Amazon or Shopify? Which is Better For Your Business?
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).