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When we talk about Amazon vs. Shopify we usually talk at the level of competing offerings, one getting into the territory of the other, etc. There is another aspect of the competition that has far-reaching consequences whose impact goes beyond the two players – the survivability of app makers that depend on these platforms.
It's an open secret that Amazon will eventually launch its own store builder. Let's talk about what 'Build with Prime' is a trojan horse for, for a moment, before going into the app ecosystem dynamics.
A brand has to deliver the following to its consumers:
As a reward, the consumers give them
Three of the four key functions (italicized in the first list) of the brand are now heavily competed for by Amazon and Shopify.
The ultimate platform promise is, "Bring your products and we will bring you everything else, including customers." This is where Amazon scores better. Amazon has better first-party data than ever (thanks to its consistent investment in smart home products and its focused acquisitions like Roomba), to bring customers. Even without counting these investments, Amazon's Prime already fulfils this promise.
30% of Amazon's 165M Prime users, spend $50-$100 a month on Amazon. That's 55M monthly paying shoppers. Shopify's Shop App has 23M active users of the app (and they are all not necessarily buying things).
With BWP, the brands get to market to Prime users with proven spending patterns and this cohort outplays the advantages Shop App brings to a merchant.
In each of the three aspects of discovery, payments, and delivery Amazon delivers a better experience than Shopify. But where it outshines Shopify comprehensively is that it short circuits loyalty for a merchant. The trust that Prime users have reposed in the 'Amazon' experience is now available as a 'button' to merchants. Amazon accrues loyalty and brands are able to cash it. Brand reviews too will eventually find their way into Amazon, giving brands a better distribution channel for the word of mouth they generate on their websites. The more conveniences a brand can offer out of the box, the better its conversion will be. Here too, Amazon shines.
This brings me to their respective app ecosystems.
As of today, Amazon has 2000+ Seller Central Partner Apps and Shopify has 7522 apps on its App Store. Shopify has traditionally seen itself as a store builder, leaving many of the sophisticated experiences to app developers. Amazon sees itself as its first customer and builds integrated experiences that go beyond software.
An Amazon store builder is not a question of 'whether' but 'when'. When that eventually happens, what parts of the app ecosystem will be shaken?
Amazon is good at payments, fraud prevention, subscriptions, logistics, and refunds. All of the stacks are perfectly tuned and could be a part of the store-builder natively. In very few business units today, Amazon has a chance to start without baggage and the store builder is one. They can pack a lot of native features without worrying about the app ecosystem. On the other hand, on the topic of customer acquisition, their strengths are the customer base they have and the ad platform they have built. The software stack for helping customers independently acquire merchants is non-existent and if there is a weakness for Amazon (apart from the trust deficit it has with brands), it is this. This area of customer acquisition and analytics is where third-party app developers will thrive, in an Amazon-centric storefront ecosystem.
Shopify's investments in the last year across companies like Yotpo, Klaviyo, and CrossingMinds underscore the point that Shopify is doubling down on protecting its lead in the customer acquisition side of the app ecosystem, before Amazon steps on its toes.
When elephants fight, the ground beneath shifts. Which ant colonies will survive? We will know the answer, in the next 3 years.
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