Amazon vs. Shopify Accounting: Key Differences and Considerations for Sellers
The world of e-commerce is ever growing and changing. If you've been managing an online business or are looking to start one, it can be hard to decide what the best platform for your goods and services is. Two of the most popular e-commerce platforms are Amazon and Shopify. While there are some big differences between the two, there are also similarities between Amazon and Shopify that can help you determine which one is the better fit for you and your business.
If you want to sell on both Amazon and Shopify, it's entirely feasible. But depending on your business plan and what you sell, you may have more success on one or the other. Here are some of the basic differences between Amazon and Shopify.
The biggest difference between these two is that Amazon is built as an online marketplace where all products compete with one another, whereas Shopify empowers online sellers to create their own online storefront. Amazon has over two billion online visitors every month, and Shopify powers over 800,000 businesses.
On Shopify, it's often easier for your business to stand out, as there are fewer sellers to contend with as well as fewer, simpler categories for shoppers to choose from. Amazon is a hotbed of competition. However, Amazon offers a vast variety of products for buyers to browse through, giving you more options on what to sell.
With these two big key differences, it would seem that Amazon, with its massive customer base already established, would be the best bet as a seller, no? But Amazon also takes a portion of all of your sales as a fee for getting to use their marketplace. Shopify provides you the tools to make your own online store, but no pre-made traffic. They don't ask for a referral fee, allowing you to keep more of your profits. Deciding which you should use will come down to your business plan and the e-commerce accounting software you'd like to use.
All e-commerce platforms will, of course, have similarities as well since they cater to much the same market. These similarities affect Amazon seller accounting as well as Shopify seller accounting–this should consolidate associated fees and lower startup costs.
One of the advantages of both Amazon and Shopify is that they offer fulfillment services so you don't have to handle any of the shipping, storage, or returns if you don't want to. You can ship your goods to a fulfillment center. From there, whenever a customer makes a purchase, Amazon or Shopify will ship the item out from their fulfillment center. This means you don't have to deal with the hassle of shipping and handling. Both offer two-day shipping, returns, and customer support.
Both Shopify and Amazon offer advertising options for their sellers. While Shopify doesn’t allow direct advertising on its websites, you can bid for ads with specific keywords that are then displayed in Facebook and Google campaigns. Amazon allows you to buy sponsored ads that are targeted at buyers purchasing goods similar to yours.
Even after seeing these similarities and differences, it can still be hard to determine which will benefit you and your business the most or if a combination will be better.
Both Amazon and Shopify offer different plans to users depending on what they sell, how much business they intend to rack up, and what kind of advertising you want to do.
Amazon has two plans: a “free” version called Individual or a monthly subscription plan called Professional. An Individual seller account is free but charges a flat rate of $0.99 or 75p per item you sell. The Professional option is $39.99 or £25 a month and removes the flat rate charge per item you sell.
No matter which plan you choose though, you will be paying referral fees. A referral fee is basically a commission fee for using Amazon’s platform and widespread customer base. It’s a percentage of the final sale cost after you’ve sold an item. This usually ranges from 8% to 15%, starting at a minimum of $0.30 or 20p. However, it can reach up to 30% on big ticket items.
Shopify has many different plans that range from $39 a month for Basic to an Advanced account that's $399 a month. You can also pick and choose what apps you want to add on to make your business website easier to use, to collect different statistics, or to advertise and bring in customers from other platforms.
Shopify doesn’t charge a referral fee like Amazon does. However, if you don’t use Shopify Pay on your store website and have customers use PayPal or another payment method, you will be charged transaction fees. Using Shopify Pay is free and will not incur transaction fees.
Amazon seller accounting (and Shopify’s) is tricky but done right it can help you keep track of your sales and transactions. These include orders, fees, VAT, taxes, and other expenses. It can also provide insights and data that you can apply to your business.
Amazon seller accounting, like Shopify seller accounting, can help you to:
If bookkeeping is a stumbling block for you, Link My Books is an e-commerce accounting software that allows you to automate your bookkeeping process by managing fees, VAT, and taxes. It easily integrates with Amazon seller accounting as well as Ebay, Etsy, and Shopify so you have all of your accounting data in one spot. There’s a free trial available so you can make sure this software is the right fit for you and your business.
Whether you sell on Amazon or Shopify or both, it’s important to consider the pros and cons of each. No matter which route you take, make sure you have a trusted e-commerce accounting software to help you keep your bookkeeping organized.