Future of international Amazon sales: interview with M. Wejtko
Could Jeff Bezos have predicted Amazon’s future when he started running his company from a small garage in Seattle in 1994? At that time, Amazon had nothing like the 270 million active users it has today. It would also take years before Kindle began to change the way we read books.
… this was the brainy, visionary and innovative side of Bezos… This is how the world of online shopping was turned on its head.
Bezos’ company is now a brand name: famous for its Kindle, fast shipping and offering virtually everything. Ever wondered why the arrow in the Amazon logo points from A to Z? This is to indicate that Amazon sells everything from … A to Z. The yellow curved line, in turn, resembles a smiley face. After all, Amazon is there to make buyers all over the globe … happy.
Jeff Bezos was well ahead of his time. He wanted Amazon to become a public utility and customer service was at the core of this endeavour. Part of his vision was for Amazon to be there 100% for its customers. The company became a success and now Amazon buyers and sellers are making purchases and sales across all borders.
Even though we’re not sure how much the visionary Bezos predicted back in 1994, we’re curious about Amazon’s future now that international selling is such a big part of it.
This is where international selling on Amazon is going
Thanks to Amazon, global buyers and sellers can benefit from Cross-Border Trading (CBT). They can order almost everything from almost everywhere and Amazon is a key player in this respect. It may be primarily associated with the US, but Amazon has also established marketplaces in India, China, Brazil, Japan and 5 European countries (EU5): the UK, Germany, France, Italy and Spain.
As 2016 progresses, we’re likely to see more sellers trading across borders, for instance Indian Amazon retailers in the EU5 and the USA. This means that there will be more competition, in particular when it comes to the fashion category, and more sellers trying to win the European buyer. Amazon sellers must be ready for new challenges.
How can European sellers prepare for the coming future, challenges and new trends? We talked to Marcin Wejtko, Project Manager at Webinterpret and an expert on international sales on Amazon.
Interview with Marcin Wejtko
How are sales on Amazon affected by the current eCommerce drivers and trends?
Marcin: For starters, let’s take the impact of mobile devices on online shopping as an example. According to the recent comScore report, during the last holiday season US consumers spent almost $ 70 billion online. Nearly $ 13 billion was spent via mobile devices, which accounted for 18% of eCommerce sales: an increase from 13% in 2014.
eCommerce going mobile is a reality. Amazon is no exception and over 50% buyers do their online shopping on their mobile devices. So the general trends observed in the global eCommerce landscape are definitely valid for this platform too. How to keep up with this trend?
Mobile shopping means that you need to focus on more Amazon-specific functionalities, fighting for the BuyBox being one example.
Of course, tablets and smartphones are different to PCs in terms of navigation, design and the general shopping experience. Good visibility of your offers and a smooth check-out process are absolute musts, otherwise you’re likely to miss sale after sale. On top of that, mobile shopping means that you need to focus on more Amazon-specific functionalities, fighting for the BuyBox being one example.
The BuyBox is a very helpful function that will help you win the buyer, but how does it relate to mobile shopping?
Marcin: The BuyBox is fundamental for browser-based shopping: around 82% of purchases go to BuyBox winners. Though, mind you, for mobile devices this is even more important since non-BuyBox offers will get much worse visibility compared to BuyBox listings. This is why, on top of great customer service and high quality goods, a seller needs to use some extra tools that will help them to win the BuyBox.
For this reason, we have introduced a free repricer feature at Webinterpret. We are constantly adjusting item prices on 5 European marketplaces to make sure that the listings of our sellers have as much BuyBox share as possible. We’re happy to confirm that it works. After introducing the repricer feature, the BuyBox share of the items in question grew by 35% within 3 months.
What is Amazon currently undertaking to facilitate Cross-Border Trade (CBT)?
Marcin: To start with, one of the detractors to Cross-Border Trade are international shipping costs, too high for many consumers. Amazon has recently decided to help in this regard, lowering its European Fulfilment Network fees for Fulfillment by Amazon (FBA). FBA is a service that revolutionises global logistics by empowering even small sellers: this happens thanks to the huge cost efficiency of Amazon fulfilment centres.
FBA is cost-effective, simple and helps you to delegate a lot, leaving you with more time to focus on the expansion of your business. What’s more, you don’t have to worry about the costs of foreign returns and you can offer free one-day delivery to Amazon Prime customers. Additionally, your ratings on Amazon can improve: within FBA, delivery-related negative feedback will be removed.
Finally, thanks to FBA you increase your chances of getting into the BuyBox, even if you’re not offering the best price for a given item.
So thanks to FBA, the visibility and promotion of the product / seller is much better?
Marcin: Definitely: in the case of most sellers, this translates into higher sales. More than 80% of Amazon sellers using FBA say that it has increased their sales volume. At Webinterpret we have noticed the advantages of FBA and how it helps international sellers capitalise on the Cross-Border Trade potential.
