When you’re starting a new ecommerce business, you have a lot of decisions to make. One of the biggest is, where will you host your new store?
Amazon and Shopify rise to the top when you start asking this question, and for good reason. They’re both widely used and provide sellers with a lot of great opportunities. However, what’s maybe not immediately clear to new sellers is that Shopify and Amazon are very different.
We all know Amazon—the world’s largest online marketplace. Here, millions of sellers compete against each other to sell their products to hundreds of millions of shoppers. They’re essentially renting retail space from Amazon, but, in exchange, they benefit from Amazon’s reputation and vast amounts of traffic.
Shopify is an ecommerce platform that gives you everything you need to build an online store from start to finish, from payment processing to marketing tools. With Shopify, you have your own website—you’re not competing with other merchants in a marketplace.
Not sure which is best for your ecommerce needs? To help you decide which platform is better for your unique business, we’re going to look at the four most important factors affecting your choice between Shopify and Amazon.
Factor #1: Cost
To decide whether Amazon or Shopify is more cost-effective for your business, you’ll need to consider your starting capital and the costs of fulfillment against each platform’s fees. Here’s what those fees look like.
The cost of selling on Amazoncan be broken down into two parts: seller fees and fulfillment costs. Seller fees are pretty straightforward. Amazon offers both “individual” and “professional” seller plans.
- Individual plan: $0.99 per item sold; includes basic seller functions
- Professional plan: $39.99/month for unlimited sales; added inventory management and sales functions
You can always upgrade from individual to professional, so there’s no harm in starting small and moving to a professional plan when you need it.
Both plans also pay a referral fee on each product sold, which is calculated based on your product’s category. (You can see the full referral fee schedule here.)
Amazon sellers can also incur fees through two fulfillment options: Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM).
With FBA, Amazon warehouses fulfill, ship, and even manage customer service for your products. This program has added perks, such as automatic eligibility for Prime and two-day shipping to customers at no extra cost to you.
There are several fees associated with Fulfillment by Amazon (you can read the details in our guide to Amazon FBA), but the main ones are the per-unit fee (scaled based on size and weight) and monthly storage fees. For small, lightweight products, FBA tends to be fairly inexpensive.
Fulfillment by Merchant means you have to handle all the costs of delivering products to your customers. The way you go about this can range widely, from managing the details yourself to hiring a third-party service. The costs associated also vary, depending on what route you take and how heavy and bulky your products are.
In order to use Shopify, you’ll need to pay a monthly subscription fee. Shopify has three monthly price tiers—$29, $79, and $299 per month—based on the features you need.
Shopify also has payment processing fees, charged per transaction, for credit card purchases and for payments made via a third-party provider (like PayPal). The credit card fee depends on the plan you choose; per-transaction fee remains consistent at $0.30. However, Shopify does provide a native payment processor called Shopify Payments that incurs no transaction fees.
Fulfillment is, of course, the other cost to consider. While Shopify doesn’t offer a program like Amazon FBA, it has negotiated shipping discounts for sellers using the Shopify platform. Inventory and fulfillment is still on you, but this does decrease shipping costs.
Verdict: Choose based on fulfillment costs
Ultimately, when trying to choose between Amazon or Shopify, it’s important to calculate your unique costs for fulfillment, because these will be the deciding factor in which platform is more cost-effective for you at this stage.
Do you have the capital to warehouse products yourself? Will you have the sales volume to negotiate discounted shipping rates? These are the kinds of questions you need to answer.
If you sell small, light items, selling via Amazon could save you a lot of money and hassle if you enroll in FBA. However, the decision between Shopify and Amazon can’t be decided on cost alone—let’s look at some of the other comparisons before making a decision.
Factor #2: Ease of Use
As you start up your business, you need to consider what your ecommerce store will cost you in terms of not only money but also time. When it comes to Shopify vs. Amazon, ease of use (and therefore time-effectiveness) really boils down to tech savvy.
Amazon ease of use
Getting started on Amazon is very straightforward. If you’re selling a product that already exists on Amazon, it doesn’t take more than a couple of clicks to list your product. If you’re selling something new, Amazon will walk you through the process of adding a product via a set of forms. You can also choose to upload products in bulk (see the video below).
Once you’ve completed this process or uploaded your products in bulk, Amazon automatically generates your product listing page (or adds your offering to an existing product listing page).
Beyond getting started, Amazon Seller Central—the hub you’ll use to manage your Amazon store—is fairly easy to use. If you have a question about something, you can pretty quickly and easily find an answer on Google or YouTube or in Amazon’s Seller Forum. There’s also a lot of third-party software available to increase the ease of Amazon selling, from inventory management to Sponsored Products advertising.
Shopify ease of use
Setting up your Shopify store is more complicated. This is to be expected, because you’re setting up a custom ecommerce website instead of just generating product listings. That being said, Shopify makes it very easy to set up a professional-looking ecommerce store with minimal technical knowledge.
Part of the ease of using Shopify comes from its network of resources. Step-by-step help documentation makes it easy to set the back end of your store, while Shopify’s library of free and premium themes makes it easy to design your storefront.
Shopify also offers a marketplace of trusted vendors, freelancers, and consultants to help you with everything from setting up your store to developing your brand.
