Big news! Amazon may open a site in Ireland, grabbing 3.8 billion euros in market share

Some foreign media pointed out that Amazon is going to open a new site in Ireland?

Amazon to open Irish site?

News that developers are building Amazon's first "fulfillment centre" in Ireland in Baldowna, on the edge of the capital Dublin , suggests the online retail giant may be planning to launch an Amazon.com site specifically for the local market.

Amazon recently opened a small-scale service center in Rathcoole, west Dublin, for Irish customers who use the Amazon Prime service. But this is just a distribution center, it does not store goods, and basically just coordinates the packages that arrive from abroad and then delivers them to customers.

However, Balduna's logistics center will be more like the fulfilment centers it has pioneered in the United States and elsewhere. Instead of just sorting parcels from the UK, as it does in Rathcoole, Balduna will hold stock of products listed for sale on its website. For the first time, orders from Irish customers will be picked up and packed at the Balduna logistics center in Ireland before delivery.

Currently, most Irish goods purchased on Amazon are packaged in the UK and must undergo Brexit checks, incurring the risk of additional costs and delays. When Baldonna's products go online, products will bypass the "Brexit pipeline" and reach Irish customers more quickly.

In addition, local Irish media recently revealed that Amazon is also looking for office space in Cork to accommodate 1,000 employees and recently reached a deal to add an office in Dublin.

Through Project Balduna, Amazon will be able to offer same-day or next-day delivery to most of its Irish customers, a capability that is currently limited by its use of facilities in the UK to serve that market. Of course, the long-awaited Amazon Ireland station is only a matter of time.

3.8 billion euros market, Irish people love to buy shoes and clothes online

There is a reason why Amazon is eyeing the Irish market. The temptation behind it is the huge market potential.

Although Ireland is a small country in Western Europe with a land area of ​​only more than 70,000 square kilometers, its GDP is very impressive. In the 2020 world GDP ranking, Ireland ranked 34th with a total GDP of 2,577,035.58 billion yuan.

This shows that Ireland is a gold mine that cannot be ignored.

A word that the Irish often talk about is "quality of life". How can the pursuit of quality of life be without shopping?

A PayPal survey shows that Irish consumers prefer cross-border online stores to local stores. In addition, the Irish are also the largest cross-border online shopping group in the world, with 84% of Irish consumers shopping on overseas websites.

According to a report released by IBISWorld, e-commerce sales in Ireland are expected to grow by 12.9% to €2.2 billion in 2019. This figure is more than double the €1.05 billion in 2010 .

The research firm predicts that over the next five years, Irish e-commerce sales will grow at a compound annual growth rate of 11.2% to €3.8 billion.

Not only that, relevant data shows that in 2019, Ireland's Internet penetration rate was 84%, the proportion of online shoppers was 81%, E-GDP (the proportion of e-commerce sales to GDP) was 2.53%, and the e-commerce turnover growth rate was 7%. At the same time, in Germany, the main market for sellers in Europe, its Internet penetration rate was 93%, the proportion of online shoppers was 83%, E-GDP (the proportion of e-commerce sales to GDP) was 1.71%, and the e-commerce turnover growth rate was 9.14%.

It is reported that currently, the top three e-commerce websites in Ireland are: Amazon UK (market share of about 5.6%), eBay (3.6%), and AliExpress.

Apparel and footwear is the largest product segment in the Irish e-commerce industry , accounting for an estimated 39% of Irish e-commerce sales , followed by consumer electronics, which account for approximately 33% of the market share.

Ireland suffers as Brexit increases tax costs

Amazon may be about to open a site in Ireland, which has a lot to do with Brexit.

Geographically, Ireland and the United Kingdom are across the sea from each other, and the distance between the two capitals (Dublin -London) is only 446 kilometers, an 8-hour drive. Considering the geographical location of the two countries, Irish online shoppers usually shop on British websites.

According to many sellers on the UK site, many Irish orders are completed on the UK site, but because the UK will leave the EU in January this year , Irish buyers will bear more taxes.

On January 1 this year , the United Kingdom completed its withdrawal from the European Union and achieved full political and economic independence , but this had an impact on the Irish retail industry, increasing the costs for Irish e-commerce shoppers while also bringing business opportunities to the local area.

For local Irish retailers and suppliers, Brexit will face two problems.

1. Goods imported from the UK will be individually certified and inspected.

While UK goods do not incur customs duties entering the EU, they must comply with EU food regulations. This is a serious problem for retailers who want to supply Irish shops and warehouses from the UK - goods subject to the regulations must now be certified and inspected separately.

2. Importing goods from the UK will incur more taxes

Another issue is that EU goods imported into UK warehouses, unpacked and repackaged for shipment to Ireland are now subject to tax.

If the only processing involved is repackaging, which is subject to duty, then this calculation is clearly unreasonable. It is hard to imagine why pasta imported from Italy to a UK warehouse should be subject to duty if it is delivered to an Irish supermarket?

Not only that, but the cost of buying goods from UK websites will rise for Irish e-commerce shoppers, with prices increasing by up to 40%.

The price of some goods can increase by more than 40% because of taxes . For example, when buying something over 150 euros, you need to pay customs duties and VAT.

There will be no difference for Irish online shoppers on purchases of goods worth less than €22 until July 2021. However, Ray Ryan, from the UK Revenue Committee's Brexit unit, said that from January, orders over €22 will incur an additional charge.

Online shoppers will face additional import charges when purchasing items priced at €23 or more as they will need to pay VAT.

Consumers will also have fewer rights to return products or seek compensation if they shop with UK companies if they are faulty or not as described, the Competition and Consumer Commission (CCPC) said .

Amazon UK orders may decline after opening of Irish site

Currently, most orders from Irish customers on Amazon are completed on the UK site, and then the packages are shipped from the UK to Ireland via the post office.

Irish consumers will have to pay more taxes if they shop from non-EU countries, so Amazon has begun planning to build an order fulfillment center in Ireland. The order fulfillment center will be built in a business park in Baldonnell, west of Dublin , and the delivery speed of large orders will be faster.

Establishing an Irish fulfilment centre would allow Amazon to bypass the UK and avoid any delays or extra charges due to Brexit deal arrangements.

For sellers on the UK site, paying a 20% tax is a foregone conclusion. According to recent feedback from UK sellers, due to the increase in tax costs, their orders and rankings have plummeted while their peers have not raised prices.

Some sellers speculate that if Amazon builds another site in Ireland, the number of orders from sellers on the UK site may drop further. Of course, for new sellers entering the Irish site, they should consider the local logistics (escaping from the warehouse explosion and delays in the UK), costs (tax reduction) and consumer purchasing power.

In the long run, Amazon’s new site will not be a bad thing for Chinese sellers, but will further expand Ireland’s e-commerce market.

Cross-border sellers may wish to look forward to this upcoming new site.