Consider the international sales performance of our sellers: 3% of all items are fulfilled by Amazon and these 3% generate 25% of the total CBT revenue. For all our sellers on paid packages we offer unlimited translisting of their FBA items, boosting CBT sales. This happens thanks to Amazon’s efficient and fast delivery network. Additionally, our paying customers don’t need to worry about any restrictions, compared with items fulfilled by the merchant.
We are constantly adjusting item prices on 5 European marketplaces to make sure that the listings of our sellers have as much BuyBox share as possible
Finally, I’d like to mention Amazon Prime: a membership programme for buyers that offers free 2-day shipping and discounted 1-day shipping rates. Interestingly, only FBA items are eligible for free delivery in this programme. However, Amazon Prime is not only about shipping and delivery. It also provides Amazon Video: free streaming of selected TV shows and films and a few extra services, such as Prime Music and Prime Photos.
Just think how great it is to be an Amazon Prime member now that the presenters of Top Gear, the best car show in the world, are hosting a new car show for Amazon Prime TV.
In the face of the looming competition from American and Indian Amazon sellers in the EU5, will it not kill European Amazon sellers’ margins?
Marcin: The arrival of American and Indian sellers is likely to bring more competition and challenges. European e-tailers may worry that the incoming low-margin or high-volume sellers will start a pricing war on Amazon. However, this is only partially true. New competition usually leads to lower prices, but bear in mind one fact: Amazon is not about offering the cheapest product. Low product prices have never been the mission of this company.
Amazon is not about offering the cheapest product. Amazon is about offering the widest selection of products, competitive prices and the highest possible quality and customer service.
Amazon is about offering the widest selection of products, competitive prices and the highest possible quality and customer service. The availability of the BuyBox illustrates this very well. Even though prices help win the BuyBox, hence we have introduced the repricer, they’re not the main success factor! The fulfillment method (FBA being the recommended one) and the seller’s feedback ratio also have an impact on the BuyBox battle.
So how can European sellers stay ahead of the new competitors?
Marcin: A pretty obvious way of staying well ahead of your competition is to ensure buyer satisfaction at the highest level. Let us reiterate, Amazon is focused on customer satisfaction and it is absolutely crucial that your buyers give you positive feedback. Otherwise, it’s quite easy to be overlooked on the search results pages.
What are other challenges that Amazon Europe is facing?
Marcin: There are further challenges related to shipping and delivery, for instance strikes of the German Deutsche Post. Implications are quite obvious: deliveries are slowed down, customers disappointed and there seems to be a general loss of trust in online shopping. This can be especially problematic in the case of international eCommerce.
Moreover, Amazon Europe is facing the problem of the inventory gap. In other words, there are disparities in the availability of the same product on different European sites. Amazon.co.uk has the biggest item catalogue in all of the EU5 countries. Companies like Webinterpret help sellers to fill in the inventory gap on other sites by translating items from amazon.co.uk into other European languages. It is easy, hassle free and without the need for any investment.
We may be on the verge of a completely new eCommerce reality.
Finally, emerging marketplaces, such as China, are becoming stronger as a competitor to the established giants, e.g. the UK, US or Germany. Alibaba, the Chinese eCommerce platform,
records sales bigger than eBay and Amazon combined. We may be on the verge of a completely new eCommerce reality.
Where would you see international sales on Amazon in five years’ time?
Marcin: Amazon will be growing strong, expanding their item catalogue all over Europe. Of course, this situation is perfect from the buyer’s perspective: they will be able to buy whatever they want from wherever they want, using their native language and with pricing in their currency.
What does it mean for online sellers, though? Fierce competition not only from local businesses, but from … everywhere. A great deal of merchants will have to pay exceptional attention to detail to win the spoilt customer. There will be a bigger need to find niche products and offer them at competitive prices. And of course, to add a cherry on top: provide an excellent customer service.
There is no reliable way of staying a winner in the dynamic eCommerce world. Yet you can increase the chances of your future success right at this moment. The best advice I can give to sellers? Start selling internationally as soon as possible: the globalisation of marketplaces is inevitable and is already taking place. Once you have established your presence on a given market, you are way ahead of competitors about to come from other countries!
Further reading & other sources
Sell globally with your webstore: interview with A. Borgstrom & F. Richardson
Facts most online sellers didn’t know about eBay: interview with A. Figas
How to address the actual needs of global online sellers: interview with M. Kostykowski
Strategies for growing your eCommerce sales: interview with Mark Ellis
Win the Buy Box on Amazon to multiply your online sales
Unleash the full potential of cross-border trade with Amazon’s FBA
Online sales on Amazon: how can I benefit from Brand Registry for Amazon?
Maximise your sales on Amazon: tips for online sellers