With 15 Amazon marketplaces worldwide to date, Amazon’s domination of ecommerce sales is evidence that every brand looking for success should have both a global and regional selling strategy. From deciding on which country to sell in to, to providing some insights into the opportunity Amazon holds across the globe, we’ve put together a framework for why and where to consider opportunities for brands looking to expand.
Why consider selling into new Amazon markets?
When considering how and where to expand your Amazon business, there are several reasons why brands should consider selling in a new Amazon market. Firstly, no two Amazon marketplaces are the same and some may be a better match for your product catalogue than others. Differences in consumer purchasing behaviours and competition from other ecommerce sites are just two of the things to fully understand before expanding into a new marketplace. Brands should understand how new Amazon marketplaces perform in markets that are similar to the ones they currently sell in. Also, brands need to understand the category landscape and have a full understanding of category benchmarks to understand how your product will perform.
We recommend fully assessing and understanding marketplace and category insights before selling into a new country. Working on Amazon is unique, it requires specialised knowledge and in-depth analysis of marketplaces and category dynamics to help brands understand if the environment is the right choice. To ensure success, we have marketplace ‘experts’ in place that have comprehensive knowledge of each marketplace, consumer trends and more. By providing brands with detailed insights, they can make the best commercial decision, allocating resources to the marketplaces that are the right fit to grow sales.
To learn more, our CEO, Chris Mole, discusses how data can help brands find new global opportunities in a video here.
What should you consider when wanting to sell in a new Amazon marketplace?
When Amazon opens a new market, or you are considering expanding, it is best to question whether the marketplace will be a good fit for your products. For example, if you are selling portable radiators on Amazon UK, you may determine that there is no demand for them within Amazon Singapore however there may be a large demand for fans which only sell well in the UK during summer. It is always a good idea to determine how well your category has traditionally performed on your target marketplace or you may find your launch doomed from the start. It is also worth considering how your products fit within the culture, you may find that some SKUs sell well during select holidays celebrated in specific marketplaces. For example, Thanksgiving Day may provide a boost in sales for a Grocery brand selling into the US but their sales in Amazon Sweden are unlikely to see such a major uptick because the holiday is not traditionally celebrated there.
You should also consider how Amazon’s new marketplace will fit within your retail strategy. Assess your entire channel strategy to note where the strengths and weaknesses lie. Doing so will give you a full understanding of the logistical aspects you may need for success within a new marketplace. At Molzi, we helped a leading toy brand change their distribution channels to prevent them from accumulating heavy FBA fees across the EU and grew their best-selling product to #1 within all 5 EU countries they were selling in. Understanding how the channels fit together gave an all-rounded view as to how to reduce costs, boost sales and optimise how to manage their overall Amazon account. Amazon opening a new marketplace may in fact, help you rethink how you work with certain retail channels to place Amazon’s new marketplace into your retail landscape.
The final point to consider is deciding which Amazon sales model to use: Seller or Vendor account. Each have their own pros and cons when selling into an Amazon marketplace and determining which account to use should be reviewed on a case by case basis. One type of Amazon account may work for a specific marketplace, but it may not be the best choice for another. For example, a US brand may find a Vendor account works well when selling locally but may determine that a Seller FBA account works best when selling into Europe to prevent the large chargebacks they will receive if they miss a Vendor PO caused by logistic issues and give the opportunity to sell within several European marketplaces via EFN.
Note: Remember that selling on Amazon should be a part of your overall retail strategy and not separate from it. If you decide to expand into a new market, ensure that you don’t begin cannibalising sales from your existing channels or negatively impacting your profitability.
Where to consider selling on Amazon
Selling into Europe
Selling into Europe has never been simpler since Amazon holds such a large foothold over online retail especially in Western Europe. Currently, Amazon holds marketplaces in the UK, Germany, Spain, France, Italy, Netherlands and Sweden, with Amazon Poland on the horizon. Amazon claims to attract 290M unique visitors each month to its European sites. Moreover, the EU Amazon sites are cumulatively predicted to make €334.14B (£299.55B) in ecommerce sales by the end of 2020, with the UK making over a quarter of the sales, €150.62B (£135.06B).
Each marketplace has their own subtle distinctions that make the difference between managing sales at a basic level and fully succeeding on a new marketplace. Amazon’s European Fulfilment Network (EFN) has also made it even easier to sell within multiple European marketplaces using a single EU Amazon account. However, Amazon does have some reach in Eastern Europe with their marketplace in Turkey.
One area that Amazon had limited foothold in Europe was the Nordics, until their launch in Sweden this year. Selling into the Nordics has opened new channels for international sellers that, despite its rocky launch, provides an opportunity to showcase products to a Scandinavian audience. It is worth remembering that the role of selling on a marketplace isn’t always just to make sales. Sometimes increasing brand awareness and gaining a new audience can be worth the investment.
With apparent plans to launch a new Amazon market in Poland in 2021, it is evident that Amazon wants to hold a major share of ecommerce sales throughout Europe; this is predicted to make up a massive €673.52B (£603.81B) by 2024. Additionally, with each European marketplace they open, the further their reach goes and the more likely consumers in countries bordering an Amazon marketplace will be able to buy from the site. If Amazon then decide to open a marketplace within that country, delivery time will be shortened which will further improve customer experience and retention.
