It should be no surprise that Amazon dominates Ecommerce in the U.S., capturing more than 40 percent of all Ecommerce sales through both B2C retail but also through Amazon Business. Since its inception in 1994, Amazon has expanded its footprint far beyond US borders, establishing itself as a formidable force in international Ecommerce as well. Today, Amazon operates in over 20 countries worldwide on five continents, with about 40 percent of its retail sales coming from markets outside the United States. Very few other companies and no other Ecommerce firm has attained such a widespread, international presence.
Ecommerce in general enables companies to enter international markets with greater ease. Given their global reach, Amazon offers a unique and efficient pathway to international expansion for companies aiming to grow their market presence without making a hefty investment in a physical presence. This capability makes Amazon an attractive option for businesses contemplating global expansion.
That said, entering new markets via Amazon isn’t as easy as flipping a switch and suddenly having products sold there. When considering expanding a business globally through Amazon, it’s imperative to understand the operational nuances involved. While Amazon offers global storefronts and the ability to leverage existing infrastructure (and sometimes existing inventory) to facilitate international expansion, each country operates as a distinct entity. Legally, Amazon is required to establish separate legal entities in every country where it does business. This means that each country's Amazon operations are managed independently, with separate accounts and regulations.
To successfully expand your presence on Amazon’s international platforms, proactive management and strategic planning are essential. Companies must invest time and resources to navigate the complexities of managing multiple accounts across different countries. This incremental investment includes understanding and complying with local regulations, adapting to diverse market demands, and maintaining consistent operational oversight. By acknowledging and preparing for these challenges, businesses can better position themselves to effectively leverage Amazon’s global reach and maximize their international growth potential.
There are essentially three steps we recommend B2B manufacturers go through to evaluate and attack their international opportunity on Amazon. Let's take a closer look at these steps and the potential benefits of using Amazon to enhance your global market strategy.
Step 1: Evaluate Your Opportunity
As with any new business venture, it’s essential to evaluate what your opportunity on Amazon may be in the markets you want to enter. Going into new markets takes time and money, and it's therefore critical to understand Amazon's market presence in targeted regions so you can gauge your own opportunity.
While Amazon is a dominant player globally, its market size varies by country and category. For instance, Amazon Business is still nascent in many markets, presenting an opportunity for growth.
Amazon Revenues by Market (in USD)
United States | $574 billion |
Germany | $37.6 billion |
UK (including Ireland) | $33.6 billion |
Japan | $20.5 billion |
Canada | $11.5 billion |
France | $6.9 billion |
India | $5 billion |
Italy | $4.5 billion |
Spain | $4 billion |
Australia | $3.5 billion |
Mexico | $3 billion |
It’s important to understand how your particular products fit into each market. Research tools like Merchant Words can help you gauge brand search volume in specific markets, while other software tools, such as JungleScout and Helium10, can provide insights into Amazon's sales volume and category performance. Additionally, take the time to explore comparable products on Amazon by conducting general searches in your product category.
Beyond traditional competitors, it's essential to look at the broader market landscape. You might find other brands offering similar products that aren't your usual competitors but can still impact the level of difficulty of capturing market share. For example, a search on Amazon France (Amazon.fr) for “power drill” turns up not only Bosch (made in neighboring Germany), but several other brands that might not be found in the U.S.
Understanding the size of Amazon's presence in each market, including overall sales volume and category dominance, will help you make informed decisions about market entry and investment. By analyzing these factors, you can identify untapped opportunities and develop strategies to effectively compete in diverse markets.
Step 2: Develop Your Strategy for World Dominance
Once you've identified profitable markets with high potential, it is essential to have a well-structured plan to execute in that market. At Enceiba, we’ve helped clients break into markets around the world, and we’ve found it’s important to adhere to many of the same best practices that make U.S.-based Amazon seller accounts successful. This includes using Fulfillment by Amazon (FBA) to ensure products are eligible for Prime shipping when sold via the Seller Central model, as well as enhanced brand content to provide detailed product information. Just as it does in the U.S., delivery speed plays a significant role in how successful your presence is in other markets, which in turn requires a robust inventory capability within the targeted geography. This can involve complex logistical planning.
Content localization is another key success factor. Simply translating your content into the local language isn't enough; you need to ensure it resonates culturally and visually with the target audience. This includes using appropriate imagery and tailoring the message to fit local nuances.
A key part of your strategy should also include prioritizing your objectives and the markets you want to enter. It’s unrealistic to expand globally all at once. Instead, focus initially on markets with the highest potential. When coming from the U.S. market and determining which markets to prioritize, it’s often beneficial to start with English-speaking countries like the UK, Ireland, Canada, and Australia. These markets can provide smoother entry due to the language similarity and existing trade relationships. Additionally, investing in advertising within these new markets is essential to drive visibility and build brand recognition, setting the stage for successful international expansion. Adopting a "crawl-walk-run" approach allows for a more manageable and strategic rollout.
Step 3: Align Resources and Expectations
Success with international expansion isn’t built overnight, and it’s therefore essential to put the right resources in place and set realistic expectations. Just like with a U.S.-based Amazon program, you need inventory to sell, budget to develop your presence, and people to manage the program on an ongoing basis.
Expert agencies (like Enceiba) can be indispensable when planning and executing an international expansion, offering expertise in inventory allocation, content development, and account development. Our relationships with and deep knowledge of Amazon can significantly streamline the complexities of entering new markets and help navigate the unique challenges of each region.
Lastly, it's important to set the right expectations when developing a global Amazon presence. For U.S.-based companies, international expansion can benefit substantially from having an established Amazon account. What’s more, it’s reasonable to aim for 5-10 percent of sales to come from international markets by the second or third year of expansion. Brand recognition will play a significant role in your success, and this should be understood prior to launching your program in other markets.
While entering every market could potentially push your international revenue from Amazon to 30 percent of total Amazon sales, it’s essential to approach this incrementally. Aligning your resources effectively and understanding the scope of your market potential will help you achieve a successful and sustainable global expansion.
If your firm is looking to develop an Amazon presence in other countries, Enceiba is here to help! Schedule a call with one of our Amazon specialists to discuss your challenges and to collaborate to find the right way forward!