There are 2.14 billion consumers who buy online in 2022 and e-commerce accounts for 18% of all retail sales. It is no longer a question of whether people shop online but how frequently they will buy and how much will they spend. However, the real question is why is Amazon so important for your e-commerce portfolio when expanding into Europe?
Where Size Matters
Each month more than 197 million people worldwide visit Amazon. In 2020, Amazon was responsible for $386bn in revenue making it the third largest company in the world by revenue. Consequently, Amazon has become the most recognisable brand in the world, providing a large customer base with a high conversion rate making it the ideal place to sell in. This is why Amazon can provide a massive new customer base at your fingertips.
Where Size doesn´t Matters
Almost 50% of all e-commerce consumers start their product search on Amazon. They have a specific product requirement and know what they are looking for. This provides a level playing field for large, medium and small sellers who want to sell their products to a diverse customer base. In fact, due to the special functions of Amazon including very fast delivery, easy returns and refunds and excellent payment security that customers trust, it is easy for small and medium sized businesses (SMBs) to build their brands and grow their business in any given country.
According to an Amazon press release from July 2020, in the US alone, SMB sellers, on average, had sales of over $160,000 and the number of SMB sellers exceeding $1m grew by more than 20% in the same year. This demonstrates the growth potential available to your business whatever its size.
More sales for less effort
Amazon sellers like you can leverage the site’s customer base and powerful distribution network to sell with the minimum of effort.
You don’t need to have your own website to start selling on Amazon as most traffic comes from product related searches. Therefore, if you are an Amazon seller looking to expand into Central Europe, there isn’t a need for you to have a separate website for the countries you choose to sell in. Whilst this may not allow you to focus on your story or your commitment, this does save the expense of setting up websites in each country until you are ready.
Customer Loyalty
To lock customers into the platform, Amazon set up its Prime membership in 2005. Since then, it has grown to over 200 million Prime members who pay for a subscription to gain benefits from the site such as 2 day free shipping as well as film and music streaming services.
Amazon Prime customers are loyal. On average, they spend $1,400 p.a. and the customer retention rate is 90% at a time when a 35% retention rate is considered outstanding generally in ecommerce business. This provides you with the solid base of customers and their loyalty.
Where is Amazon most important in Europe?
The US market is obviously the most populated and successful due to its longevity however, Europe is now becoming the focus of Amazon’s expansion plans consisting of 8 individual marketplaces, Germany (accounting for a third of Amazon’s total sales), UK, France, Italy, Spain, Poland and most recently the Netherlands and Sweden in 2020. The continued expansion into Europe exhibits the continued development by Amazon. This new consumer base exceeds more than 400m new customers that have different sales periods and holidays to US customers enabling you to expand your business by doubling your sales peaks all year round. Additionally, because European countries are in close proximity to each other, it is common for Europeans to order from neighbouring Amazon websites.
In addition to increasing your customer base, European Amazon marketplaces offer less competition than the US market with fewer active sellers. This means that some niches in Europe that are available in the US have not yet been conquered and products that may be readily available in the US are harder to find in Europe. This opens up demand for your products across Amazon in Europe and this is predicted to grow exponentially over the coming years. Therefore, there are opportunities to explore new growth opportunities and expand your brand.
Amazon is committed to making European expansion simpler by allowing you to have one single seller account to sell and ship in several European countries. However, you need to be aware that European Amazon will provide differing storage, fees and surcharges to cover everything once your products arrive in the EU.
The only potential barriers you may face in your expansion into Europe are language, local customs and taxes. It is noted that Amazon.de expects language translations to be perfect and the tax systems to be complied with to the letter. This is where Retailys can help by providing you with market analysis for your specific products, appropriate translations, advising you on which countries will be the most profitable and assisting you with your full expansion into Europe.
Dušan Makrlík
E-commerce specialist & Sales manager
makrlik@retailys.com
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