazon provides a fast, entry-level process for small businesses which are starting up with a limited inventory and no customer base but it also offers an alternative revenue stream for established retailers.
Both Shopify and Amazon handle the processing of payments on your behalf but that is where the similarities end. That may be a simplification but it’s important to understand the distinction because it will affect all the decisions you make.
Getting Started
Shopify makes it easy to set up shop. Once you’ve answered some basic questions about the brand and the business you proceed to the design stage. Here you can choose from hundreds of customizable themes which you can play around with until you find your desired look. It’s completely free for the first 90 days so you don’t even have to supply card details and risk being caught out at the end of a free trial by inertia selling techniques. With Amazon, you need to provide a lot more data upfront including bank account details and tax information.
Shopify provides you with hundreds of templates so once you’ve finished adapting one, it will look as near to bespoke as possible without bringing in a web designer. And building your website doesn’t require any coding skills because it uses a simple drag-and-drop method and an intuitive interface that means you always know exactly where you are. Amazon is also easy to set up: simply upload all your product information and search terms then you’re ready to start selling. However, it will always look like an Amazon store because you are limited to a choice of just three templates. This is a strategic decision from Amazon to ensure conformity in its marketplace, just like any market inspector would.
Identity and Autonomy
It may be that you like the idea of a close association with the world’s most successful retailer, not only because you may have to work less hard to generate traffic but because you benefit from Amazon’s reputation for speed and service. With Shopify, you are essentially on your own.
The choice is an individual one but it’s worth considering how the market breaks down between the two. Shopify is behind over 1 million live websites while Amazon hosts nearly 10 million sellers, with 2 million active accounts. It is interesting to note that Amazon’s attempt to provide a comparable service to Shopify, Amazon Webstore, closed after five years. Clearly, it decided that the marketplace model was the way forward, leaving Shopify with plenty of direct competitors but not the industry titan.
You will probably also want to think carefully about the amount of control you’ll have over your operation. As an entrepreneur, your instinct may be in favour of maximum autonomy – your plan most likely is to create a successful stand-alone business rather than simply riding on the shoulders of giants and conforming to their rules.
As we’ve already found, if you want your site to have a unique look, Shopify outguns Amazon, which requires you to adopt the uniform appearance of its merchants. Once your Shopify account and site are up and running, you really are in charge of what you do and – within the limitations of the platform – how you do it, including any extensions you choose to add. The shop is yours. Amazon on the contrary does have rather a lot of rules, as anyone whose seller account has been suspended for alleged code violations can tell you.
Pricing
There is another very important issue to decide from the start and that is the question of pricing. Again, the two platforms operate completely different systems. With a Shopify e-commerce site, you pay a monthly subscription for the site and hosting plus transaction fees. There are five different payment plans from Lite, which lets you use the shopping trolley feature on an existing site, to Plus, which is a fully functioning site designed for high-volume sellers.
Amazon offers just two plans: individual and professional. The former is really not suitable for business volumes. The latter costs £25 a month plus VAT, which roughly equates to a Shopify subscription. Amazon also levies transaction charges which can be as low as 6 percent but do run as high as 45 percent on some products. That can make a significant dent in your profits.
Marketing
Without effective marketing, no business can succeed. Attracting, retaining, and building a customer base is hard work and demands imagination, time, and resources. This is where Amazon gives you a head start. Shopify offers no active promotion so you will have to develop and execute your own strategy by educating yourself extremely quickly on how to deploy every SEO and social media marketing technique, or by hiring an agency to do it for you.
For most people, Amazon is the default online retailer so free traffic in huge volumes is already waiting for you. If you’ve got your keywords right then the moment you go live as an Amazon seller there’s a chance you’ll be featuring in the search results. Instant visibility.
Fulfillment (or, as they spell it in the USA, ‘Fulfillment’)
Marketing and selling your products is one thing, but the troublesome matter of logistics must also be addressed. Your core business is sales, not distribution, so ideally you want the option to outsource the physical handling and despatch of items to customers. For years, Amazon has offered the Fulfilled by Amazon (FBA) service which provides precisely this service. All you need to do is bulk ship your products to a designated Amazon warehouse and pass over order details for their staff to pick, pack and dispatch. This comes at a price of course, both for storage and handling, but it may be a very worthwhile investment.
