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Amazon FBA vs Shopify: Which One Is Best For You? [Guide]
Amazon and Shopify.
One is the most popular ecommerce retailer in the world, worth over $1 trillion.
The other powers some of the biggest commercial names on the internet, including Tesla, KKW Beauty, Victoria Beckham, RedBull, Kylie Cosmetics, AllBirds, and more.
But there are perhaps more differences between Amazon and Shopify than there are similarities.
Amazon is a marketplace facilitator. Shopify is an ecommerce platform.
The strategies that sellers need to adopt to be successful on these sites vary greatly, and the trade-offs might just sway you towards one over the other.
And that’s what this guide is here to do. We’ll break down what the platforms look like in 2021, what they offer their sellers, and how your strategy would need to be different for each one.
We’ll also look at how you can use the elements of each that you like, to create your dream ecommerce toolkit.
In this Amazon FBA vs Shopify guide:
Table of Contents
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Introducing Amazon and Shopify for Ecommerce Sellers
Amazon refers to its sellers as Selling Partners.
As a marketplace facilitator, Amazon hosts the space where people buy and sell. Plenty of other sellers are competing in the same space for the attention of Amazon buyers.
Shopify is a sophisticated tool for ecommerce. A new seller uses it to build their store from the ground up themselves.
There is no established, buzzing marketplace to join, but you’re not limited by the same rules or templates that Amazon sellers are - nor are you competing with millions of other sellers (in the same space).
Let’s take a look at Amazon and Shopify by their sizes in revenue, sellers, and buyer traffic.
How hard will you need to work to make some money on one of them?
Amazon by numbers
- Amazon is worth more than America’s next 9 largest retailers combined ( source).
- In the first quarter of 2021 alone, Amazon amassed $108 billion in net sales ( source).
- In the last three years, monthly visitor numbers to Amazon.com haven’t dropped below 2 billion ( source).
- 44% of Amazon sellers make between $1,000-$25,000/month. 26% make less than $1,000/month ( source).
Shopify by numbers
- 1 in every 1,000 employed adults worldwide is supported by a Shopify merchant ( source).
- There are 1.75 million Shopify sellers, with half of those based in the US ( source).
- Shopify’s revenue increased 86% from 2019 to 2020 ( source).
- There are over 6,000 apps on the Shopify app store ( source).
- The number of Shopify customers grew 52% from 2019, to almost 457 million ( source); a consistent increase since 2014:
Source: Backlinko.
Amazon and Shopify are at the top of their games, not to mention the ecommerce industry across the board.
Huge potential exists for a new seller, whichever way they choose to go this year.
How are the platforms supporting their sellers in 2021?
When you sign up to Amazon or Shopify, you don’t just take the tools and run.
Each platform - whether it’s more involved with your business, like Amazon, or less involved, like Shopify - has new things to offer sellers all the time.
So let’s check out what some of the latest updates are for this year from each.
Amazon experts JungleScout report every year on their predictions for platform changes.
Here’s a round-up of what they believe will be happening on Amazon this year:
- More brand registry features. This will interest sellers considering Shopify because of its greater level of freedom. By registering as a brand on Amazon, you unlock a host of extra benefits and gain more control over your business.
- Expanded video content. Based on Amazon’s introduction of videos on listings and Amazon Live, it seems likely they may explore this further.
- Improved ad features and targeting. They predict more focus on conversion rate optimization and more off-site advertising opportunities.
- A build on their support of smaller businesses. They currently have a section of the website dedicated to small, local businesses, but perhaps in light of COVID-19, this will become more of a focus.
In our blog about selling on Shopify in 2022, we discuss the latest changes the platform has made to support its merchants.
Here’s a quick overview of these updates:
- Shop Pay installments for spreading costs. Following the popularity of schemes like AfterPay, Shopify is now offering an integrated solution for Shop Pay users. Buyers can choose to spread the cost of their purchases for free.
- Localized experiences. Customers like to view pages in their own language and currency, so Shopify has expanded its facilitation of this for merchants. Learn how to set up international domains here.
- AR & VR shopping experiences. Shopify loves to help its merchants achieve unique customer experiences, and gives them access to the latest technology available to do that. AR and VR are great examples of this.
Stay up to date with Shopify’s latest news via their Reunite conference webpages.
Selling on Amazon vs. Shopify
Now that you have a bit of context about the types of changes that occur on the platforms, let’s get down to it: the great comparison.
Here, we’ll break down each element of selling on each platform to help you decide which is better for your business.
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The setup
If we stick to the practical setup steps for now and put aside the product research for what to sell on Amazon and what to sell on Shopify, we can see stark differences straight away.
Setting up to sell on Amazon is a matter of opening a Seller Central account. To do this, you’ll need business contact information, a bank account, ID, and a credit card to pay your fees.
