Amazon FBA Business vs. Shopify - What You Need To Know Before Spending Money

In this post, we discuss the advantages and disadvantages of selling on Shopify vs Amazon FBA in 2022.

When you start delving into the world of selling online you’ll have a few options you can take with the 2 most popular ones being Amazon FBA or Shopify.

As of October 2021, Amazon accounted for 41 percent of the U.S. e-commerce market, making it by far the leading online retailer in the country. While Walmart is just at 6.6%.

In the US, Shopify’s market share is currently the largest of all the eCommerce platforms, with nearly a third (32%) of eCommerce websites using Shopify to power their businesses.

They clearly are leading platforms that could make your online business dreams come true.

So, let’s see the advantages and disadvantages of Shopify vs Amazon FBA in 2022.

AMAZON FBA

Advantages

Higher intent to buy: Customers that are already searching on Amazon have a higher intent to buy than customers you randomly reach browsing on Facebook through an ad.
Credible & reliable: You won’t have to try so hard to be credible just because being an Amazon FBA seller itself adds credibility.
Less stress: You won’t have to worry about fulfillment and storage which if not handled carefully will lead to a lot of disappointed customers who will leave bad reviews and higher fees. Amazon will also take care of customer service for you.
You can easily sell in other Amazon markets: You have more opportunities to scale with other Amazon markets such as Canada, Mexico, and Europe. And, they’re expanding more and more.

Amazon FBA business statistics

76% of sellers are profitable in 2023 despite the major disruptions in logistics such as clogged ports
63% of sellers achieve profitability within one year of launching their business on Amazon.
60% of sellers with 3+ years in business on Amazon are earning over $100,000 in annual eCommerce revenue. Source.

Disadvantages

- It’s very competitive: When a customer searches on Amazon they’ll be bombarded with ads and top competitors who might be hard to beat. You’ll need to put in a lot of effort to beat competitors with 1000+ reviews and a 4.5 rating.

It will be hard to profit: If you didn’t do your research carefully you’ll be shocked that 40% of your revenue could go to your fees. Also, PPC can eat up a lot of your profits.

- It can be so unpredictable: Amazon sometimes randomly suspends your listings and demands various paperwork.
- It’s frustrating to deal with customer service: You’ll have to deal with bots and inexperienced customer support at some point when you sell on Amazon.

Needs a lot of capital, to begin with: You certainly can launch with lower capital however it will be hard for you to profit and beat your competitors. You need to have some budget, especially for your inventory and shipping costs.

The paid plan is more expensive: If you want to advertise you’d need to subscribe to their $39/month plan while in Shopify you just need $9/month to start.

SHOPIFY

Advantages

Can be very profitable: You won’t be dealing with a lot of fees and would need less capital, to begin with. Also, it’s easier to do dropshipping.

You have a lot of room for creativity: Branding is very limited on Amazon but with Shopify, you can easily make a beautiful product page and make a better layout.

- No hackers: You won’t have to worry about competitors hacking your account or flooding your listing with negative reviews.

You won’t have to deal with Amazon’s not-so-good customer service: Shopify has great customer service so far. You can even ask them for some minor tweaks on your website.

A lot of opportunities to scale faster: You have more room to scale as there are many app integrations and ways for you to sell more: You can easily upsell & cross-sell on Shopify. There’s also affiliate marketing.
Dropship easily: You can easily dropship with the many integrations available such as Oberlo, Printify, stock
Shopify is just overall a really fun platform to play with: The sky’s the limit in terms of creativity and opportunity.
Build a loyal audience that you can easily retarget: Amazon FBA won’t give you the details of your customers. With Shopify, you can easily get their email address and ramp up your marketing.

Disadvantages

Harder to get sales: Shopify seems to be a great idea at first as you won’t pay for all the fees and start with no capital with dropshipping. But, keep in mind that statistically, Shopify stores need more visits before it converts. Let’s say in Amazon you’d usually just need 5-10 clicks to get a sale. However, in Shopify, you’ll need at least double that.

You can only rely on yourself/team: In Amazon, you can have sales right off the bat if you bid high enough on PPC (Which I recommend you don’t do). There’s also a honeymoon stage where Amazon helps you get seen higher on the search results. Also, they assign you, account managers, to help with PPC. You won’t get this on Shopify.

MY EXPERIENCE

I’ve had clients who have a lot more regrets about opening a Shopify store than Amazon.

Many clients have been burned by expensive “experts” and very high ad spend which is a norm when you have a Shopify store.

The reason it’s the norm is that as I explained above it takes more convincing customers to buy on your own website rather than on Amazon while the ad costs are just more or less the same.

They’d tell me they could have used that money to buy more inventory and grow their Amazon product line instead.

I also have a client who’s found success in Shopify because he found a niche product with good profit margins and a great digital marketing specialist.

So, the answer is it just really depends.

CONCLUSION

The bottom line here is your budget and risk tolerance.

In terms of risk, they’re both quite risky but just the amount of market share & credibility of Amazon makes them the better option if you want to have a scalable business worldwide long term.

Shopify has grown 4,600% since IPO and is giving better and better features and services every year. But it hasn’t conquered other countries yet like Europe, Asia, & Japan which Amazon has. So, we’ll see.

Once you have established your Amazon FBA store then it would be a great idea to expand to Shopify.

We hope we helped you decide where to spend your money and time between Shopify vs Amazon FBA in 2023.

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