In the question of Shopify vs. Amazon, you can see it’s been an active three years for Shopify. After peaking in 2021, Shopify stock dipped by 70 percent to hit a new low at the beginning of 2023. Fortunately for Shopify merchants, the ecommerce marketplace quickly set its sights on big brand-name acquisitions. It also cut staff by 20 percent and sold Shopify Logistics to Flexport to democratize the accessibility of its logistics features.
Shopify recently called B2B “the biggest ecommerce opportunity for 2024.” That’s because B2B sales are over double the size of DTC and they’re expected to grow by 18 percent annually until 2030. Ecommerce has now surpassed all other channels for B2B sales and, by 2030, 80 percent of all B2B sales will take place online.
Downsizing in 2023
Trimming staff has been a risky PR move for companies during the pandemic. However, Shopify’s transparency about its layoffs prevented too much overly negative public perception. Motley Fool called Shopify stock “a once-in-a-lifetime-buy” in 2023 and it’s proven to be just that. Rather than taking a nosedive after the firing and selloff dip, Shopify stock doubled at the end of 2023 and continues to grow in the new year.
Shopify merchants made a record high $9.3 billion in Black Friday/Cyber Monday sales this holiday season and all signs point towards continued expansion. So, is Shopify still primed to break Amazon? Or has it reached a tipping point? How do the seller experience and compensation compare? And how will the marketplace continue to serve sellers in 2024? Let’s take a look!
Amazon Can’t Compete with Empowered Shopify Sellers
Shopify and Amazon are very different platforms. Shopify gives brands the tools to build their own web interface and hosts over 800,000 sellers on the platform. Amazon, on the other hand, is a top-down online marketplace that services over 197 million consumers.
Let’s look at the two platforms’ core differentiators:
Fee Structure
Shopify charges from $39 to $399 a month, depending on the functionality required. There’s no transaction fee when using Shopify Payments, 2 percent on each purchase with Shopify Lite or Basic Shopify; 1 percent with regular Shopify and 0.5 percent for Advanced Shopify.
Amazon, on the other hand, charges 99 cents per sold item on its Individual Plan, or $39.99 a month on its Professional Plan. Amazon’s transaction fees are called “referral fees.” They range between 8 percent to 45 percent, depending on the product category, with a standard minimum of 30 cents.
Customer Traffic
Shopify is transparent about the number of merchants on its websites, not the number of customers. Outside firms report that Shopify had 2.1 million daily users in 2023. With that said, a few community discussions from merchants noted sharp traffic declines of (40 to 80 percent) in 2023.
Amazon, on the other hand, touts its strength with customers with around 2.2 billion monthly website visits in 2023. The marketplace raked in $9 billion USD in the third quarter of 2023.
Order Fulfillment
Amazon and Shopify offer similar inventory management tools in their online seller portals. Shopify also has its own fulfillment network, called Shopify Fulfillment Network or SFN. Additionally, Shopify lets sellers fulfill their own orders, or use a third-party service. For sellers that use Shopify Payments, their monthly Shopify fee is the only fee incurred.
Amazon’s fulfillment service is called FBA, or Fulfillment by Amazon. Sellers need to pay for their own storage, shipping, and returns with FBA, and fees payable to Amazon usually wind up being between 15 to 40 percent. However, for small businesses and those just getting started, FBA is a great option to get the ball rolling.
Marketing Suite
Shopify gives brands an affordable, mobile-friendly platform on which to build their own website. It has the built-in communication tools for inventory management, SEO, and selling. Shopify differentiates itself, however, are the email marketing tools that it offers as part of its suite. Shopify’s ESP (email service provider) goes beyond transactional email tools, so marketers can dynamically insert products or copy them into emails based on inventory availability, related products, or product recommendations specific to that customer. Shopify also offers integrations that make it easy to start selling on Meta and other social platforms.
Amazon’s existing customers are its core marketing asset. Amazon’s Marketing Cloud focuses on Amazon Ads. While Amazon offers sellers access to 197 million customers a month, it doesn’t come close to Shopify’s email suite, SEO, or branding opportunities.
In short, the comparison between Shopify and Amazon highlights fundamental differences in approach and offerings. Empowered Shopify sellers, armed with transparent fee structures and innovative marketing suites, stand out in a marketplace that values customization and the ability to create a brand from the ground up. Amazon holds its own with unparalleled customer traffic.
To B2B or DTC, That Is the Question
There was a time when B2B sales were relegated to trade show floors and showrooms. In the early years of ecommerce, Direct-to-consumer (DTC) sales reigned. But times have changed, and during the pandemic, business owners got used to sourcing most of their inventory online. Shopify recently called B2B “the biggest ecommerce opportunity for 2024.” That’s because B2B sales are over double the size of DTC and they’re expected to grow by 18 percent annually until 2030. Ecommerce has now surpassed all other channels for B2B sales and, by 2030, 80 percent of all B2B sales will take place online.
B2B sales have a higher ticket price, reorders are usually part of an automated delivery system, and retailers servicing the B2B industry face a less saturated market than their DTC counterparts. That said, many ecommerce retailers have both a wholesale and a DTC component –– offering deals on bulk orders for wholesale operations.
Looking Forward in 2024
Over the past few years, Shopify’s trajectory reveals a resilience that goes beyond global market fluctuations. Despite a significant stock dip and laying off 20 percent of its staff, Shopify emerged stronger at the end of 2023, proving itself to be a dynamic power player. Record-breaking holiday sales, coupled with the continuous growth in the new year, show that Shopify remains a force to be reckoned with.
As we consider the short-term future in 2024, the pivotal question remains: Has Shopify reached a tipping point in its quest to challenge Amazon, or is it still only on the brink of a groundbreaking transformation? My research points toward the former, as Shopify continues to restructure and roll out exciting innovations for DTC and B2B sellers alike. The journey for Shopify is still beginning, and its ability to adapt, innovate, and offer transparency at scale will determine its impact on the future of the ecommerce industry.
