Shopify vs. Amazon FBA for Scaling Your eCommerce Business

Last updated on August 31st, 2023

Written by Mohamed Aden

If you're an eCommerce newbie, the real battle between business models starts with Shopify vs. Amazon FBA. This decision shapes the outset of your eCommerce business. It is as important as choosing a reliable business partner. 

In this blog post, we will break down the strengths and weaknesses of Shopify and Amazon FBA. We aim to help you make a smart decision for your eCommerce venture. 

Understanding Shopify

Shopify is an eCommerce platform that allows you to manage and personalize your online storefront to sell online. It provides entrepreneurs like yourself with templates, payment options, and other eCommerce tools to establish and operate your own online store. This user-friendly online store builder simplifies online selling, sales tracking, and inventory management.

Benefits of Using Shopify

Now that you're familiar with what Shopify is, let's look at the benefits of using this specialized eCommerce platform to scale your online business:

1. Easy Shopify Store Setup

One of the strong areas of Shopify is its intuitive interface and user-friendly web tools that can be downloaded directly from the Shopify app store. Shopify users can easily launch their own eCommerce store without going through complicated processes, so they can quickly start selling. 

2. Customizable Themes

Shopify provides a variety of customized and mobile-responsive templates fit for different industries. With the option to choose from free or paid themes, you can easily create a visually appealing and unique store representing your brand.

3. Excellent Customer Support

Shopify is known for its exceptional customer support. They provide 24/7 customer care via phone, email, or live chat. Shopify also has a community where users can interact with one another and help each other with their questions and concerns. 

4. Low Transaction Charges

Compared to other eCommerce platforms, Shopify's transaction fees are generally cheaper.  Based on your Shopify store's plan, you'll only pay a 0.5%—2% transaction fee. You'll also have zero transaction fees with Shopify Payments, the platform's built-in payment gateway. This can help you save on costs and maintain a higher profit margin for your online store. 

Drawbacks of Using Shopify

You now know the benefits that make Shopify worth a try. Now, let’s explore the limitations of using it. 

1. Higher Monthly Fees

While Shopify provides a range of features and ease of use, it comes with higher monthly fees than other platforms like Amazon. These costs can pile up and affect profitability, especially for startups or small businesses.

Take a look at Shopify’s subscription plans and how much they cost: 

2. Limited Free Themes

Another disadvantage of using Shopify is the limited number of free themes. Although hundreds of templates and designs exist, most high-quality, professional-looking themes require payment. 

This can be frustrating for users looking for budget-friendly yet visually appealing design options for their online store.

3. Challenging Platform Exit

Leaving Shopify is challenging if you want to switch to another eCommerce platform. You can't seamlessly transfer your Shopify store except for reports. Think carefully about long-term commitment before signing up and creating your own Shopify store.

Amazon FBA Explained

Now that you know the benefits and drawbacks of using Shopify, let's explore the other option: Amazon FBA. It refers to the Fulfillment by Amazon (FBA) program, where sellers can keep their goods within Amazon's fulfillment centers.

When customers order products, Amazon takes care of the fulfillment processes on behalf of the sellers. This lets sellers focus on sourcing new products and other areas of building a successful business.

Here’s how Amazon FBA works: 

Benefits of Amazon FBA

Using Amazon FBA comes with several benefits. But are these benefits better than what Shopify offers? Check them out below: 

1. Shipping Discounts

When you sign up for Amazon FBA, you can benefit from the program’s shipping discounts. Your goods become qualified for free shipping and Amazon Prime’s Free Two-Day Shipping. Through Amazon FBA, you can save 32% of your usual shipping costs from major shipping companies. 

2. Return Management

Handling returns can be a hassle for many businesses, but Amazon FBA takes care of return management in your stead. The platform directs customers to an online returns center if customers return a product. This allows you to concentrate on other parts of your business operations.

3. Customer Support

Amazon FBA offers 24/7 customer support, saving you time and money for hiring a separate customer service team. FBA Support handles inquiries, issues, and complaints for orders fulfilled through their service. 

Amazon FBA also doesn’t charge extra fees for their customer service, except for the Returns Processing Fee for certain product categories. 

4. Access to Specialized Services

Aside from Amazon handling the storage, packing, and shipping of orders for you, you also gain access to various specialized fulfillment services. For example, FBA Export allows you to sell easily to more than 100 countries. 

Other specialized fulfillment services include Amazon Global Logistics, Multi-Channel Fulfillment, and more. Note that you won't need additional capital or workforce funds to use these services. 

Drawbacks of Amazon FBA

While Amazon FBA offers great benefits, it's not perfect. Like other business models, Amazon FBA has some downsides: 

1. FBA Fees

One of the primary issues for Amazon sellers is the high cost of selling fees. Amazon charges storage and fulfillment fees, your chosen selling plan, referral fees, optional services, and more. FBA fees can quickly build up depending on the product's weight, size, and time it remains in storage.

2. Requires Regular Inventory Management

Another challenge you may face with Amazon FBA is the need for regular inventory management. In the FBA system, you're responsible for ensuring your products are updated in Amazon's warehouses. 

Despite Amazon lifting the burden of fulfillment off your shoulders, you must still be proactive in maintaining your inventory levels. Failure can result in stockouts, leading to missing out on sales opportunities.

Making the Decision: Factors to Consider When Choosing Between Shopify vs. Amazon FBA

Now that you have familiarized yourself with Shopify and Amazon, let’s explore the factors you must consider when choosing between the two. While this is not an exhaustive list, here are some of the top factors you must consider in your decision-making process:

1. Order Fulfillment

With Amazon FBA, the platform takes care of order fulfillment for sellers. This process benefits beginners without the logistics expertise to manage their fulfillment. It also suits busy entrepreneurs who don’t have time to handle fulfillment processes. 

On the other hand, Shopify allows you to manage your inventory and order fulfillment or use a third-party service. This offers flexibility in fulfilling orders and managing inventory, which might suit more seasoned sellers. 

2. Fees

Amazon charges various fees, including a referral fee per item sold, fulfillment fees for storage and shipping, and a monthly subscription fee depending on your chosen selling plan.

Below are the prices of selling plans on Amazon: 

When it comes to subscription fees, Amazon is cheaper than Shopify. However, with other selling fees involved, Shopify seems to be a more affordable option for sellers. Shopify doesn’t charge referral fees, storage, and other fees that selling on Amazon incurs. 

3. Potential Profit

When evaluating potential profitability, consider the level of competition in your niche and the fees associated with each platform. Amazon offers a much larger customer base, but you may face increased competition with other 9.7 million sellers. This can still be a good thing as it’s a sign that there’s a huge potential for greater profits.

With Shopify, you might have lower fees and lower competition with more than 4 million sellers. However, you must pay for marketing to attract customers, which could cut your profit margins. 

4. Marketing Options

Amazon’s options for branding, customization, and having a unique store design are limited within the Amazon marketplace. However, the platform offers various advertising tools, such as Sponsored Display Ads, to help promote your products. You may also enhance your product listing using A+ Content. 

Meanwhile, Shopify allows for more customization, design, and app integrations for establishing a unique and personalized shopping experience for buyers. However, some of the best apps on the Shopify app store aren’t free; you must pay to use them.  

Which is Better: Amazon or Shopify?

Amazon excels in scaling a business. The platform provides comprehensive tools and programs to help sellers. But if you’re looking for more brand control and customization, Shopify offers better opportunities. 

Get Started With Amazon FBA, and Let Seller Interactive Lead You Through the Entire Process!

Depending on your business goals, one platform may outdo another. But if you’re seeking to maximize your potential in the eCommerce industry, Amazon FBA is the way to go. That said, selling on Amazon requires strict and complex processes, such as complying with its guidelines. 

If you’re ready to scale your business but need expert guidance on selling on Amazon, Seller Interactive is here to help. We offer comprehensive account management services, from setting up your Amazon Seller Central account to prep and logistics. 
Book a call with us today and take the next step to improve your eCommerce business!