Selling on Amazon Europe - The Opportunity
HOW TO SELL ON AMAZON EUROPE - THE DEFINITIVE GUIDE
Selling on Amazon.com - A Changing Landscape
The amazing opportunity presented by Amazon's FBA Program for private label sellers is well documented, producing many success stories.
Incredibly, 100,000 sellers reached over $100,000 in sales Amazon in 2016.
Amazon.com (US) is undoubtedly the largest marketplace for sellers, with their North America division accounting for 2 of every 3 sales in Q2 2017.
However, as always in the fast-paced world of ecommerce, things are changing.
The number of active sellers using the FBA service grew by more than 70% in 2016. Many sellers in the US have felt this influx of new sellers, with some niches experiencing oversaturation and downward price pressure.
Amazon.com presents excellent sales potential, certainly. But, it's a much more competitive marketplace for sellers than even a year or two ago.
The majority of top selling products in each category on Amazon.com have a significant number of reviews. For example, the graphic below is an analysis of the first page results on Amazon.com for "yoga mat". With an average of 1,191 reviews, like many other categories on Amazon.com, it will be very difficult to successfully launch a new product and gain market share.
Gone are the days of success from launching generic private label products on Amazon.com, and quickly getting a large number of reviews to compete - as you probably know by now, doing large giveaways for reviews was banned by Amazon at the end of 2016.
Innovation and diversification are the keys to growth for today's Amazon Seller.
To ensure continued growth and diversify business risk, sellers must look outside Amazon.com.
This can include launching on other platforms in the US, including Ebay, Walmart and Jet. Another option is developing your own ecommerce site.
However, the focus of this guide is on international expansion, and specifically, Amazon Europe.
Is international expansion worth it for Amazon Sellers?
The short answer? Yes.
Want to see proof? No problem.
Just check out the results of Jungle Scout's 2017 Seller Survey.
The results from 3,000 respondents indicated on average, sellers who expand to a second marketplace increase their profits by 40%.
Selling in 3+ markets was even more lucrative, with an average profit increase of 61%!
These results are unsurprising when you consider some of the benefits offered by international expansion:
Introducing your products to millions of new customers
International marketplaces tend to be much less competitive than Amazon.com
It allows you to leverage successful products and supplier relationships you have already put in place
Why Amazon Europe?
Amazon has 10 marketplaces outside of the US – Canada, Mexico, the UK, Germany, France, Spain, Italy, India, China and Japan.
So, why is Europe the first step for international expansion?
There's a number of reasons that make Europe an attractive market for Amazon Sellers:
- It's the next biggest Amazon marketplace after North America, thus offering the largest sales potential.
- Excellent sales growth in recent years.
- You’ll be able to list your products on 5 marketplaces (UK, Germany, France, Italy and Spain) and ship to customers in 26 countries around Europe.
- The market potential is also significant - Europe has a population of over 700 million, more than twice that of the US.
- Competition is also much lower on Amazon Europe, compared to the US. There are far fewer sellers, and products tend to have much lower numbers of product reviews. As an example, see the top results for "yoga mat" on Amazon UK. An average of just 160 reviews, compared to over 1,100 for this product type on Amazon.com.
Sellers who expand to Europe currently have a great opportunity to gain a large market share there, which can reap rewards for many years to come.
Once you follow the right steps (all in this guide), getting set up on Amazon Europe is also quite straightforward.
Just one seller central account is needed to sell to customers across 26 countries in Europe.
You only need one local inventory pool too. This means all of your products can be stored in the UK and distributed throughout Europe.
Assuming you are using the FBA Program, you will send your products to one Amazon fulfillment center in the UK. When an order is made on any of the 5 marketplaces, Amazon will pick, pack, and ship your product. This is the perfect way to get started in Europe as it's the most straightforward.
Once you have scaled on Amazon Europe and your sales are significant, you can consider using their Pan-EU FBA Program - this involves storing inventory throughout Europe, but also comes with greater VAT obligations.
We'll cover that later in detail in this guide, along with other details and factors in optimizing your set up for Amazon Europe.
But for now, let's leave that and introduce you to the 5 key marketplaces of Amazon Europe.
The Big 5 Marketplaces of Amazon Europe
Using website visits in Q1 2017 as a proxy for size, we can see that Germany and the UK are the biggest marketplaces in Amazon Europe.
Amazon Germany is actually bigger than the UK, which is often a surprise to many US sellers.
While the other three marketplaces (France, Italy and Spain) are much smaller, together they are approximately the same size as the UK.
Competition in France, Italy and Spain is generally much lower than Germany and the UK. This is evident by fewer sellers, lower numbers of product reviews and generally lower costs for pay per click advertising (PPC).
This can mitigate the fact that Amazon France, Italy and Spain are smaller, as success in these 3 marketplaces is often easier to attain.
We have firsthand experience of this, having optimized listings for a number of sellers who have found their greatest success on Amazon France and Italy.
Interestingly, the data opposite suggests that Germany is a more attractive proposition than the UK. It is less competitive than the UK (based on the number of sellers), and is also a bigger marketplace (as we saw earlier).
One imagines this is primarily due to the language barrier, which prevents many US and UK Sellers from expanding to non-English speaking marketplaces like Germany.
However, the language barrier is actually an opportunity, as many sellers don't do a good job at translating and adapting their product listings to non-English speaking marketplaces.
With respect to ecommerce sales growth in these 5 marketplaces, the graphic below looks at the period of 2012 to 2016.
We see excellent sales growth in ecommerce across each country. However, Germany, France and Italy stand out, with growth rates of over 90%!
This confirms the excellent opportunity offered to sellers who expand to Amazon Germany, while we can see a very bright future for Amazon France and Italy.
This is also backed up by a considerable population in these countries - Germany (82 million), France (65 million) and Italy (60 million).
Amazon Europe - Your Expansion Plan
While the setup of expanding to new markets involves a number steps, once it's done, you will have opened your business up to millions of new customers.
The good news? In this guide, we'll outline every step required to successfully expand to and launch on Amazon Europe.
However, before launching a product in a new marketplace, it's important to research and assess its potential. Let's look into this in more detail in part 2 of our guide.
Next section: Part 2 - Product Research for Amazon Europe.