Amazon or Shopify? Which is Better For Your Business? Pt.1
Part 1: Marketplaces
Sep 29, 2020
Brands today, and for obvious
reasons, are looking for ways to increase their online-retails presence. But
moving from brick and mortar to more digital channels can sometimes be
challenging due to a large number of options available. The two most common buckets
of options are marketplaces (such as Amazon or Noon) or more direct ones like a
seller’s own website.
At Shorages, we often get asked which approach is better. As part of
a three-part blog, I will be listing down some of the pros and cons of each of
these frameworks. The first part will cover in-depth what we have seen with
marketplaces in the MENA specifically. The second part will cover direct sales
channels through websites built using e-commerce platforms such as Shopify. Finally, the third part will attempt to compare the two
and highlight which is better for your business.
Part 1: Marketplaces
An online marketplace is an
e-commerce platform that connects third-party sellers with a consumer base that
visits it. The two most popular marketplaces in the GCC being Amazon and Noon.
Marketplaces have been dominating online sales in the region from when
e-commerce first started and continue to do so today. This is the case since
their benefits are plenty as they can offer:
As it stands, the appeal for e-commerce
marketplaces stems from the instant accessibility sellers can get to sell
online. With a marketplace, they do not need to develop their website, find
payment solutions, set-up their operations, and spend on marketing. They simply
must plug and play into the marketplace.
E-commerce marketplaces such
as Amazon have become the new department store; selling a wide variety of
consumer goods from a large range of brands. More recently, we see the rise of
segment-specific marketplaces such as those that deal primarily with either
children’s toys, high-end fashion, sportswear, etc. Segment-specific
marketplaces allow brands to target a more specific consumer audience without
getting lost in the variety of options available on more generic marketplaces.
However, as more and more
sellers flock to marketplaces, it is becoming harder and harder to sell on
these platforms due to the following reasons:
These issues have caused some
brands such as Nike to depart from Amazon. Instead, they have opted for a more direct to consumer
approach. However, not every brand has the same resources as Nike, so what
alternative do smaller and more independent brands have? (More on this in Part
2).