Are Shopify and Amazon Competitors?
You may know about the two online giants, Amazon and Shopify. They’ve been battling somewhat against each other for years in the eCommerce world. However, both are in massively different business sectors. Shopify powers over 600,000 businesses in all types of niches with their web designing and hosting platform. Whereas Amazon has an estimate of over 150 million unique US visitors a month. But does this mean they’re competitors?
From a business standpoint, both Amazon and Shopify are in completely different industries and don’t compete with each other directly. Amazon is an online marketplace where they and online sellers sell goods. As for Shopify they’re a website builder and help people construct their online stores for them to sell goods or services online.
Although Shopify themselves doesn’t directly compete with Amazon, you may find that some Shopify users sell the same or similar items on their websites. The owner of that website is competing with Amazon, but Shopify not. Although taking products away from Amazon and placing them on Shopify can see an increase of profit by around 10%, it’s much harder to generate sales and traffic to your own website organically.
Should I Use Shopify or Amazon to Sell on?
Now you understand the difference in industries between Amazon and Shopify. As you’re aware, you are able to sell on both platforms. But which one is the best and most profitable one? It’s hard to decide and depends on a multitude of different factors. Below I have broken down both Shopify and Amazon into pros and cons for you to easily understand what platform is best for your situation.
Pros and Cons of Selling on Shopify
First, let’s start with Shopify (as it’s my favorite). It’s the king of all website builders and has marketed itself superbly towards up-and-coming entrepreneurs and the go-getters. Creating a website can seem like a troublesome task to an individual that has no technical experience. Shopify has bypassed this issue by creating a website builder that enables the inexperienced to create stunning and beautiful websites.
Because of Shopify’s dedication towards the eCommerce world, they’ve invited all types of individuals to the industry from skills ranging from complete beginners to experts. This can be looked at as a gift and a curse. But overall, it shows the sheer simplicity and professionalism Shopify provides to its users.
With that being said, there are a great number of pros when selecting Shopify as your eCommerce platform.
- 14-day free trial (there has been promotional offers that extend this up to 90 days).
- Intuitive and flawless design.
- Reasonably priced and affordable for most individuals.
- The flexibility of design, control and many other features.
- You own the rights to your store, allowing you to take legal ownership.
- Additional apps can be added to increase the performance and experience of your website.
- Automatically optimizes for mobile, tablet and desktop use.
- Opportunity to grow and expand.
- Much lower transaction and user fees than most other eCommerce platforms.
Although the pros make it look like the more dominant platform, they’re also some cons to this. Some that require much more effort than you think.
- You need to be good at marketing and driving traffic to your website.
- A large budget for marketing is needed unless you’re going the organic route.
- If you’re building a brand, you will have to gain trust and build a good reputation.
- Low fees and additional applications sound great for a website. However, you’ll have to spend more to have access to these apps.
- Using third-party payment gateways will occur another fee from that payment provider.
Realistically, Shopify is a great platform but requires some learning of other skills to get your website up to speed. The biggest flop with most Shopify businesses is that they can’t generate the traffic needed for conversions. Single-handedly, learning the basic or intermediate knowledge about marketing will certainly give you a head start to this business venture.
Pros and Cons of Selling on Amazon
Next, let’s talk about Amazon. If you haven’t heard of Amazon, you’ve never browsed on the web. This eCommerce giant has led the online marketplace business model for over a decade. They see 100’s of millions of active users each day worldwide.
The concept behind Amazon is much different from Shopify as you won’t need to market your site or create a storefront. Amazon already has this covered so all you’ll need to do is purchase goods and sell them on Amazon. The business model itself sounds pretty easy, but it does require a lot more money to start up than Shopify as you’ll have to buy and hold stock (unless you do FBA).
It can be time-consuming at first, but when you’ve added your ideal products and have a comfortable supply of both stock and sales. It can quickly generate a somewhat “passive” income that can easily be expandable by finding new fast selling products.
As a newbie or an advanced eCommerce marketplace seller, Amazon comes with various advantages when it comes to selling on their platform.
- No marketing required, instantly gain access to their organic and already active users.
- Reputation is already built from customers.
- You can potentially make sales your first day if you’ve selected the right product or products.
- Sales, refunds and returns are made simple through their in-house payment gateway.
- FBA is always an optional service and very scalable for fast-selling products.
- Multiple different reports for sales, products and stock.
Amazon has made both the buying and selling experience very easy for each party member. But what cons are associated with selling on this eCommerce marketplace?
- Huge fees (15-40% depending on your selling option) that are not claimable through business expenses.
- You don’t own the listing or store. Amazon can potentially ban a product or your selling account with immediate effect without any prior notice.
- Lacks in branding and flexibility.
- Very low margin on most re-sellable goods as there’s so much competition.
Both the pros and cons weigh each other out. Although it’s easier to make money on Amazon you have to also abide by their rules, make a much lower margin and deal with potential bans on certain products. I’ve been in this situation and having just ordered non-refundable stock from halfway across the world, it isn’t the best feeling.
After providing the pros and cons of both Shopify and Amazon, I thought it would be greatly beneficial to add my final verdict based on some important factors of eCommerce.
Versatility – Due to the lack of customizable features and branding that Amazon offers on their marketplace, Shopify wins this element as you’re able to build a trustworthy brand from their website builder.
Ease of Selling – As a beginner, by far the easiest platform to start selling on is Amazon. You won’t have to learn any additional skills like marketing and will just have to improve your product research and stock management.
Most profitable – This factor is a hard one to decide on as both can be extremely profitable if scaled and utilized correctly. However, if you’re good at marketing your product and have good branding. By far, Shopify will out-earn your Amazon efforts.
Scalability – Both can be scaled in different ways. For Amazon, you’d have to up your original product range and for Shopify you’ll have to up your marketing efforts. Both can be scaled nicely but Amazon may require more physical people to pick and pack goods unless you are using FBA.
Are Shopify and Amazon Competitors?
As you can see, the answer isn’t quite as simple as it might seem at first. Hopefully this article helped you understand just how Amazon and Shopify are similar and different, and clear up some potential confusion. If you’d like to learn more, sign up for our newsletter below and become an e-commerce genius!