Which is better - Amazon or Shopify?
When you decide that you want to sell a product or products online, there are two major platforms to choose from initially - Amazon and Shopify.
There are other outlets of course, including through your own website, but the two ecommerce giants offer opportunities that you cannot access on your own.
But how do you know whether Amazon or Shopify would be the best for your particular business and products? Craig Gedey, managing partner of Thompson and Holt, has vast experienced of online selling and looks at the main differences between Amazon and Shopify, how much it costs to sell on both, and how you can decide which one would be best for you.
What are the differences and similarities between Amazon and Shopify?
Thompson and Holt managing partner Craig Gedey: “The biggest one is that on Amazon you have access to a customer base of over 150 Prime members who trust and love the website, allowing you to take advantage of sales without advertising. On Shopify however you are responsible for driving traffic to your website, they do not do that for you. Even if you have a great product and website, if customers aren’t aware of it then it can be difficult for new sellers to begin generating sales quickly.
“The two are also fundamentally different in that Shopify is an ecommerce platform, whereas Amazon is a marketplace where you are competing with thousands of other third-party sellers, which can create its own challenges and issues. Sellers are constantly competing with each other for customers.
“There are more fees on Amazon, which can account for up to 40 percent of your sales revenue depending on which schemes you sign up to. There can be huge benefits from some of these, but understanding those fees first is crucial, so make sure you do as much research as possible. On Shopify the only fees are the monthly subscription cost, payment processing fee and annual domain name registration - which amounts to much less than Amazon.
“Shopify allows you to have its own customised storefront that is all about your products and brands. There is no competition there with rival sellers and their items, or sponsored adverts. They also have tools that allow you to build your store with themes and apps connected to you.
“There are similarities between the two as well. You don’t need to have a registered business to sign up for either, you can start selling as an individual although you do need certain identification documents for Amazon in particular. It’s easy to list products for both and get started initially, with relative low costs - although they can rise with Amazon depending on which schemes you choose to enrol in. And both platforms for offer levels of seller support to help your on your ecommerce journey.”
How much does it cost to sell on Amazon and Shopify?
Thompson and Holt managing partner Craig Gedey: “Both companies have their own individual fee structures that you should look into fully before making any commitments.
“On Amazon, all sellers pay referral fees whether or not you use the Fulfilled by Amazon (FBA) programme. This is Amazon’s commission for selling on their site, and is typically 15 percent, although it varies depending on the category. There is also two types of selling plans - individual, where you are charged $0.99 per transaction, and professional, which is $39.99 a month. The latter gives you access to important features like the Buy Box and PPC advertising, and is the best way to go if you are selling more than 40 items per month. If you join FBA you pay fees for Amazon to store, pack and ship your items, depending on the size and weight of the product, there is a refund administration fee and storage fees for Amazon warehouses. It’s important to work out exactly how much it would cost you for each.
“On Shopify, there is a basic $29 per month plan, a $79 per month Shopify plan and a $299 Advanced Shopify plan. Each have their own benefits that you should read through carefully, but the basic one is perfect for most sellers starting out. You can look at moving up as your business grows. There are also credit card processing fees per transaction, which on the basic plan is 2.9% plus $0.30.”
What are the main benefits of selling on Amazon and Shopify?
* Immediate access to a vast marketplace
* You can access marketplaces all around the world instantly
* A constantly evolving and improving marketplace
* A wide range of different selling models to try
* Customers are more likely to convert on Amazon than other ecommerce stores
* Access to Amazon’s storage and fulfilment programmes
* Amazon can handle FBA returns and customer service issues
* Access to a wide range of tailored advertising
* Free 14-day trial to allow you to familiarise yourself with the platform
* Easy to build a store from nothing
* You have full control over your own ecommerce store
* No costly selling fees that eat into profit margins
* The Shopify app store lets you download different plugins that add functionality to your store
* You can create a one-product store or sell as many products as you’d like
* Can build a mobile-friendly store so customers can easily make purchases on the go
What are the main negatives of selling on Amazon and Shopify?
* Can be expensive, with fees going up to 40 percent of sales depending on the programme
* Hugely competitive with more sellers signing up daily
* Because of that some markets have become saturated
* Some people have issues with Seller Support
* If you don’t follow Amazon’s strict terms and conditions you can be suspended or excluded, which is when Thompson and Holt can help reinstate you quickly
* Because it’s not a marketplace with ready-made customers waiting, you have to drive your own traffic from day one
* That can become costly if you’re paying for adverts on the likes of Facebook and Google
* Only nine themes for your shop are free - you need to pay for more advanced ones
* Most apps in the store are not free
Is Amazon or Shopify better for my business?
Thompson and Holt managing partner Craig Gedey: “This very much depends on your own specific business and circumstances, and weighing up the above positives and negatives is a good starting point. There are some very general rules however. If you are a re-seller, Amazon is more likely to be the better option for you, allowing you to list products on an existing Amazon listing with a sales history. This is also possible on Shopify but would be more difficult to convert sales.
“Shopify is more favourable if you’re looking to grow your own brand in a market where you can fully customise your website.
“There is much to weigh up and try and research as much as possible before making a decision. Don’t fall into the trap of thinking signing up to Amazon guarantees customers overnight - because of the level of competition there, you have to work just as hard to build up your business.
“And, of course, you could sell your products on both Amazon and Shopify if you wanted. Good luck!”