It's an important decision - determining the best ecommerce platform for your business. Your business depends on it. As with any business decision, it will impact resources and budgeting.
The two distinct differences between the two:
it's a software as a service (SaaS), so you don't own the code as an asset. You're basically leasing it.
it's a hosted solution (where your store is hosted by Shopify and updates, security, integrations can only be done by them)
it's an open-source software platform, so you get their base code and customize it to suit you.
you are responsible for hosting, install, setup, configuration, integrations. This requires medium to high level of web development and programming skills of a magento focused agency.
WHICH ONE IS BETTER & WHY?
In our experience building websites, Shopify is best suited to small businesses with a very simply set of product(s). Customizations are mainly "front-end" graphical for the visitors at your store.
Most Shopify sites we see are doing $50,000 to $250,000 in annual revenue.
Whereas Magento shines it's brightest for merchants with several thousand SKUs (even 100,000+) and more complex product types. One of the most common business requirements is Magento's ultimate flexibility around units of measure for items, inner-packs, cases and more. Customizations can be either "front-end" or "back-end" process automation, features, administration and integrations.
Most Magento sites we see are $1M+ in revenue.
The line in the sand difference is that if you require flexibility and customizations involving your product or customer database, and want more control to integrate and connect to other websites/platforms/APIs, then Magento is the best bang-for-the-buck on the market today.
ecommerce-platforms.com effectively analyzes the features in functionality, fees, add-ons, capabilities and customizations here: