Shopify vs. Amazon: A Tale of Two E-Commerce Giants
We’ve put together a comparison guide of Shopify vs. Amazon that draws on research and insights from our team. While comparison usually means picking one or the other, we conclude that there is merit to using both Amazon and Shopify to build a digital presence and grow your business.
Introduction
For years, Amazon has been the biggest player in the e-commerce world, making up a staggering 41% of all e-commerce. With its quick shipping and extensive network, Amazon was prepared for remote shopping and experienced tremendous growth during the pandemic, when hundreds of thousands of businesses were forced to close or turn to e-commerce. But the pandemic also powered growth elsewhere. Needing to pivot to stay afloat, businesses brought their products and services online, and in navigating the unfamiliar space, many of them found the tools that they needed on Shopify, a then-little-known company that soon became Amazon’s main competitor in a lot of ways.
Today, business owners who want to create a digital storefront end up evaluating these two e-commerce platforms. When comparing Shopify vs. Amazon, both offer valuable services and give sellers access to a wide range of tools. However, the differences between the two are plentiful. Amazon at its core is customer obsessed, labelling itself as the “everything store”, while Shopify is merchant obsessed and, in shifting entirely into virtual work during the pandemic, aims to be the “everywhere store”.
In an era where having a digital presence is indispensable, knowing the differences between these two across the features that matter the most for your business is the first step to e-commerce success.
An Overview of Shopify vs. Amazon
An important difference between the two is that Shopify allows business owners to build and manage an online store, while Amazon is a marketplace that houses products and services from different businesses. Many people liken Shopify to an empty building that sellers rent out, and Amazon to a massive department store that sells virtually everything. Customers seek out brands on Shopify and stumble across them on Amazon.
Shopify currently powers more than one million independent businesses of all sizes, catering to retail chains and big companies like Kylie Cosmetics and Tesla, as well as a mosaic of smaller DTC brands, start-ups, and celebrities like Lady Gaga and Adele who have launched their own merchandise.
Pros
- Extensive e-commerce tools: Shopify merchants start out with a core product, which includes customizable templates, integrated payment processing, and more. They can add to this “starter kit” with additional features like Shop Pay and apps built by third-party developers in Shopify’s App Store.
- Unique brand identity: As mentioned before, Shopify is merchant-forward, and so they prioritize empowering brands to make their online store completely their own.
- Flexibility with collecting consumer data: In Shopify, a brand has access to their customers' data and knows exactly who they are. Data powers personalized experiences. As privacy regulations decrease the usage of third-party data and cookies, brands will need to increasingly rely on first-party data. Access to consumer information has been a continuous battle between Amazon and its third-party sellers.
Cons
- Marketing: With Shopify, customers come to the brands by searching for specific stores or items, which means that sellers need to be more hands on with marketing campaigns to get the word out about their brand (and the spend associated with that marketing).
- Fulfillment Responsibilities: Sellers need to take care of fulfillment themselves or rely on third-party carriers, which are often subject to unpredictability.
Amazon has 14 global sites and more than 213 million unique US visitors each month, making up an extensive customer base.
Pros
- Extensive customer base: This is great for new or small businesses who don’t yet have the inventory or revenue capabilities to maintain an independent store, and for established businesses who want an additional revenue stream. Customers are able to organically discover brands just from searching within Amazon.
- Fulfillment Capabilities: Amazon’s FBA service (more on this below) allows sellers to partake in two-day Prime shipping.
Cons
- Competition: Sellers on Amazon are competing with each other with products and layouts that look similar. The Amazon marketplace is densely saturated.
- Limits to consumer data: Because Amazon limits access to consumer data for third-party sellers that use its fulfillment service, sellers lose the ability to learn who their consumers are.
Side-by-Side: Differences Across Specific Features
1. Branding and Design Ownership
Shopify undoubtedly gives business owners more flexibility and control over branding and web design.
- They can customize templates and enhance the customer experience with upgrades made exclusively for Shopify merchants.
- Sellers can customize further with the Shopify App Store, which houses more than 6,000 apps and integrations created by third-party developers, including Brij. These apps, like browser extensions, allow you to add customer reviews, virtual try-ons, and even QR codes onto your products.
- For the tech-savvy, Shopify allows you to edit the code to build unique themes and power custom experiences.
Brands on Amazon, in contrast, have to make the most out of the same layout, which makes it difficult for their products to stand out, as they are displayed amongst hundreds of similar ones. However, customers go in knowing this and shop with the same standards, selecting products that have trustworthy reviews, thorough descriptions, videos, and brand legitimacy. Limiting the design options essentially places a ceiling on how creative brands can be on Amazon, which can be a silver lining.
Bottom Line: While selling on Shopify requires you to be more hands-on, the platform gives you the tools you need to make your online store entirely your own. This flexibility is more limited on Amazon, but there can be merit to simplicity.
2. Payment Options
The online checkout experience often comes with some friction, namely with inputting personal information and searching for your credit card. The average cart abandonment rate averages 70%, with nearly 20% occurring because of a lengthy checkout process. Amazon has combated the issue with its one-click checkout, which saves customers’ shipping and payment details for future purchases.
