As eCommerce continues to skyrocket to new frontiers, a tasty little rivalry is developing between the two giants of the industry: Amazon and Shopify.
The CEO’s, Jeff Bezos and Tobias Lütke, have kept things amicable in the past, but it appears to be heating up of late, with industry pundits comparing the competition to Star Wars. (Bezos and Amazon are the domineering Empire, while Lütke and Shopify are leading a band of rebels looking to repel their control of the eCommerce galaxy).
The battle for ‘Merchant Market Share’
Labelling Bezos as the Emperor might be unfair, depending on your point of view: if the key to Amazon’s success has been to put the customer first, for Shopify the key has been to put the merchant first.
Although they operate different business models and tech, both are fighting for ‘Merchant market share’ – they want eCommerce businesses to use their solution to sell online. Shopify has been the dominant player in the Direct-to-consumer (DTC/D2C) space, where brands sell products directly to customers online, bypassing third-party retailers and wholesalers.
Buy with Prime vs. Shop Pay
Amazon has tried to build another flywheel (a term coined by Bezos in 2001), to get DTC brands to offload storage and delivery to Amazon with a new service, Buy with Prime.
In April 2022, Amazon introduced Buy with Prime, which allow shoppers with a Prime membership to shop on eCommerce websites other than Amazon and check out using their Amazon account. Crucially, Amazon will also handle fulfilment. This is in direct competition to Shopify’s checkout solution, Shop Pay.
Shopify Strikes Back
Shopify has recently pushed back hard on Amazon’s one-click checkout service. The Canadian company is warning merchants who try to install Amazon’s ‘Buy With Prime’ button on their storefront that it violates Shopify’s terms of service, and is also raising the (phantom) menace of security risks, according to research firm Marketplace Pulse.
There are many software options for building eCommerce stores, including WooCommerce, Magento, BigCommerce, and others, but the underlying software is invisible and irrelevant to consumers. No buyer can tell the difference between a Shopify or Magento store, and no consumer can even tell that two Shopify stores share the same software. (And why should they? Consumer awareness of the underlying tech serves no purpose).However, Shopify has realised that most consumers don’t recognize their brand and is trying to change that by building a consumer-facing ecosystem – the Shop app. It includes features like the ability to discover brands and check out with Shop Pay.
The Empire or the Rebel Alliance?
Amazon is an online marketplace with more than 197 million consumers. Unlike Shopify, you must compete alongside other online merchants in the same marketplace. The Amazon FBA (Fulfilment by Amazon) program lets merchants send goods to Amazon fulfillment centres where products are stored, packed and shipped.
Shopify is a subscription-based eCommerce platform that allows businesses to build their brand and online storefront. Users can build websites through easy-to-use and mobile-friendly themes. There are also features related to marketing, store management, analytics and third-party integrations to boost the site’s functionality.
Because Shopify requires building a website, it’s ideal for eCommerce entrepreneurs looking to develop their own brand. On the other hand, Amazon is suitable for those who want to take advantage of the thriving Amazon marketplace.
Who will ultimately win the war and dominate the galaxy? Watch this space.