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Shopify or Amazon? Which Is Better for Your Business?

Max Freedman
Max Freedman

Shopify and Amazon are giants in the e-commerce world, but which one is better for your business? Read on to make the right choice.

Shopify and Amazon offer excellent e-commerce solutions, and both platforms are popular. As of June 2019, Shopify hosted 820,000 merchants. Amazon's figures are less precise, but according to SellerApp, more than 2.5 million sellers have products listed on the e-commerce platform.

While both platforms offer potentially large exposure, the benefits and challenges of selling through them are unique. Businesses must choose the platform that works best for their needs, products and selling methods.

What is Shopify?

Shopify is an e-commerce platform that lets you create an online store and manage all e-commerce functions – including inventory, payment acceptance and shipping – in the same place. It's also a hosted platform, which means it's cloud based. You don't have to purchase software and pay to upgrade it; your Shopify membership ensures you have access to the latest updates.

What are some benefits of Shopify?

  • Ease of use. Shopify offers an easy setup and friendly administrator interface, making it one of the most popular e-commerce platforms on the market. This program also provides several free professionally designed templates.

  • Multiple languages. The administrative options for Shopify are listed in English, but you can create your storefront in any language.

  • Payment flexibility. Additionally, the platform lets you choose which payment gateway to use. It also accepts funds in several currencies.

  • Learning opportunities. Another popular function of Shopify is its Ecommerce University, which provides access to numerous articles, how-to guides and other training resources.

  • Customer service. Shopify has a 24/7 in-house support team that you can access, and the platform also streamlines your own customer service tasks. Shopify helps you provide the best tools to your customers – for example, the ability for your customers to zoom in to get a better look at your products and the ability to show other customer reviews. With these tools, you may receive fewer questions from your shoppers.

  • Fulfillment flexibility. You can choose to work with third-party fulfillment services (or drop shippers). You can also opt to fulfill all of your own orders.

What are some disadvantages of Shopify?

  • It may be more expensive. Business-savvy Shopify use often requires extensive app add-ons. With every app you add, you'll pay more. As such, it may ultimately be more expensive to use Shopify than to use Amazon.

  • It may require more marketing. Unlike Amazon, Shopify itself is not an online marketplace, so you don't get the inherent boost of a presence on the internet's most prominent, diverse store. Instead, you'll have to market your Shopify e-commerce store yourself.

  • You can't add extra content. Some e-commerce sites allow you to add extra content, such as videos, alongside your product listings, but Shopify lacks this capability.

How much does Shopify cost?

As of November 2020, Shopify offers three pricing options. The cost is between $29 and $299 a month, plus transaction fees for each sale. You can also try Shopify for free for 14 days to help you decide whether it's right for your business and which plan you might need.

Basic Shopify

  • Price: $29 per month, plus transaction fees
  • Transaction fees: 2% on all sales that don't use Shopify payment, in addition to credit card fees
  • Features: Two staff accounts, an online store with a blog, unlimited product listings, 24/7 support, manual order creation, discount codes, SSL certificate, abandoned cart recovery, ability to print shipping labels, fraud analysis, POS app for local sales, third-party POS and hardware support
  • Shipping discount: Up to 64%

Shopify

  • Price: $79 per month, plus transaction fees
  • Transaction fees: 1% on all sales that don't use Shopify payment, in addition to credit card fees
  • Features: Five staff accounts and everything included in the Basic plan, plus gift card options, professional reports, USPS Priority Mail Cubic pricing on qualified shipments, register shifts and unlimited Shopify POS staff PINs
  • Shipping discount: Up to 72%

Advanced Shopify

  • Price: $299 per month, plus transaction fees
  • Transaction fees: 5% on all sales that don't use Shopify payment, in addition to credit card fees
  • Features: 15 staff accounts and everything included in the Shopify plan, plus an advanced report builder and third-party calculated shipping rates
  • Shipping discount: Up to 74%

Shopify is extremely flexible. If the three major plans above don't cover your needs, you might also consider Shopify Plus, which is a custom-designed solution for enterprise organizations. Another option is Shopify Lite, which lets you sell items on Facebook or a blog for only $9 a month but doesn't include a Shopify store.

What is Amazon?

You probably already know that Amazon.com is an e-commerce behemoth. But did you know that more than half of all the units sold on Amazon are from third-party sellers? You can sell on Amazon as an individual or a professional, and the platform offers several shipping options.

What are some benefits of Amazon?

Probably the biggest benefit of having your products on Amazon is that it makes it easy for customers to find you. As of 2018, 54% of people started their product searches directly from Amazon, according to eMarketer; only about 46% of the search traffic began on Google. So, for some products, if you're not on Amazon, more than half of potential customers may not find you.