After entering these details and verifying your identity, you are essentially good to go on Amazon.
Shopify takes more work.
You are building your selling platform from the ground up. Not only will you need to sign up to use the platform, but you’ll need to pick a Shopify theme, brand your site, customize it, create and add your policies, choose your payment gateways, and create your store’s pages.
This is ideal for sellers wanting to build a brand, not for those that want to get going quickly with minimal customization.
Better for a quick setup: Amazon.
Better for a more customized setup: Shopify.
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The costs
Shopify subscriptions cover all your “fees” for the platform. You have a fixed cost to consider and don’t need to worry about variables on top - unless you opt for non-default options.
For example, using Shopify Payments as your gateway of choice doesn’t involve transaction fees. But opting for other gateways does.
Another optional cost would be any Shopify apps that you choose to add to your mix. There are thousands available to help you customize your store and user experience.
With pricing plans that cover most of your bases, Shopify fees are relatively straightforward.
Amazon fees are more complex.
Amazon sellers pay to list their items. This is either per item for individual accounts, or a monthly subscription for professional accounts.
For each item sold, sellers pay a referral fee. This is Amazon’s commission for bringing you customers, and depends on what the item is.
Then there are a host of fees for certain scenarios. For example, refund administration fees when an item is returned, fulfilment and storage fees for FBA, mislabelling fees, and more.
In our guide about how to sell on Amazon, we discuss how much it costs to get started on the platform based on your chosen business model, how long it typically takes to make money, and how much most sellers make.
The simplest fees: Shopify.
The cheapest fees: Arguably Shopify, but this depends on numerous factors.
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The rules and expectations
Selling on Amazon is like getting a job at Wholefoods (which, incidentally, it owns).
You sign your Wholefoods contract, put on the uniform, and represent the brand - so you are at the mercy of its rules and regulations.
Selling on Shopify is like hiring a stall at a market. You might get a table included and some blank signage to use, but the rest is up to you.
Shopify has an Acceptable Use policy, but beyond that, you can make up your own rules.
Amazon can suspend sellers at any time. In fact, JungleScout reports that this is a worry for 75% of sellers.
There will, of course, be a reason for any suspension. But if it was the result of a misunderstanding, you will still have lost precious time and potentially resources in the meantime.
Can you live with that possibility?
The stricter rules: Amazon.
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The fulfilment options
Fulfilment by Amazon is an expert fulfilment network operating across the US and overseas.
It can be used by Amazon and non-Amazon sellers (via Multi-Channel Fulfilment), and automates the entire delivery process for sellers. It also takes care of customer service, and listings fulfilled by Amazon get a prestigious badge that says so, helping customers trust the authenticity of the seller.
Shopify Fulfilment Network is exclusive to Shopify sellers in the US and Canada, automating the fulfilment process for them. Sellers keep their own branding, and the network will even pack based on your instructions for unique unboxing experiences.
SFN is currently available to American and Canadian sellers with small product catalogs.
The more flexible option: Amazon FBA.
This service is larger, can fulfil multi-channel or non-Amazon orders (so Shopify sellers can use it too), and operates overseas ( with some limitations).
The cheaper option: Either.
This depends on what you sell, how much of it, and how quickly.
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The marketing strategies
By joining an established website with millions of monthly visitors, Amazon sellers aren’t starting from scratch in the same way that Shopify sellers are.
Search Engine Optimization (SEO) is effective for both Amazon and Shopify. Sellers can use this to their advantage for free regardless of platform - although on Amazon, this is limited to listings. With Shopify, sellers can blog to increase their search rankings too.
For Amazon sellers, the main objective of marketing is to stand out from their Amazon competitors. The secondary objective may be to show up in Google search results through off-site ads.
For Shopify sellers, the main objective of marketing is to appear in search results and tempt people from outside the platform, since there is no existing traffic within it.
Amazon provides a few integrated advertising tools for its sellers:
- Sponsored brand, product and display ads. These primarily boost listings, products and product lines within Amazon itself.
- Amazon stores. This is as close to Shopify as Amazon gets, allowing brands more control to design a storefront hosted by Amazon. This helps sellers develop their own brand.
- Amazon Attribution: For brand-registered sellers and Amazon vendors, this free tool allows them to keep track of their marketing channels off Amazon. This is ideal if you use social media, for example.
- Amazon Live: A livestreaming tool that allows sellers to connect with customers on the platform and discuss their brand or products.
You will likely need a professional Amazon seller account for the programs above.
Amazon also has the Prime badge, FBA badge, and buy box to reassure customers of seller authenticity, all of which help conversion rates. You can find out more about these here.
With Shopify, you’ll need to come up with your own marketing plan from scratch.
