Amazon is a giant enterprise that sells A-Z products online and is a prominent cloud services provider worldwide.
Amazon makes most of the revenue from its e-commerce business.
In 2022, Amazon's net worth will be around $1.4 Trillion!
Can you guess the biggest rival of Amazon? If you're thinking:
- Walmart (No)
- eBay (Nope)
- Target (Nah)
Amazon's biggest rival is just a 2006 startup, Shopify!, which does not make even 1% of Amazon's yearly revenue.
But, how is it possible?
If you're curious to know, then keep reading this article.
In this article, we've discussed:
- Shopify Vs Amazon
- Why is Amazon's biggest rival Shopify?
- Why are merchants unhappy with Amazon?
- Amazon's new business that can affect Shopify
And everything we'll discuss in detail. So without any further delay, let's find out!
Are Shopify and Amazon totally different businesses?
If you think that Shopify and Amazon are totally different businesses, you're absolutely right!
But if you consider a merchants-based marketplace, then surely Shopify & Amazon are competing because these two companies are in the E-commerce space and come with unique aspects in the market.
Amazon started its journey as an online store that bought wholesale products and sold them online. For a few years, amazon consistently ran its business.
Jeff Bezos's Big dream is to make Amazon a company that sells everything!
And to make this dream come true, Amazon allows third-party sellers and merchants to list their products online and use Amazon's fulfillment center to sell & ship their products globally.
Almost half of the products are sold by Amazon, and third-party merchants sell the rest.
For merchants, Amazon is just a place where they can participate and showcase their products. There's no control over selling & managing products from the merchants' side and the rest of the selling & shipping process done by Amazon.
Now, if you revert to the complete situation, you'll find Shopify!
Shopify is a marketplace that helps merchants create their online store with their branding and allow them to manage the entire process of selling and managing products at their online store without any Shopify interruption. In return, merchants need to pay some amount to use the Shopify platform and its services.
Shopify has a developers community that keeps building new applications for Shopify that provides a better experience to merchants. It's a complete all-in-one solution for merchants to create, store and sell products online.
Shopify is just a medium that connects sellers and consumers.
These are the two most giant companies in the Ecommerce space.
But the question is….
How is Amazon's biggest rival Shopify?
Shopify made just $4.6 Billion in revenue in 2021, and that's hundreds of times less than Amazon's 2021 revenue. So what makes Shopify a worthy competition?
The Gross Merchandise Value (GVM) Split:
You need to focus on Metrics called GVM (Gross Merchandise Value). It's a sum of all the value of products/services sold from a platform.
- Amazon's GMV in 2021 was around $610 Billion. Third-party merchants generated 64%, and Amazon's retail generated 36%.
- Shopify's GMV was $175 Billion in 2021, but Shopify's GMV was 45% and growing rapidly every year.
Shopify is getting closer to Amazon's GMV, and merchants prefer the Shopify platform rather than Amazon. There's a huge reason behind it! Merchants are not satisfied with Amazon.
Why are Merchants not satisfied with Amazon?
Most merchants prefer Shopify to do business. As we've previously discussed, Shopify provides an all-in-one ecommerce platform for Merchants to create an e-commerce store & sell their products online globally.
But Amazon is just a platform for listing merchant's products and complete control handover to Amazon. Sometimes many merchants' top-selling products are rejected by amazon, and amazon clones itself and sells the product under Amazon retail. That's why merchants don't like the amazon platform for selling products.
Shopify provides complete security, control and authority to run an e-commerce store without third-party interruption.
Now, Shopify provides complete e-commerce services like packaging, shipping and delivery processes for merchants.
Overall, Amazon is definitely at the top, but Shopify is not easily ignored in the e-commerce space. In the future, Shopify can be a big rival of Amazon.
After seeing the rapid growth of Shopify and merchants' demand, Amazon takes a big decision that can affect Shopify!
Amazon is acquiring an e-commerce platform called "Selz" that can help merchants create their stores and sell their products with complete authority.
Does it sound like Shopify? Right
Shopify is already the biggest solution for merchants to create, store and sell products, but Amazon wants to solve this problem and clear the competition by acquiring another e-commerce platform, "Slez."
Amazon already has millions of customers, merchants and collaboration with luxurious brands that can make Slez the best ecommerce platform globally against Shopify.
But you should consider that Shopify's net profit margin was 62.2% in 2021, and Amazon's profit margin was a meager 7.1%.
There are chances that Amazon can make Slez a successful & profitable business and a greater competitor of Shopify. But we can see that the growth of Shopify is growing rapidly, and there are probably so many other features, growth coming that can attract merchants to prefer Shopify.
Well, there's no point in fighting with a giant company like Amazon, but it's an interesting fight to see in the E-commerce space.
We hope you've found this article helpful to know about both companies, Amazon & Shopify and what Amazon's new business can be a rival of Shopify. Drop your comment and let me know your opinion about Amazon & Shopify?
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