Shopify vs Amazon FBA: Can DTC Keep Up?

Cahoot teamed up with Kaspien and Boogie Board in a recent webinar to dive deep into a topic on many sellers’ minds: in a Shopify vs. Amazon scenario, what does it take to sell successfully on marketplaces and DTC stores simultaneously? 

Marketplace sellers face a daunting transition when they consider expanding to sell directly to consumers. It’s not just the challenge of building a website and learning to sell outside of their original channel. They also have to build a new logistics muscle outside of the relative ease of Fulfillment by Amazon and Walmart Fulfillment Services. 

The current DTC logistics picture isn’t pretty. Cahoot’s exclusive study with Forbes shows that many of the most successful DTC brands on Shopify let Amazon and Walmart beat them on price and delivery experience for their own products.  

What does that mean for sellers just starting their expansion to DTC? Is it worth it? Or is Shopify vs. Amazon just a huge headache? 

Quantifying the DTC Challenge 

Kaspien and Cahoot dove deep into the benefits and challenges of selling DTC in their recent webinar, Are Shopify Websites Worthwhile? 

Cahoot’s founder, Manish Chowdhary, set the stage with Cahoot’s original research on differences in final sale price and delivery experience between the top marketplaces and DTC stores. Unfortunately, it doesn’t look good for DTC stores. 

Right off the bat, marketplaces offer better prices to consumers for identical products sold on a brand’s DTC store and on marketplaces more than half the time. When you look at the final sale price, which includes the cost of the cheapest possible shipping option, 59% of the Shopify stores we researched have worse prices for identical goods than Amazon. 58% have worse prices than Walmart. It’s not a small gap, either – in each comparison, the DTC store is over 25% more expensive than the marketplace.  

Source: Cahoot original research 

It would be bad enough if the gap ended there, but it doesn’t. In addition to higher prices, the Shopify web stores also often ship those identical products more slowly than the marketplaces. In this comparison, the marketplace matters – Amazon’s famed Prime program helps it ship faster than most DTC stores. On the other hand, Walmart usually ships at the same speed as the DTC comparisons, or more slowly.  

Source: Cahoot original research 

On top of that, shipping is free for both marketplaces. On the other hand, the average shipping cost for the Shopify stores is a whopping $7.61. 

Keep in mind that nine out of ten online shoppers comparison shop between DTC web stores and Amazon. They pull up the identical product on the brand’s website and a marketplace, and they’re likely to find that the marketplace offers a cheaper product that will arrive more quickly.  

These price and delivery gaps seem daunting, but they aren’t the end of the conversation. Denise Abraham, GM of Private Label at Kaspien, and Katelyn Stiver, Marketing Director at Boogie Board, provided insights in our webinar as to why a DTC store can still provide value for marketplace sellers. 

What Brands Gain When Selling Direct 

A sale is a sale, right?  

Not quite.

In our webinar, Denise and Katelyn made a compelling case for why DTC sites add more value than simple sales to a brand’s push for e-commerce growth. 

Access to Customer Data 

One of the most valuable pieces of a sale isn’t the money, but the customer’s email. Without customer data, you can’t target them with marketing, and you can’t build loyalty.  

Using Shopify, Boogie Board is able to collect demographic information about their customers to better understand who’s buying their products and how to better speak to them. Even though they’ve only collected data for a bit over a year, Katelyn’s team has been able to use it to hone in their marketing on key demographics and geographies that best respond to their messaging.  

Without the DTC site, they simply didn’t have the same insights into their customer base that they have now. As they grow, they’re even using geographic data on their customers to plan TV commercials in their most successful markets. 

Testing Ground to Launch New Products 

Speaking about her experience with the excellent Boogie Board brand, Katelyn shared the huge difference in launch speed between their DTC site and Amazon.  

“We launched last May, and we saw really great sales the first few months on our direct to consumer store. It took Amazon until about August/September for us to see good volumes.” 

They use BazaarVoice to syndicate reviews they get on one channel across many others, so early traction with their DTC channel also helps boost the performance of others.  

Unfortunately for sellers, Amazon is the one outlier that doesn’t allow reviews to be syndicated across platforms, so they need to build each product up there organically. That only increases the value of testing messaging and products on a DTC site, though, as they can apply quick learnings from the DTC site to tweak their listing on Amazon, reducing the time it takes to grow on the marketplace.  

In this way, learnings from DTC sites help accelerate revenue on marketplaces.  

Capture a Wider Set of Customer Types 

Shoppers on Amazon aren’t necessarily DTC shoppers, and vice versa – if you’re only selling on certain channels, you’re likely missing entire pieces of the market that never see your offer. 

During JumpOff Jo’s soft launch, Kaspien has noticed significant differences in consumer behavior and preferences between Amazon and Target. Denise shared that as they prepare to add their DTC site to the mix, they know that they’ll see yet another unique customer demographic coming to their site – to the point that they anticipate selling certain products uniquely through certain channels.  

Boogie Board, who’s been learning the ins and outs of DTC vs Amazon for over a year now, noticed the same dynamic. Katelyn relates, 

“Our lower priced products tend to do much, much better on Amazon, whereas our higher priced products do better on our store.” 

That doesn’t mean that brands shouldn’t list most of their products everywhere they sell, but it does suggest that a unique approach is necessary for every market. Boogie Board always starts with their DTC site, which sets the brand image, and then adjusts product positioning to match customer needs on each channel. 

The DTC site sets the tone for the entire brand, while marketplaces fill in gaps with customer profiles that aren’t inclined to shop directly from a brand site. 

How Shopify Can Win vs Amazon FBA 

There’s clearly a lot to gain from a successful DTC site, but the price and delivery speed challenges remain a thorn in sellers’ sides. You of course won’t stop selling on Amazon while you boot up your direct approach. So, how do you get a direct site growing when customers can get your products for the same or better price on Amazon, with faster and free shipping? 

Fulfillment by Amazon (FBA) is so fast and affordable because it spreads a merchant’s inventory across the country. By doing this, inventory is always close to the customer, no matter where the order is placed – so it gets there quickly and with minimal shipping cost. 

Historically, merchants simply haven’t been able to adopt Amazon-like distributed fulfillment short of using Fulfilled by Amazon. That dynamic is changing, though, thanks to modern fulfillment networks designed with the rigors of fast & free e-commerce in mind.  

The best modern networks will have 10 or more locations across the country, user-friendly software, native integrations with major e-commerce platforms and marketplaces, and more. They’ve been designed purposefully to power merchants’ growth with affordable fast shipping across all channels. 

If you’d like to learn more about what to look for in a fulfillment provider, here’s a primer on how to choose the right 3PL for your Shopify store. And when you’re ready to evaluate competitors, here’s a 3PL RFP template that will help you make the right choice. 

We’d love to be included in your search. Cahoot’s fulfillment network is built for e-commerce, so we’ll level the playing field with Amazon with affordable 1- and 2-day shipping for your DTC store. 

Our innovative peer-to-peer model offers low-cost, fast fulfillment by design. We’re changing the industry by empowering merchants with excess warehouse space and resources to provide high-quality order fulfillment to other merchants. As a result, our pricing is typically lower than that of other top providers, but we can beat them on fulfillment speed and reliability. 

If you’d like to find out how Cahoot can help your business, please get in touch with us. We can’t wait for you to join our community and fight back against the big marketplaces. 

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