Verdict: Amazon is slightly easier to use
Ultimately, both Shopify and Amazon are very easy to use—within their own contexts. So to decide which is better for your business in this regard, you need to evaluate your business goals. If you’re looking for a side hustle or a quick way to launch into ecommerce, Amazon is less complicated to manage, and it wins for overall “ease of use.” However, if you’re trying to grow an independent ecommerce business, Shopify is the easiest, most beginner-friendly custom ecommerce platform available to you.
Factor #3: Branding
How much does control over brand design matter to you? For some sellers (especially resellers), branding might not even enter the picture. For others, building and curating a successful brand might mean everything. This is an important factor to consider when comparing Shopify vs. Amazon.
On Amazon, you have some but not much control over your brand. You can use images and descriptions to create a unique product listing. Some sellers are eligible for Enhanced Brand Content, which allows them to build out their product pages further.
Beyond that, the other way you can distinguish your brand is to create an Amazon Storefront. A Storefront is essentially your seller page on Amazon, where your products are listed in one place—only dressed up to present your brand in a creative and unique light.
Even with a Storefront, Amazon’s branding is front and center, which can create challenges when trying to create brand loyalty. And if you’re not selling a unique product, you’ll have to share a product page with every other business selling that item.
Shopify gives you full control over your brand. You own your website design and messaging and have plenty of tools at your fingertips to adjust those elements at any time. Shopify themes come in a variety of designs, but they can be customized with design elements, widgets, images, and even custom code. You don’t have to worry about looking “templated” with a Shopify store.
There’s also an entire Shopify app marketplace to make it easier for you to design the brand experience you want customers to have. There are over 2,000 apps in the “Store Design” category alone, with everything from review widgets to promotion pop-ups to trust badges.
Verdict: Shopify offers more control over branding
There’s no doubt about it: Shopify offers sellers much more control over their branding than Amazon. When deciding between the platforms, carefully consider how much building brand equity is worth to you. If, for example, you’re selling a high-end product where brand perception adds value to the product itself—such as in the case of Apple products or a luxury brand—control over your brand assets is essential.
Remember, though, that the control Shopify offers is also what makes it a bit more complicated to navigate than Amazon. Weigh branding and convenience, and decide which is more important to you at this stage in your business.
Factor #4: Traffic
Last but certainly not least, you need to know which platform makes it easier to reach your customers and generate sales. The short answer is, Amazon offers more traffic. But that answer doesn’t really give the full picture, because high traffic also means high competition.
Amazon offers sellers a very big pie—hundreds of millions of shoppers on a monthly basis (and those shoppers generated $53.76 billion for third-party sellers in 2019 alone). However, to get a piece of that pie, you’ll have to compete with more than two million other active marketplace sellers.
If you’re selling a unique or niche product, you’ll have a slightly easier time because you won’t have to contend as directly with other sellers. But if you’re reselling another brand’s product, you’ll have to compete on the same product listing for what’s known as the Buy Box.
Tools like Sponsored Products advertising can help you stand out to buyers and generate traffic more quickly than organically building awareness. Just know that, even with Amazon advertising, it takes time, effort, and often money (at least at first) to build a consistent funnel of traffic to your products.
Shopify is not a marketplace,so you have to drive traffic to your store the “old-fashioned” way. This requires more up-front effort on your part. An ecommerce advertising strategy is a must to drive traffic from channels like search, email, and social media. You’ll also need to put effort into search engine optimization (SEO) and probably content marketing as well.
The benefit to this approach is that once you turn shoppers into customers, you can focus on developing loyal, repeat buyers instead of constantly chasing new ones.
Verdict: Amazon is better for generating product-page traffic
Amazon makes it easier (though not easy) to get traffic quickly. If you’re selling a basic commodity that doesn’t rely on branding, it’s probably better to focus on Amazon. High volume of sales is going to be more important to this business than building brand equity.
With that said, it’s difficult to turn that traffic into loyal customers, because you can’t market to buyers or offer any kind of loyalty program. They may very well purchase from a competitor the next time they need your product.
Shopify can take longer to ramp up traffic but provides a better framework for sustainable business growth. The good news is, you don’t actually need to make this into an either/or question.
In Shopify vs. Amazon, who wins?
Both Amazon and Shopify offer different approaches to building a successful ecommerce business. There’s really no objective way to declare an overall winner. But because you’re trying to decide where to launch your ecommerce business, here’s our opinion:
Amazon is better for sellers looking for a profitable side hustle or who want to bootstrap their ecommerce business. It’s also better for those selling commodities, where traffic matters more than brand control. Entrepreneurs and individual sellers can thrive with an FBA business model without having to invest a lot of capital in logistics or promotions.
Shopify is better for sellers who want to build a long-term brand with a unique or high-end product. The ecommerce platform grows with sellers and offers many features to support this goal, including beginner-friendly store-design tools and more.
Just remember: while Shopify vs. Amazon is a popular dichotomy among new sellers, it’s really not an either/or decision. Yes, you should probably start with just one as you ramp up your new business, but it’s very easy to expand from one platform to the other (Shopify even has an Amazon integration).