Until recently, if you sold using a Shopify e-commerce site you had to establish or sub-contract your own logistics service which involved its own costs as well as the managerial responsibility that accompanied it. Shopify has now begun to roll out its Shopify Fulfillment Network which is quite a long way from matching Amazon FBA but shows a determination to fill this gaping hole.
Meanwhile, Amazon has created its Multi-Channel Fulfillment Service (MCF) which is available to all e-commerce sellers and offers Prime delivery speeds, a simple pricing structure and the facility to sync with other e-commerce platforms such as – of course – Shopify.
Payments
There really isn’t a lot to separate the two when it comes to payment options. They both appreciate the customer demand for the broadest choice and therefore most third-party payment providers can be used – over 100 credit card companies alone at the last count as well as secure virtual terminal operators – while Shopify and Amazon also operate their own systems. It is advisable to explore in some detail the different charging rates so you can decide how to average them out and build those costs into your prices.
Shopify & Amazon Pros and Cons in Summary
Shopify
Pros
- 90-day free trial
- Drag and drop page building
- Hundreds of customizable templates
- Ownership and independence
- Exclusive shop window
- Powerful e-commerce tools and apps
- Fulfilment service options
- No transaction charges with Shopify payments
- Easy migration from another platform
Shopify
Cons
- Marketing costs and responsibilities
- No reputation by association
- Transaction fees if using third-party providers
- Reports only available with premium plans
- Additional monthly fees for third-party app use
Amazon
Pros
- 30-day free trial with Pro account
- Instant global access to customers
- Reputation by association
- Immediate start
- Easy returns and refunds
- FBA available
Amazon
Cons
- Potentially high commission charges
- Conformity requirements
- Lack of control over store page
- Generic appearance
- Non-exclusive shop window
There are sound arguments on both sides. Payment and fulfillment concerns are less of an issue than they used to be but on the whole, we’re still comparing apples and oranges. In many ways, Amazon is the easier, faster way to reach a vast customer base, but you sacrifice independence and there could be some hefty charges and commissions. Shopify is a genuinely customizable platform that gives you the freedom to create a truly individual business but you must be prepared to put in the work to market yourself or appoint someone else to do it for you. Sales will not be instant, so you need to be committed to a long haul towards profitability, but you will not be so closely shadowed by hundreds of competitors as you will with Amazon.
Does the Choice Have to be Exclusive?
Once upon a time you would have had to decide which solution seemed best for you and put all your digital eggs in that basket. Naturally, you’d prefer to have the best of both options: the flexibility, independence, and control to create a brand that generates high-profit margins as well as instant global reach. Happily, that is now a real possibility as the facilities for integration and cross-platform selling have evolved.
As a Shopify client, not only can you now use Amazon FBA to fulfil customer orders, you can also process payments with Amazon Pay instead of asking customers to offer up card details. Perhaps even more significant is the facility to sync products featured on a Shopify site with an Amazon account, which effectively means you have your own shop as well as what is effectively a concession within the Amazon marketplace. There are even apps supplied by Shopify with which you can transfer ratings and reviews from your Amazon seller account to your Shopify platform. And if for any reason a customer simply prefers to shop with Amazon, you can redirect them there: the transaction may not be as profitable as selling from the Shopify site but ultimately a sale is a sale and better that they buy from you than a competitor.
Your choices don’t end there, because with a Shopify store you can sell through other channels beyond Amazon, such as eBay, Etsy, Alibaba, and dozens of others. A smart strategy would seem to be to establish your brand and presence with a fully autonomous site powered by Shopify and then branch out across any number of appropriate channels. You do need to make a choice, but that is only the choice as to how to get started. You are ruling nothing out, simply plotting a logical course. As for the future of your business, every option remains within reach.
If you’re interested in building, upgrading or migrating to a higher ranking, higher-converting Shopify store in just 2 weeks using a world exclusive Shopify theme and SEO product filter app, then please get in touch.