ECOMMERCE TOOLS | 10 minute read
Both Amazon and Shopify offer eCommerce business owners a different set of features and advantages. Knowing what criteria to use to make the best selection is essential, and we’re here to help.
Setting up your eCommerce shop can feel like deciding between opening a small standalone store on a city street and opening the same store in a mega mall. The first offers a unique and personal experience, the second provides enhanced visibility and ease of setup. Each has its advantages and setbacks that can impact the success of your business.
With so many features on either platform and so many considerations to keep in mind it can be hard to know where to start. In order to make that choice easier we’ve looked at the most important criteria.
As an eCommerce business founder and owner you likely want the freedom to set the prices for the products being offered yourself. The ability to do so and make other choices is part of why you set out to start your own business and not work for someone else.
Setting an appropriate price point for the products you’re selling is dependent on a few factors, including what your competitors are selling a similar product for, what transaction fees are being taken by the storefront platform and what operating expenses you have. All those will determine first what price you set and your subsequent profit margins.
First, what kind of fees can you expect to pay to do business on Amazon and Shopify?
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?
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
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.
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.
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.
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.
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Subscription-based tool. Complete, out-of-the-box solution |
Online marketplace with millions of sellers and shoppers. |
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24/7 support via live chat, phone, email, and Twitter |
World-class Amazon Seller Support to handle customer inquiries, refunds and returns by live chat, phone, or email. |
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Customers are already primed to buy |
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eCommerce Store Design |
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| Over 70 templates | Upload your own images and descriptions, but the overall layout and design of your store page is recognizably Amazon’s. |
| Closed system: you can only modify your store to the extent that Shopify allows | |
| SSL certificate is included | |
| Features | |
| Shopify handles the technical parts of your store which means you don’t ever have to worry about performance, security, and scalability. Just upgrade your plan to scale up. |
Vast range of products sold through its marketplace. You can even sell services rather than physical goods. Fulfillment by Amazon (FBA) program, which you to access Amazon Prime customers, and lets Amazon handle the storage, packing and shipping of your products. |
| Sales stats and reports | |
| True Costs | |
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Starting at $29/month for Basic Shopify. You can upgrade to Shopify Plan at $79/month or Advanced Shopify at $299/month. Free trial available, no credit card required.
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When using FBA, there are a range of fees varying from $2.41 up to $137.32 for fulfillment fees (per unit). Then there are monthly inventory storage fees ranging from $0.69 to $2.40 per cubic foot. These prices are totally dependent on the size, volume, and type of product, and even the time of year. Individual sellers don’t pay a monthly subscription like Professional Sellers do. Instead, you pay a $0.99 fee for every product you sell. |
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Each plan includes domain name, SSL certificate & web hosting |
You may see more product returns. |
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Has its own Shopify Payments solution costs flat rate of 2.9% + 30 cents per transaction (powered by Stripe). Shopify offers all popular 3rd party payment gateways, but Shopify charges extra 2% fees on each transaction thru 3rd parties. |
Amazon Pay is its main payment gateway. You can accept major credit and debit cards through this, but not PayPal. |
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Cons |
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Extra costs: Shopify has a monthly fee, but it also has an App Store. Adding third party apps can increase your monthly costs. |
You’re up against a lot of competition. At times, you’ll be competing against Amazon. 3 other Challenges: Tracking inventory with FBA since it’s out of sight out of mind. |
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Since Amazon has strict guidelines on how to prep and ship your items, it takes time to get used to them. |
