The pandemic undoubtedly fuelled the global growth of entrepreneurship. As a result, the number of new eCommerce businesses has also grown significantly, with many selling their products and services on platforms or marketplaces such as Shopify and Amazon.
Whether you are a start-up or an established business, using Shopify or Amazon – or both together – to grow your brand online can offer a number of different benefits.
And, if you’re struggling to determine the best option for your eCommerce business, you’ve certainly landed in the right place. We’ve created a helpful guide outlining everything that you need to know about Shopify and Amazon FBA for eCommerce businesses.
What is Shopify?
Shopify is subscription-based software that allows anyone to set up an online store and sell their products in the digital world.
Shopify is a complete commerce platform that lets you start, grow, and manage a business. Perfect for beginners and eCommerce experts alike, Shopify provides you with the foundations you need to run an eCommerce business, including the tools required to showcase products, engage with customers, accept payments, and much more.
What is Amazon?
Amazon is a marketplace which allows sellers to sell their products on the Amazon store, thus benefiting from their significant online presence. Fulfilment by Amazon (FBA) is an optional service that helps businesses of all shapes and sizes to grow, by providing access to Amazon’s logistics network. Businesses send products to Amazon fulfilment centres and, when a customer makes a purchase, Amazon FBA takes full control of the receiving, packing, shipping, customer service, and returns of those orders. You can however use Amazon FBA to also fulfil your Shopify orders, provided you have an Amazon Seller Central account.
Differences Between Shopify and Amazon
When determining whether or not Shopify or Amazon can better accommodate your business needs, it’s important that you understand the differences between the two eCommerce solutions.
The main difference between Shopify and Amazon is that Shopify is a specialised eCommerce platform and Amazon is an online marketplace.
With this in mind, Shopify will give you the tools you need to build your very own online store, whereas Amazon allows you to sell through its marketplace, alongside other online sellers.
Which of The Two Platforms is Easier?
This depends on the type of business, your business needs, and your goals. Both platforms come with their own pros and cons, and it’s important that you weigh these up when you’re figuring out the best solution for you.
Keep in mind that, if you are a reseller focusing on retail or wholesale, Amazon will likely be the better option for you as you can list your products using an already existing Amazon listing with a sales history.
On the other hand, if you’re looking to grow brand awareness with a fully customisable website, Shopify will probably be a good option. That’s not to say that you can’t build a brand on Amazon – many businesses do this successfully.
There are risks attached to being an Amazon only seller, especially if the business is your sole source of income. Amazon has complete control and can take you off sale for a variety of reasons. You won’t have to search the internet too hard to find stories posted by frustrated sellers as they grapple with such issues. Being multi-channel reduces the risk of suddenly finding you have no income at all.
What Does it Cost to Sell on Each Platform?
If you’re planning on selling on Shopify or Amazon, it’s important that you familiarise yourself with the fees associated with each platform. We’ve rounded them up for you:
Amazon Fees
Promising to “save time and help grow your business,” Amazon FBA offers a range of selling plans based on product category, fulfilment strategy, and other variables.
All selling plans give you the freedom to pay per sale or stick to a flat monthly fee. You can change or cancel your plan at any time. You will also need to look at referral fees, fulfilment fees, and other costs. Selling fees are higher than the transactional fees that Shopify charges because you are benefitting from Amazon’s marketing machine.
Shopify Fees
Again, Shopify offers a range of different payment plans so that you can choose a package that works for your business.
For example, the basic plan is best for eCommerce businesses with occasional in-person sales and costs £24 per month. Shopify is best for growing businesses selling online or in-store and costs £69 per month, while Advanced is best for scaling businesses that require advanced reporting and costs £259 per month. There’s also Shopify Plus available for established businesses. Prices for Shopify Plus start from $2,000 per month. There are transactional fees in addition to the platform fees.
How Many People Shop on Amazon vs Shopify?
When weighing up the best option for you, it’s also important to consider how many people are shopping on Amazon and Shopify. Let’s take a look at the latest shopping figures:
Amazon
According to recent research, nearly 90% of shoppers in the UK are using Amazon. There are about 15 million British shoppers subscribed to Amazon Prime. There are 21 Amazon FBA distribution centres in the UK.
Shopify
Recent research has indicated that worldwide 457 million people bought from a Shopify store. This number has increased by 52.33% over the past year, signalling a boost in online sales.
Which is Better for My eCommerce Business?
As discussed above, it is clear that both Shopify and Amazon have different features to offer eCommerce businesses.
However, Shopify is widely recognised as being one of the best eCommerce platforms on the market if you want to grow your brand online in a way that meets your bespoke business needs.
If you have the time and resources, we would always recommend diversifying your business beyond a single marketplace or platform. This is because it puts your business at greater risk if something goes wrong. In addition to the issues mentioned above with regard to Amazon, if your Amazon seller account health score were to drop then you could drop in the search result rankings. This can be a reason for being suspended from selling. Equally with Shopify, if you found yourself hit with a large bout of fraudulent transactions, Stripe could choose to put your payouts on hold. Therefore, we don’t recommend putting all your eggs in one basket so that you have something to fall back on if one channel slips.
Get in touch!
As you consider the future of your Shopify business, we invite you to explore how our specialist Shopify accounting services can help you. Reach out to us today, please give us a call on 01942 725419.