Accelerating expansion! A group of Amazon sellers are flocking to new sites and platforms

Multiple data show that at the beginning of the new year, many cross-border sellers have been preparing to set up multiple platforms and multiple markets.

Amazon US sellers are accelerating their expansion into the European market

Morden​   According to a report by Amazon Retail , market expansion has become the top priority for Amazon sellers in 2023. According to Amazon agencies, the demand for Amazon sellers to expand to new sites and platforms is increasing, and sellers from the US site are pouring into the European market.

Jungle   Scout 's report shows that among Amazon's 20 global sites, the US site has the largest number of sellers, of which at least 45 % have opened a second site while operating the US site , and 50% of US-Asian sellers plan to enter new Amazon sites for sales this year .

So which markets will become expansion destinations for Amazon sellers?

The UK and Germany are the largest e-commerce markets in Europe and the two largest markets for Amazon outside the United States .   Pulse data shows that at least 3,300 sellers on Amazon Germany have an average annual sales of $1 million, while in the UK, at least 3,200 Amazon sellers have reached this sales level .

As the world's fourth largest economy , Germany is located in the economic center of Europe, close to markets such as Italy, Sweden and Denmark , and the average income of local consumers is very high . It is also Amazon's second largest market in the world . In addition to the high consumption level, the British market also has the advantage of similar language . Therefore, these two markets have naturally become the preferred expansion markets for most Amazon sellers.

In addition to the UK and Germany sites , the number of sellers on Amazon's other sites is also increasing . In 2022, the number of sellers on Amazon Brazil, Turkey, Japan , and Saudi Arabia increased by 220%, 80%, 53%, and 50%, respectively.

Expansion does not mean acting blindly just because of favorable factors. "A general never fights a war without preparation." Sellers must understand the local market, such as transportation costs, taxes, etc. They must also conduct market analysis, market research, competitor analysis, SWOT analysis, etc. , make good pre-war plans, and "advance step by step" to achieve good revenue results .

In addition to expanding in the market, many Amazon sellers are also planning to set up on multiple platforms.

Amazon sellers are flocking to eBay, Walmart and other platforms

An Amazon agency manager said that due to factors such as increasing competition on the Amazon platform, rising FBA costs, and slowing Amazon e-commerce sales , sellers' profit margins on the platform have dropped rapidly. In the past 6 to 12 months, Amazon sellers have been expanding to other platforms at an accelerating pace .

Amazon Agency Supply   Kick's CEO said that in the past six months, 40% of the Amazon sellers it contacted expressed interest in selling on other platforms such as eBay , Wayfair, Home Depot and Walmart .

Jungle   The 2022 "Amazon Seller Status Annual Report" released by Scout pointed out that 52 % of Amazon sellers plan to develop new e-commerce sales platforms in 2023 , among which the intention to open a store on eBay is the highest .

Previously, the editor had interviewed many sellers on the question of "whether there are plans to develop on multiple platforms". The vast majority of the sellers interviewed said that they had this plan in 2023, and some sellers had already laid out platforms such as Walmart last year.

Sellers joked that if they didn’t expand into other platforms, they would “die together” with Amazon . Some sellers also said that expanding to other platforms was a helpless move, because the team was small and had limited energy, but the operating costs on Amazon continued to increase, and it was becoming increasingly difficult to keep up with the pressure on profits.

The latest data from Marketplace Pulse shows that in 2022, sellers' operating costs on Amazon accounted for more than 50% of sales revenue, which is 10% higher than five years ago.

Specifically, sales commissions account for 8% - 15% of Amazon's operating costs, logistics costs (including storage fees and other fees) account for 20% - 35% , and advertising and promotional costs account for 15%.

Amazon not only frequently raises FBA fees, but also the price of advertising continues to rise. As market competition becomes more intense, in order to get a high conversion rate display for products, advertising on Amazon has almost become a must for sellers, and this cost is really difficult to save . What is even more troublesome for sellers is that even if the advertising fees are burned faster and faster, the number of orders has hardly improved.

Under such circumstances, Amazon sellers have to find more ways to survive.

However , Pattern's marketing director George   Hatch said that the number of sellers on platforms such as Walmart and eBay is growing rapidly, almost as fast as Amazon five to seven years ago. If this trend continues, the marginal growth brought by new platforms will also decrease , and as these platforms become more mature, the requirements for sellers will become more stringent .

Can the “multi-market, multi-platform” strategy really help sellers?

The risk of a U.S. recession that began last year has not been eliminated , so consumers may continue to control their spending this year, which is extremely bad news for sellers.

Data from Hackett Associates shows that the current US import demand is showing a cliff-like downward trend. It fell by 1.2% in 2022. Although the number is not large, the import processing volume of major US ports increased significantly in the first half of last year, but fell sharply in the second half of the year.

The association also predicts that import volumes at U.S. ports in February will fall 25.6% from the same period last year , the lowest level since May 2020, and will fall 19.4% in the first half of this year compared with the first half of 2022.

In the past, most of the products on Amazon ’s US site came from China, but with the shift in global supply chains and changes in shipping prices, products from other countries have more price advantages. Chinese sellers either have to choose to reduce profit margins and maintain original prices, or bear the risk of a possible decline in order volume after price increases .

From this point of view, it is necessary for sellers in the US market to expand into other markets. However, choosing the European market also brings a lot of pressure. Not to mention the collection of various fees such as VAT, EPR, UKCA, and tariffs , Amazon has recently "encouraged" tens of thousands of European distributors to become third-party sellers. If so, the number of competitors in this market will increase significantly.

Not only do we need to develop multiple new markets, but we also need to plan multiple new platforms, but other platforms don’t seem easy to develop either.

A seller with multiple platforms said that although Walmart currently has many preferential policies for new sellers, the platform traffic is too small and it can only serve as an auxiliary platform for product exposure. Platforms such as Temu have already begun to "take action" against sellers and are not a "good match."

For most sellers, Amazon is still irreplaceable. In 2022, Amazon 's global buyers reached 300 million, with monthly visits reaching 2.7 billion times, and 66% of consumers chose Amazon as their preferred shopping search platform .

Among the 2 million small and medium-sized sellers on Amazon , 89 % of sellers made a profit in 2022, and 37% achieved full-year profit growth .

Jungle   Scout data shows that currently 73% of small and medium-sized sellers on Amazon have a net profit of more than 10%, and 35% of sellers have a profit of more than 20% . Among them, the average profit margin of sellers on the US site is between 7% and 10%.

Although the multi-market and multi-platform strategy also has risks, it is understandable that Amazon sellers want to share the pressure of a single market and a single platform . Whether it can really help revenue depends on whether the sellers' layout arrangements are in line with market development needs.

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