Whether you are just getting your e-commerce business off to a start or are planning on taking it in a different direction, you will need to debate which platform will work for you, Shopify vs Amazon FBA. Let’s look at the pros and cons of each platform so you can make an informed choice for your business.
While you may choose to run an online store independently and have an Amazon Marketplace presence most e-commerce businesses find their feet through a single outlet. Both Amazon FBA and Shopify have advantages so the choice comes down to how much autonomy you are looking for and which option will work best for your potential customers.
The advantages of Amazon FBA
Marketplaces don’t come much bigger than Amazon. According to Statista, Amazon made close to $232 billion in 2018, with half of all units sold being through Marketplace. Those numbers speak for themselves. By attaching your store to Amazon Marketplace you are automatically reaching a massive customer pool, particularly if you sell internationally.
Additional Services of Amazon FBA
Amazon FBA also has a huge amount of services that they will take care of for you. They can dispatch for you in the UK and worldwide (Amazon fulfilment centres), handle your inventory and store your product, removing the need to source an independent warehouse.
The disadvantages of Amazon FBA
While Amazon FBA does allow you an easy way to launch a new e-commerce business internationally, the price may be less friendly. Amazon FBA charges a flat fee of £28.75 (inc. VAT) a month to professional sellers. You’ll then be charged a fixed percentage of the sale as a referral fee. Depending on the item you are selling this could be as much as 20% (jewellery) but is more likely around 8% (consumer electronics). On top of this, you can pay for Amazon fulfilment and storage. Amazon provides a fee calculator to help you plan for these costs. The specifics of your product will affect how profitable your item is in this setting.
The control issue
Amazon FBA has a major advantage in being a busy hub primed with customers trying to buy, but it does cost you control. Amazon fees may skew your pricing from your initial intent, and you have limited control over how your shop looks. Additionally, Amazon holds a sword of Damocles over your e-commerce business, as they can remove your presence if they see fit. You’ll need to stick rigidly to Amazon guidelines and ensure you don’t get too much negative feedback and you may still not be secure.
A crowded marketplace
You will have the customer base, but their degree of brand recognition may be limited. The nature of the crowded Amazon Marketplace means customers routinely know what they bought but not from whom. Couple this with a lack of visibility due to the immense size of the Marketplace and your sales may not mean repeat customers or recommendations.
The advantages of Shopify
One of the key arguments in the Shopify vs Amazon debate is control. By using Shopify on your own site, you have far more control over your store than you do on Amazon FBA. You can make your store reflect your branding, set price-points that don’t need to closely reflect other Marketplace sellers and have less of a concern over feedback scoring. Your e-commerce business can be marketed and branded to be recognisable and individual using a vast library of themes and imagery. It is also secure. Unless you routinely carry products that commit copyright infringement, Shopify is extremely unlikely to remove your business.
Shopify has a free 14-day trial that will allow you to get to grips with it before signing up for a subscription. Subscriptions start as low as $29 a month for business owners. Transaction fees are 2% on sales that don’t use Shopify payment on the cheapest package and will decrease as your business scales.
Integrations and partnerships
Shopify knows you’re going to be up against the giants such as Amazon and eBay and as such have more than 2,100 integrations possible to offset this. Some are functional integrations, such as with Xero, but many are marketing and selling tools such as A2X, Google Shopping, and a site translator to reach customers across the globe.
The disadvantages of Shopify
The biggest disadvantage is that you won’t start with a primed audience who will arrive at your store ready to purchase. You will have to market your business and build a customer base from scratch. This can be time-intensive and slow to get rolling so may not be ideal if you are looking to bring in a set amount in a short timeframe.
While the initial costs make Shopify seem like an easy choice it is worth remembering that you will need to host your e-commerce business. You will need a website, a domain name and any advertising costs you incur to get started. Many e-commerce business owners run their business through a website and Amazon Marketplace to increase brand awareness but if you are looking for a cheap way to get started, you will need to factor in these additional costs.
Shopify vs Amazon FBA
After running through the workings of Shopify vs Amazon FBA, both options are valid choices for any e-commerce business but how you want to grow your business is a key factor in your decision. If you want to build a brand that will stand out and that you have absolute control over, you will need Shopify. If you want to get a product to the marketplace quickly to a vast sea of potential customers, all primed to shop, then Amazon FBA will be better suited.
Once you’ve decided which platform is best for your e-commerce business, get in touch with our team. We will help you streamline your accounting systems and utilise app integrations to reduce your workload and up your productivity.
The best time to start is now.