Note: Selling into the UK in particularly, will become more difficult once the country leaves the EU at the end of 2020. Sellers will be unable to use EFN to stock inventory within the UK and the rest of the EU6. Instead brands will need to have a UK Amazon account and a EU account and manage both accounts separately.
Selling into North America
It is a common belief that if you can make a brand successful in the United States, you can make it successful anywhere. Of course, any brand who has broken into the US knows that this is not necessarily true. Like every marketplace, the US holds its own intricacies that are not suited for all products and in other Amazon marketplaces. However, one thing is true, the US is a massive opportunity for many brands. With a population of 331M people, according to eMarketer forecasts, ecommerce sales in the US is expected to make $843.15B by the end of 2021 and expected to grow to $1,204.77B by 2024.
53% of US adults claim that they begin product searches on Amazon when planning to make a digital purchase making the marketplace a heavily significant shopping platform when discussing US consumer shopping habits. Even after a significant year of growth due to the pandemic in 2020, Amazon retail ecommerce sales are expected to grow by almost 11% to $343.27B by 2021. Furthermore, US Amazon Prime users are expected to grow by an additional 3.3million households in 2021, making up 41% of worldwide Prime households.
Amazon Canada is also a perfect marketplace to consider selling on for brands already selling in the US. In Canada, both North American Amazon sites (Amazon.ca and Amazon.com) had a consumer percentage reach of roughly three-quarters of internet users during the first four months of 2020 and Amazon Canada is estimated to accumulate $39.22B by the end of 2020. There are currently 18.5M ecommerce users in Canada, with an additional 5.21M users expected to be shopping online by 2021. Amazon’s ecommerce share of Canadian sales is bound to increase further as the marketplace continues to expand their Prime service benefits throughout the entirety of Canada and convince shoppers of the benefits of fast, free delivery.
Selling into Latin America
Out of the entire LATAM market, Brazil has the largest population at 210M people and accounts for over 1/3 of all Latin American ecommerce sales. Brazil is expected to see an increase of digital buyers from 66.7M people to 73.9M by 2024. As a country, Brazilians tend to be savings conscious with half of Brazilians being influenced to shop online when offered a coupon. This makes Amazon an enticing marketplace, especially with its ability to quickly set deals and promotions on ASINs.
What makes selling into LATAM and, in particularly Brazil, a lucrative opportunity as it is a less competitive landscape for major brands to expand their global reach but holds large untapped potential. Predicted to accumulate $94.73B ecommerce sale by end of 2021, Latin America may not be the largest global ecommerce share but 78% of all Brazilian ecommerce sales are accounted for by big players including Amazon and MercadoLibre. With limited competition, the majority of ecommerce sales are made on sites such as Amazon Brazil meaning those selling on the marketplace are more likely to receive a share of the overall sales.
Selling into Asia
When considering selling into Asia, Japan should be regarded as a very lucrative choice as the country holds the world’s third-largest economy and the fourth-largest ecommerce market, with sales of $131B predicted by the end of the year.
Amazon holds a large share of ecommerce sales in Japan where it accounted for almost 23% of online sales in 2019. This makes it one of the country’s dominant ecommerce players along with Japan’s very own Rakuten Ichiba and Yahoo’s PayPay Mall. Amazon Japan is Amazon’s second largest market with over 699M monthly visitors. Amazon Japan is also much more accessible to international sellers than PayPay Mall or Rakuten Ichiba, as it does not require having a company registered in Japan or having to work with a local service provider to set up an account within the country. For this reason, its often the first choice for businesses expanding into Asia and Japan.
Other Asian countries to consider are India & Singapore. Amazon India holds 31.2% market share and has developed a strong reputation in the country as India’s most trusted online retailer. It reportedly gained 10 times as many respondents claiming that they trusted Amazon more than they did Flipkart; Amazon’s largest Indian competitor which holds 31.9% market share.
Although it may not be among the 20 largest economies in the world, Singapore is a great opportunity as cross-border sales make up approximately 60% of the country’s eCommerce sales already meaning consumers are used to international online trade and more likely to buy exported goods. Additionally, English is widely spoken making translation less complicated than other international marketplaces. Singapore can be a great opportunity to expand as it is the only Amazon marketplace where sellers are assigned an Account Manager to help with account set up and other issues.
How to set up your business as Amazon expands into new markets?
Selling into new Amazon markets can be a difficult task, especially when you are also trying to maintain a good account health in your local marketplace. Challenges such as managing logistics, high distribution costs and fees, chargebacks, constant optimisation, and the time to simply manage your channels is more than a full-time job by itself without adding another marketplace to it.
Ensure you have the right team or Amazon agency with the skill set to manage your Amazon presence on every market you decide to sell into. Large global brands will need a local seller to list their products and fulfil orders in market, unless they are having a team that understands every marketplace intricacy that they sell into. At Molzi, we rely on ground information to ensure that we know what is going on within any country at any time so that you can be certain that the changes we make and the recommendations that we provide are coming from experts who know what your target demographic wants to see and can efficiently execute it.