E-Commerce Trends Not Knowing Is Your Loss Amazon Global Business Expansion Strategy

Infinite Growth of the Global E-commerce Market, How Far Would Amazon Make? Ever since the COVID-19 pandemic, the global e-commerce market is indicating an explosive growth. The market volume has grown to USD 4 trillion in 2020, and it is expected that it will reach USD 5 trillion this year. ^[1] In this situation, Amazon is solidifying its position as the world’s largest global e-commerce platform, marking 2.7 billion monthly visitors. One thing that we should note is that although the U.S. e-commerce market has grown rapidly with the growth rate over 35% since 2020, it only comprise 13.6% of the entire U.S. distribution market.^[2] This statistic indicates the great growth potential of the U.S. e-commerce market and Amazon, which has the most market share in that.

Amazon US Is Not the Only Answer Recently, many Korean sellers are following the changing tide in the U.S. market and trying to tackle this large market with innovative and competitive products. Then, would going all in to enter the Amazon US that has a high growth potential be the only answer for the success of global sales of Korean Amazon sellers? Of course, there is no argument in that the Amazon US is the first market in the global e-commerce, considering its visitors and sales volume. However, narrowing down our route to success in Amazon only to Amazon US can be a short-sighted approach, considering that there are many advantages as follows if we expand our Amazon business to other marketplaces.

First, diversification of sales making route to secure sales and profit stability.

Second, additional securement of potential customer groups to enhance the possibility of extending the business and increasing the sales.

Third, expected prior market occupation of the emerging market as the ‘first mover.’ We can obtain relatively more opportunities because competitions in each category is less intensive compared to the U.S. market although European Amazon market has 170 million monthly visitors, which is equivalent to 80% of those of Amazon US.

Actually, many sellers do know such advantages but they are experiencing many difficulties in entering the global market because they don’t know how to start while they know those advantage.
Hence, today we will learn about means to connect the existing Amazon US account with other marketplace accounts easily to extend our Amazon business to North America and European countries, in order to solve those sellers’ trouble. Creating Account and Activating Sales Are Different A seller who has ever created an account in the Amazon US would have experienced that not only the account for the United States but also those for Canada and Mexico, which are North American countries, are created during the account registration process. However, this is just granting the sales right in other marketplaces. In other words, it is not that product listing in the Amazon US is connected to the accounts of the other countries and sales in Canadian and Mexican markets is activated automatically. Then, do we have to repeat the product listing work, which has required much time and effort in the beginning of our Amazon business, to expand our market to other marketplaces? Copying the Listing Easily with the BIL Feature Fortunately, Amazon understands the sellers’ suffering and has created Build International Listing(hereinafter, BIL) BIL tool is a feature to copy the listing in the source market place into the target marketplace in a simple manner. For example, if a seller has entered Amazon US and wants to extend their business to Amazon CA (Canada), the seller can copy the listing in Amazon US by creating a BIL in Amazon CA.

The most significant advantage of this feature is that it processes not only listing but also complex processes, including translation, synchronization of reviews and ratings, and exchange rate calculation, automatically and connect them. Also, setting changes occurred in the source marketplace, including changing the sales method from FBA to FBM and modifying the product price, can be also applied to other marketplaces as they are. (Sellers may not apply this if desired) In addition, the seller can manage the comprehensive account organically and efficiently because each product price can be weighed in consideration upon the market price and fees of the target country.

The next assignment the sellers who expanded the marketplace easily shall face is how the products shall be shipped to the consumers in other countries. Basically, this can be easily solved by storing the products in the Amazon FBA warehouse of the concerned country. However, just thinking about logistics cost from shipping out the inventory, duplicated inventory burdens, and complex paperwork needed for the customs clearance alone will cause the headache and you will think “just give up.” Ship to Mexico and Canada, Just with the United States Warehouse The thing that can mitigate such burdens of sellers is Remote Fulfillment with FBA (hereinafter, Remote FBA) applied to 3 North American countries (the United States, Mexico, and Canada). With this program, the seller may handle the shipping for the order from other country with the inventory in the United States FBA warehouse without a need to stock additional inventory to the other country. Also, import duties and taxes occurring in regard to the order through this program are all borne by the buyer, the seller’s burden can be mitigated.

