Advantages

  • Separate folders can be still targeted.
  • Easier linking process.
  • All SEO efforts and advertisements will affect all subfolders the website will even count towards the power of the subdirectories.
  • Easy to manage.

Disadvantages

  • SERP limitations.
  • On large sites, the URL anatomy can be quite messy (if handled well, it can look very slick though).
  • Unable to benefit from hosting different parts of the site in different countries.

Subdomains (uk.yourstore.com, ru.yourstore.com)

Advantages

  • Cost (only one domain is used).
  • Individual subdomain can be hosted in different countries (there is a belief amongst SEO people that it’s a great idea to host sites inside).
  • Better usability (recognizable country from the domain).

Disadvantages

  • Extra link building is required.
  • Maintaining several subdomains is more difficult.

 

Before August 2011, the main difference between these two options was that Google considered subdomains as external links, however now it seems that they’re internal links:

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MagentoTech Newsmagento
Advantages Separate folders can be still targeted. Easier linking process. All SEO efforts and advertisements will affect all subfolders the website will even count towards the power of the subdirectories. Easy to manage. Disadvantages SERP limitations. On large sites, the URL anatomy can be quite messy (if handled well, it...