Deciding which selling channels to use for your eCommerce store is a huge part of planning your business. While many business owners choose to sell on more than one channel, you’ll only want to pick selling channels that can meet your needs. Some are objectively better than others, but many of the biggest players in the business — like Amazon FBA and Shopify — are great all-around options.
So, which should you choose: Amazon FBA or Shopify? Is one better than the other? What are the pros and cons of each? Does it make sense to sell on both? Finally, how can you streamline your accounting processes with either channel?
In today’s guide, we will answer all of these questions and more, but first, let’s look at what you can expect when you’re selling on Amazon FBA:
Amazon FBA, or “Fulfillment by Amazon,” works as a platform for businesses to sell their products via Amazon’s fulfillment network. In layman’s terms, this means that sellers can sign up and send their inventory to Amazon’s warehouses. Then, whenever a customer makes a purchase, Amazon handles all of the logistics on your behalf. Amazon FBA takes care of storing, packaging, processing, and shipping your product directly to your customers. Additionally, Amazon FBA manages returns and provides certain customer service features.
● The Trust Factor - Amazon’s 38% eCommerce market share is the best in the business by a mile. Not only does this mean that you can expect higher volumes of traffic to your online store, but it also means that you can expect higher conversion rates simply by using Amazon. Why? Because people have come to trust Amazon as a legitimate provider of goods and services. If you use a selling channel that nobody’s ever heard of or simply doesn’t have the brand power of Amazon, you’re almost certainly going to see a drop in consumer trust.
● Next-Day Delivery - If your customers are signed up for Amazon Prime, they can get free delivery on qualifying purchases and as fast as next-day delivery for an extra fee. This means that your customers can literally customize their shipping experience, without having to pay extra money directly to you.
● Efficient Infrastructure - Amazon has thousands of warehouses across the United States, as well as facilities in major markets around the world. Amazon FBA is designed to be as efficient as possible to ensure that your products arrive at your customers’ doorsteps in a timely fashion — regardless of where they live.
● Hands-Off Logistics - Putting your business in Amazon FBA’s hands means enjoying the perks of completely hands-off logistics. You don’t need to create labels or try to calculate shipping fees. You don’t even have to worry about managing returns. Pretty much every step of the process is done for you.
● Low-Cost Storage - It’s easy to focus on the packaging, processing, and shipping perks, but there’s something to be said for being able to store all of your inventory in well-maintained warehouses. This means you won’t have to pay to rent or purchase property just for storage. It also means that you won’t have to rely on a small, third-party inventory management business that may not be as dependable or as cost-effective as a larger company like Amazon.
● A Lot of Fees - Amazon FBA is all about convenience, but that convenience comes at a cost. You will have to pay certain fees just to maintain your Amazon FBA account (per unit sold or a standard monthly fee), in addition to referral fees, fulfillment fees (to actually ship your products), and potentially other costs depending on the nature of your business.
● High Return Rate - Amazon FBA makes it pretty easy for customers to return products, which incentivizes consumers to buy things from Amazon on a “trial” basis. So, rather than buying with the intention of keeping a product, some Amazon customers may buy something, use it a little, and send it right back. You’ll lose that sale, regardless of the condition of the product when it is returned.
● No Long-Term Marketing Funnel - Many eCommerce businesses are designed to actually lose money on the first sale because they expect to make long-term revenue on repeat customers. However, when you sell with Amazon FBA, you have no way to get a customer’s info to market to them in the future. Instead, you essentially just make a sale and the relationship is (by and large) over between you and that particular customer.
● The Cheapest Product Wins - Amazon’s infamous “Buy Box” can make or break the popularity of your product. However, Amazon FBA generally assigns the Buy Box to the cheapest available version of a given product. If you’re not offering the cheapest version, you can say goodbye to a huge share of potential sales.
● Limited Transparency - Amazon can change its terms of service at any given moment, which puts your business at the whims of a huge and largely unknowable corporation. Your account could potentially be suspended, effectively closing your business, without a transparent process to understand why or try to reverse the decision.
Shopify’s platform makes it easy to create and run an eCommerce store with very little overhead. With Shopify, you can essentially make a retail website from the ground up, even if you have no knowledge of coding or web design. Then, you can sell the products you want to sell while still maintaining a high degree of control over your business.
● Direct Marketing Opportunities - When a customer makes a purchase on your Shopify store, you’ll have their information for future marketing campaigns. More often than not, this will include their name, email address, phone number, and physical address, giving you tons of different ways to market to existing customers.
● Low Fees - Depending on the type of plan you have, you’ll generally have to pay about 30 cents per transaction, plus a percentage of the product value that can range between 2.4% and 2.9%. This is far cheaper than most other platforms, and the simple fee structure and transparency make it easy to know exactly how much you’re earning per sale.
● You Control Your Business - Even though you’re essentially renting Shopify and hosting your store on their servers, you have complete control over the look and feel of your business. You choose the products, the design, the prices, and (to a certain degree) the path the customer takes when deciding whether or not to make a purchase.
● No Built-In Market Share - Shopify is a huge business, but it’s not an eCommerce store like Amazon or eBay. Instead, it simply hosts eCommerce businesses. This means that it doesn’t draw in the same kind of traffic as one of the eCommerce retailers. Instead, marketing your Shopify store falls on your shoulders.
● Limited Logistical Assistance - While Shopify can act as an intermediary between your business and logistical operations like USPS or FedEx, you have to do almost all of the storing, packaging, and shipping yourself. You’ll also have to manage returns on your own.
● Difficult to Leave - It’s easy to set up a Shopify store in minutes, but if you decide that you’d like to migrate your store somewhere else (like your own self-hosted website), things can get tricky. In fact, you’ll often find that migrating your data and design away from Shopify is pretty difficult, which means you may have to start from scratch with your “new” store.
Amazon FBA and Shopify have a lot to offer, so why should you have to choose between them at all? The fact is that you can operate your eCommerce business on multiple platforms with the help of third-party multichannel selling software like Sellercloud, Goflow, or ShipStation. Any of these options can help you sell on more than one channel with ease.
And if you want to make your data integration even more seamless while also handling all of your eCommerce bookkeeping needs, you’ll be all set by adding ConnectBooks. With ConnectBooks, you can handle all of your multichannel accounting in one place.
Do you want to learn more about selling with Amazon FBA and Shopify? If so, reach out to the experts at ConnectBooks today!