Amazon vs Shopify- Comparing the eCommerce Channels

Just some of the Product categories for selling in Amazon

Related blog: Amazon Inventory Management by TradeGecko

Those are your upfront costs of setting up your storefront operation on those platforms. Now that you’ve made your products available, what kind of cut of the purchase price will each take via transaction fees? 

• Amazon will take a per-item transaction fee that varies depending on which of the site’s categories your product falls under. Those fees apply to both Professional and Individual Selling Plan members. While the Individual plan has no subscription fee it does charge a flat $.99 per item on top of the category-based fee.

• Shopify takes a percentage of the purchase price that depends on which membership tier has been chosen. Basic Shopify = 2%, Shopify = 1% and Advanced Shopify = 0.5%. Sellers using Shopify Payments pay no transaction fees.

Knowing what fees are taken out by the platform – to cover their own operating costs – will help you set prices that are profitable for your business.

If you were going to set a $10 price on an item, for instance, but know that a platform is going to take 3% off the top, you know you’re only going to get $9.70 of that. Setting a slightly higher price point - say $10.50 - means more will be taken in fees but your final revenue is closer to the $10 you initially aimed for.

Those fees impact your profit margin, requiring you to adjust appropriately. Shopify offers a simple calculator to determine what markup (the amount over your expenses) to place on each item.

Related blog: Shopify Inventory Management by TradeGecko

Fulfillment: Getting The Product to the Customer

Once you’ve converted the customer from a lead to a customer, they expect the product they just purchased to be sent to them. It’s a step in the process that shouldn’t be overlooked. Customers get upset when you don’t do this.

• Collecting buyer information: Anyone buying products on Amazon needs a single Amazon account. Sellers will receive whatever addresses and billing information the buyer have added to their profile there. On Shopify, buyers will have to fill out their information for each seller
• Once the order has been placed on both Amazon and Shopify, the seller receives an email or text alert they have a new order pending.
• Shipping the order takes place at a fulfillment center of the seller’s choosing. Both Amazon and Shopify allow sellers store their inventory at an off-site warehouse which is where the product will actually be sent from.

Fulfillment by Amazon is also an option available to sellers of either platform. That service allows sellers to have their products housed at Amazon fulfillment centers and be sent directly from there, meaning you can take advantage of their finely-honed logistics.

There are additional fees for using FBA, of course, though they should be compared to the costs of contracting with a warehouse yourself.

Shipping comes with its own set of expenses as well. Whether or not the platform charges a shipping fee, there are going to be costs from the delivery company - UPS, FedEx, USPS etc - incurred.

• Amazon Professional sellers are charged for shipping of media items such as books, movies etc. Individual sellers are charged shipping rates on all products regardless of category.
• Shopify sellers are not charged additional shipping fees. Sellers at different membership levels get different carrier discounts.

eCommerce Platform Branding & Marketing

As the old saying goes, you can lead a horse to water but you can’t make it drink.

For eCommerce retailers, leading a horse to water involves making customers aware of your store and its offerings. You can’t close a sale without first accomplishing that initial, vital goal.

If you were setting up a physical retail location you would spend time worrying about signage, product displays and advertising in local media. Similar issues need to be pondered by eCommerce operators.

• Many of those points are moot when using Amazon as your eCommerce platform. While you can display the name of your store, which comes with a custom Amazon.com domain, and add descriptions to product listings, there’s little in the way of branding available to set your storefront apart from all the others on that platform.
• Shopify, in contrast, offers sellers a variety of themes for their storefront that can be customized with additional design work. While every storefront gets a free subdomain (ex: mystorehere.myshopify.com) sellers can choose to map that to a domain of their own to increase the branding power.

In 2017 Amazon introduced Stores, which offer more customization and branding options.

No coding necessary when designing an Amazon Store

When it comes to promotion and marketing, Amazon offers a variety of advertising options that will bring specific listings to the top of search results or otherwise feature them to increase discovery. Shopify, meanwhile, recommends taking a more organic approach and focusing on tactics such as search engine optimization, social media promotion, advertising elsewhere on the web and more. Those recommendations are applicable and relevant no matter what platform you choose.

Related blog: TradeGecko’s Library of Inventory Management Basics and B2B Tips

Choosing Amazon is akin to placing your products on another retailer’s shelves. It’s great and simple because you don’t have to worry about nearly as many logistics, but comes at the cost of not being able to personalize the experience, connect directly with customers and tie your own fate to theirs.

Choosing Shopify is more like owning your own corner store, allowing you to create a wholly unique experience and brand. That can foster customer loyalty and brand awareness, but also means a lot more uphill skiing, especially in the initial stages of operation.

Less experienced eCommerce business owners may opt for convenience and fewer headaches while those who have the required resources may want to choose Shopify and maintain more control over all aspects of their operation.

Shopify vs Amazon Side-by-Side Features Comparison