Amazon vs Direct-to-Consumer (DTC): Comparing Channel Profitability

Most sellers compare Amazon and DTC revenue but not true profitability. Amazon has high and visible fees (referral, FBA) but low customer acquisition costs. DTC has lower per-order fees but requires significant marketing spend to drive traffic. A fair comparison requires a full cost build-up for both channels.

Amazon costs per order include:

| Cost | Typical range |

|------|---------------|

| Referral fee | 8–17% of selling price (varies by category) |

| FBA fulfilment fee | £1.80–£6.00+ per unit (size/weight dependent) |

| FBA storage fee | £0.20–£0.75 per cubic foot per month |

| Amazon PPC | 10–30% of Amazon revenue (typical ad spend) |

| Returns processing | 0.5–2% of revenue (if return rate ~5–10%) |

| Closing fees (media) | Fixed per-item fee for media products |

Combined Amazon fees typically total 25–45% of selling price, varying by category and ad intensity.

DTC costs per order include:

| Cost | Typical range |

|------|---------------|

| Shopify platform fee | 0.5–2% of revenue |

| Payment processing | 1.5–3% (Stripe, PayPal) |

| Shipping | £2–£8 per order |

| Packaging | £0.30–£2.00 per order |

| Paid marketing (blended CAC) | 15–35% of revenue |

| Returns processing | 1–3% of revenue |

| Customer service | 1–3% of revenue |

DTC total fulfilment + marketing typically runs 25–50% of selling price — comparable to Amazon, but the mix is different.

AskBiz's P&L → Channel Comparison view shows Amazon vs Shopify (or WooCommerce) side by side with:

• Revenue per channel
• Gross margin per channel (after COGS)
• Channel fees and fulfilment costs
• Marketing spend per channel
• Net margin per channel

To get accurate channel comparison data:

1. Enter your COGS in Settings → Products → Cost of Goods

2. Connect both your Amazon and Shopify accounts

3. Enter marketing spend manually for channels not integrated (e.g. if you run Google Shopping for DTC but it's not connected)

Go to P&L → Channel Comparison to view the side-by-side analysis.

The Amazon vs DTC decision isn't purely financial. Consider:

Customer data: Amazon doesn't share customer data with sellers. DTC builds your owned email list and customer database, which has long-term value beyond the immediate transaction.

Brand control: Amazon controls pricing visibility, competitor ads appear on your listing, and listing content is constrained. DTC gives full brand control.

Scale vs margin: Amazon provides access to millions of buyers with no upfront marketing spend. DTC requires building an audience. At early stage, Amazon often wins on volume; at scale, DTC often wins on margin and LTV.

Risk: full dependence on Amazon creates concentration risk (policy changes, listing suspensions, fee increases). Most successful multi-channel sellers use Amazon for volume and DTC for margin and data.