However, use of this program may be restricted depending on the characteristics of the product, and additional 20% FBA fee compared to the Amazon US sales occurs per order. Hence, it is recommended to check the response of the consumers in each country through this country and directly enter the marketplace with proper marketability. That is, we can utilize the strategy to verify the market response through this program and directly stock the inventory to the FBA warehouse of the target country to reduce the fee and selling price gradually. Similar but Different European FBA Shipping Method Then, what would be the way for Korean sellers to utilize the Amazon platform most effectively to enter European e-commerce market, which is as attractive as the North American market, as mentioned before? We will introduce three types of European Amazon FBA and share the insight about what would be the best sales method for each situation.

1. 01European Fulfilment Network (EFN)

   EFN is a program similar to Remote FBA. It uses the FBA warehouse inventory in one of 8 European countries where the Amazon marketplace exists to enable the Amazon selling in other European countries. (France, Germany, Italy, Netherlands, Spain, Sweden, Turkey, and the United Kingdom)
   For example, if a customer in other EU country make a purchase through the inventory in Germany, Amazon will handle the export and import process as a proxy. While this is convenient because selling in the entire Europe become available with VAT registration in a single country, it has disadvantages that fee per order is expensive and the shipping speed is slow.
   
   
   

   

   (Source : hellotax - Amazon Blog – EFN / 2020.05.10)

   (Source : hellotax - Amazon Blog – EFN / 2020.05.10)

   
   
   
2. 02Pan-European FBA (PAN-EU)

   When inventory is stocked in a FBA warehouse of one of the European Amazon marketplaces, Amazon freely moves the inventory to and stores it in FBA warehouses across the EU depending on the market demand. Unlike the EFN method in which products are delivered directly to consumers in other countries, it is a method in which inventory is brought into each country's FBA warehouses and then delivered. While it has advantages that fee per order is cheap and the shipping is fast, it has the disadvantage that the seller shall register VAT separately in all 8 countries where European FBA warehouses are located.

3. 03Multi-Country Inventory (MCI)

   It allows the seller to send the inventory to the FBA warehouses of specific countries through MCI and sell in the concerned country. However, it has disadvantages that the transportation cost is high, and the seller shall register VAT separately in each country.
   
   
   

Conclusionally, in that the costs and efforts for the initial market entrance can be minimized while examining the consumer response in Amazon EU market, the initial entrance through EFN is recommended for the sellers first entering the European Amazon market. However, if the business is large enough to bear VAT registration work in all European countries with FBA warehouses and sufficient market response examination works have been conducted, the PAN-EU method will reduce fees and increase product price competitiveness. Product and Logistics, the Success Factors for Amazon Global Selling So far, we have looked into the ways to increase the chance of success in Amazon business by targeting the global e-commerce market beyond the Amazon US. However, the success of the Amazon business is not determined by a single factor, but by a complex effect of diverse factors. If we choose the two most important among those, they will definitely be merchantability and logistics stability. Hence, products with solid marketability and quality shall be selected, and logistics partner that can ensure persistent inventory stability should be selected.
Cello Square, a digital forwarding service, provides one-stop services for all areas of import and export logistics from freight charge inquiry to settlement based on Samsung SDS' latest IT technology, ensuring best logistics stability in the industry. In particular, it provides comprehensive logistics services specialized for Amazon FBA not only in the United States but also in other North American and European countries mentioned above and Japan. It is also an advantage of Cello Square that it provides local storage and its own fulfillment service (scheduled for January 2022) to provide the local service in a price cheaper than the FBA warehouse and can stock the inventory locally if urgent restocking is necessary.

Hence, sellers looking for professional forwarding services specialized in the Amazon FBA forwarding will be able to make an advance toward the Amazon business success through Cello Square, a Samsung SDS' digital forwarding service, which can make shipping regardless of the volume, easily conduct urgent restocking, and provide optimal solutions from local import customs clearance to Amazon warehousing. Amazon FBA Products in a Glance

(Source : Samsung SDS)

References [1] Retail Ecommerce Sales Worldwide 2019-2024, eMarketer
[2] Quarterly share of e-commerce sales of total U.S. retail sales from 1st quarter 2010 to 1st quarter 2021, Statista

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