Amazon owned the patent for one-click checkout until it expired in 2017, which was when Shopify introduced its own one-click checkout, Shop Pay, at its developer conference. Shopify calls it “the best-converting checkout experience on the Internet”, with a 1.72x higher conversion rate than regular checkout processes.
Another factor of a seamless checkout experience is the availability of different payment options, namely the option to buy now and pay later (BNPL). Shopify partnered with leading BNPL provider Affirm in 2020, with Amazon following in its footsteps in 2021.
In 2021, Shopify also expanded Shop Pay to Facebook, Instagram, and Google, allowing merchants to reach customers on these platforms.
Bottom Line: Both Amazon and Shopify have reduced friction at checkout with their one-click capabilities. As the payment landscape continues to evolve, we can expect to see more movements made by these two platforms.
3. Omnichannel Strategy and Point-of-Sale (POS)
Omnichannel is what every business owner aspires to achieve, and for good reason: The pandemic has demonstrated the opportunities of selling online, but the gradual return to normalcy has also proven the necessity and value of brick-and-mortar stores. As people return to the physical stores, online channels like social media continue to grow as relevant revenue streams.
Shopify’s POS system is well suited to help businesses, especially brands who want to:
- Tap into DTC
- Keep inventory updated
- Unify their online and offline sales
- Offer local pickup and delivery capabilities such as buy online, pick up in store
Amazon currently does not have as extensive POS features as Shopify, but it has been working on a POS system, a project named “Project Santos”, since the end of 2020. Some people have expressed doubts that it can compete with Shopify’s POS, since Amazon has significant roadblocks to omnichannel e-commerce.
Bottom Line: Shopify’s POS system is a powerful advantage that helps business owners with their omnichannel strategy. As social commerce continues to grow and other channels appear, Shopify is currently better positioned to help brands manage the changing landscape.
4. Fulfillment Capabilities
When it comes to last mile delivery, Amazon’s capabilities remain unmatched. The company’s ever-growing network of fulfillment centers and its transnational shipping strategy, now including its own cargo shipping fleet, has held its ground against labor shortages and supply chain disruptions.
Sellers on Amazon can choose to ship products themselves or take advantage of Amazon’s FBA (“Fulfillment by Amazon”) service, which handles the entire shipping process. This option lets shoppers choose two-day Prime shipping on these products.
Sellers on Shopify can also choose to ship products themselves or use Shopify’s shipping carrier services such as UPS or DHL Express. One thing to be cautious about is the unpredictability of third-party fulfillment, especially with ongoing delays and product shortages.
Bottom Line: Amazon’s fulfillment capabilities are essential for an ecommerce world that values speed. By owning the last mile, Amazon has been able to withstand inventory problems that have plagued other retailers.
5. Marketing and Attracting Customers
There is no other e-commerce platform that is more widely visited than Amazon. Its presence in over 100 countries and extensive customer base allows sellers to not have to worry about search engine optimization (SEO) or finding the right customers.
Still, business owners need to find ways to stand out from their competition and lead customers to their products. With effective brand storytelling, hard to beat pricing, and glowing customer reviews, customers can very well end up choosing your brand—even if they weren’t intending to. Amazon’s algorithmic product recommendations can also direct customers to your page.
A Shopify subscription doesn’t come with a ready-made audience, so business owners need to lean on email and text campaigns, SEO, social media, and multichannel selling to build an online presence. The process is often expensive and takes time, but luckily, Shopify provides the marketing tools that power these campaigns.
More work is put into marketing when selling on Shopify, but there are long-term perks to being in control of the entire process. The most important one is being able to develop sustainable consumer relationships. Access to consumer data allows brands to create a more detailed profile of their customers, which does wonders for personalization and customer retention. Amazon limits the amount of consumer data they give to third-party sellers who use its FBA service, which can be costly in the long run.
Bottom Line: There is no doubt that Amazon’s large consumer base is valuable for brand visibility and reduces marketing efforts for brands. However, there is merit to having ownership over the marketing process and owning your customer data.
Best Practices with Using Both Shopify and Amazon
It’s clear from the Shopify vs. Amazon comparison that each platform drives value in different areas. This means that there is merit to leveraging the strengths of both platforms to expand your business. You can use Shopify to build a standalone store, which is essential for branding, strong customer relationships, and multichannel selling. Amazon complements Shopify as an extra sales channel and a touchpoint for redirecting new customers to your Shopify store.
By using both platforms, you can:
- Expand your consumer reach
- Strengthen your SEO ranking
- Sell where your customers shop
- Build a valid online presence
“Ultimately, the strategy depends on the individual business and its needs,” says Charlotte Thorndike, our team’s customer success manager. “Businesses that are just starting out might prioritize selling on Amazon and gaining a footing, while those with a solid customer base and strong focus on building a brand might focus on expanding their Shopify store. There is no one size fits all—brands should evaluate what’s best for their business, and continue reevaluating as it grows.”
Shopify vs. Amazon: Conclusion
Amazon and Shopify bring value in different ways, and we advocate for a complementary approach. Both are currently making moves to strengthen certain aspects of their platforms, and it is hard to tell what the debate will look like in the future. Whether Shopify and Amazon become partners or choose to fly solo, it’s safe to say that they will have a lasting impact on the future commerce landscape.