Here are some other benefits of selling on Amazon:

  • Traffic and repeat business. Amazon already owns the brand power, and you get a boost just from being listed on the site. That doesn't mean you can sit back and relax completely, but you don't have to put in the SEO and marketing work to make your own site rank.

  • Automatic trust. People won't worry if you're secure and trustworthy for payments and shipments. Amazon builds in a lot of protection for shoppers, so they're more likely to take a chance on you.

  • Access to Amazon resources. These include shipping and fulfillment options, shipping discounts, the third-party seller community and Amazon customer service.

What are some disadvantages of Amazon?

  • Extensive competition. Amazon is the most popular web store. As such, when you sell there, you're up against extensive competition. It doesn't help that, in most cases, it's hard to distinguish your brand in Amazon search results.

  • Poor branding and customization. Amazon's own logo, graphics and web design are plastered all over its website. While that's great for Amazon, it's not as great for you. Amazon seller pages lack customization options, so outside of individual product listings, it's hard to find areas on Amazon where your brand and image will be clearly distinct.

  • Strict rules. Amazon is perhaps best known for its unparalleled customer service. That's in part because Amazon requires its sellers to strictly adhere to its standards for buyer communication, its A-Z Guarantee, and its rules for what can and can't be sold. If you want full sales freedom, you may prefer Shopify.

How much does it cost to sell on Amazon?

The cost of selling on Amazon depends on how you sell and whether you want Amazon to fulfill orders for you. If you're fulfilling your own orders, you can sell as an individual or a professional.

Individual sellers

  • Cost: 99 cents per sale, plus referral percentages
  • Features: Ability to add new items to the Amazon catalog, option for Fulfillment by Amazon

Professional sellers

  • Cost: $39.99 per month, plus referral percentages
  • Features: Everything included for individual sellers, plus the ability to sell products throughout North America, bulk listing and reporting tools, custom shipping rates, the ability to offer special promotions and eligibility for top placement on product pages

How much Amazon charges for referral fees depends on the product category. For books, it's 15% of the sales price, for example. But for consumer electronics, it's 8% or 30 cents minimum.

You can also pay to have items fulfilled by Amazon. That means your inventory resides in an Amazon warehouse and Amazon handles the shipping. When you choose that option, you pay a per-unit shipping fee on every order, plus a warehousing fee per cubic foot of product stored.

Shopify vs. Amazon key factors

To better understand the difference between Shopify and Amazon for e-commerce, consider these key factors:

Ease of use

Shopify is built to allow even the most inexperienced web sellers to easily craft exciting, engaging e-commerce websites. Starting with Amazon may be even easier; instead of building an entire e-commerce website, you just have to complete a few initial setup pages and list your items. Plus, some Amazon sellers use Fulfillment by Amazon so that they only have to worry about making the sale and not about inventory management, shipping and other stock-related e-commerce tasks.

Customer payment

Shopify's payment gateway, Shopify Payments, eliminates transaction fees. You can also use hundreds of other payment methods on Shopify. Amazon, on the other hand, does not allow sellers to accept certain payment options, like PayPal.

User payment

Amazon's fee structure for Fulfillment by Amazon can obscure many small fees you might have to pay. Additionally, Amazon collects fees on individual users' sales or a monthly fee for professional users. However, Shopify pricing can be just as complex, since each app you add to your e-commerce website – and apps can be key for Shopify success – costs more money.

Customer service

Although Amazon is known for providing customers with unparalleled customer service, sellers don't enjoy this same quality. If you need to get in touch with Amazon, you can't call them directly like a customer could. Instead, you can request a call and await Amazon's response. Shopify, on the other hand, has a 24/7 customer support phone line and a live-chat tool, plus additional advanced support.

Design

Shopify sellers have access to dozens of customizable web store themes. Amazon seller pages offer few customization options and, minus your product photos, are usually quite homogenous. While Amazon's design limits can reduce the amount of work involved in setting up a web store, Shopify's customization options can be better for building your web store exactly how you see fit.

Choosing between Shopify and Amazon

Both platforms have their pros and cons. Shopify requires you to brand and market your store, while Amazon comes with a built-in audience. But Amazon limits how much you can truly control about your sales. For example, third-party sellers can't list every type of item. Ultimately, you have to determine which platform best supports your business. You can also choose to integrate both Amazon and Shopify to get the best of both platforms, but you'll have to pay for both.

Image Credit: FlamingoImages / Getty Images
Max Freedman
Max Freedman
business.com Contributing Writer
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.