There are apps and integrations available to help you with aspects of it, like MailChimp for email marketing, but you’ll need to decide which to use, and when.
What is exciting about Shopify over Amazon, however, is that the platform is constantly coming up with innovative ways to enhance customer experience.
For example, Shopify sellers currently have greater access to and choice of VR and AR technology for their stores.
The easiest option: Amazon
The tools are integrated and designed for Amazon sellers. This makes it the easier option for a seller new to marketing.
The most flexible option: Shopify
It’s a blank slate, so you can design every aspect of your brand and customer journey from scratch and choose the right apps to help you do it. These apps can be exciting and innovative, so stores have the freedom to push boundaries.
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The accounting
Accounting for ecommerce is similar across the board, and a pretty unique beast.
Regardless of which platform you choose to sell from, you’ll need to keep track of the same kinds of things:
- Fees and subscriptions: Amazon may come with more fees, but if you have a suite of apps for your Shopify store, you’ll have numerous subscriptions to manage.
- Shipping and handling: Whether you fulfill yourself, use FBA or SFN, you’ll have plenty of costs to deal with.
- Sales tax, VAT, and income tax: Both Amazon and Shopify sellers need to pay attention to taxes. It is likely that you’ll be legally obliged to collect and remit sales tax, VAT if selling overseas, and income tax on your business earnings.
- Inventory and storage: Unless you dropship, this will be a major area of your accounting. You’ll need to keep on top of how much inventory you have stored in various locations, what is in transit, delayed, at customs, being returned - all regardless of platform.
The most complex option: They are similar.
The complexities of accounting depend on how you run your business and the technology you use to support it, rather than which platform you choose.
How to Sell on Amazon and Shopify
It is possible to use elements of both Amazon and Shopify to help optimize your ecommerce toolkit.
Whether that means having both stores and funnelling sales traffic to one, building affiliate links, sharing fulfilment, or even payment gateways.
Let’s explore those below.
Using Amazon FBA for Shopify
For sellers wanting greater creative control, but access to Amazon fulfilment.
If you want to design your own store and brand experience, and you’re not afraid of the extra marketing involved, then Shopify is your best bet.
You can still leverage the mammoth Amazon fulfilment network via Multi-Channel Fulfilment.
Sell as an Amazon affiliate on Shopify
If you want to be paid for sending customers to Amazon products.
If you have an established Shopify store, or are interested in making some extra bucks sending people to Amazon, then its Associates program is your best route.
You don’t need an Amazon store, or even a Shopify store - just an audience that would be interested in a particular product.
Shopify Amazon integration
For Shopify sellers wanting to expand onto Amazon.
We mentioned above that Shopify likes to innovate to help its merchants reach more customers. Well, now, that includes expanding across sales channels too.
We know from Shopify’s Future of Commerce Report (2021), which we discuss in our blog about ecommerce trends, that more and more sellers are expanding this way. So integrations make this far easier and more seamless.
You can find further information about Shopify’s Amazon channel and instructions to set it up here.
Using Amazon Pay on Shopify
For sellers more interested in Shopify but want to offer Amazon payment gateways.
Due to Amazon’s huge reach and household name status, many customers will be comfortable with Amazon Pay. And you may want to offer it as a result, which you can activate from within Shopify’s integrations settings.
In our analysis of Shopify payment gateway popularity, we found it to be high on the list for US buyers, but not the highest. Shop Pay and PayPal still came out on top.
Shopify sellers who opt not to use Shop Pay as their default option are charged a few extra fees, so keep this in mind when choosing a non-integrated gateway like Amazon Pay. Find out more about this here.
Whether Amazon or Shopify, Get Your Accounts in Order
We mentioned above that accounting, on either platform, is similarly challenging.
Ecommerce sellers need a comprehensive grasp over every income and expense line that is associated with their bank deposits from Amazon and Shopify. So when it comes time to calculate this, settlement statements can cause more confusion than clarity.
Statements can span months, miss out on crucial details, and make sellers’ lives more difficult when it comes time to reconcile.
This is the problem that A2X solves.
You can integrate A2X with Shopify, Amazon, or both, and have these bank deposits interpreted for you, automatically.
Each deposit gets a corresponding journal summary, with every transaction calculated for you.
At a glance, you’ll see how much of that deposit is tax, shipping, returns, storage, fees, and more.
A2X also splits statements that span months, and organizes books via the accrual method of accounting which gives you the greatest clarity and accuracy when it comes to forecasting your business finances.
Turn hours into minutes with A2X for Amazon and A2X for Shopify.
Also on the blog
Want to feel completely confident in your ecommerce bookkeeping?
Businesses that document their processes grow faster and make more profit. Download our free checklist to get all of the essential ecommerce bookkeeping processes you need every week, month, quarter, and year.
Download it here
