Should I Expand to Amazon USA or Other European Marketplaces?

Matthew Ferguson advises Loris to put the Caesar mentality of world domination on hold and focus on conquering local marketplaces first

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Question

I live in Italy and am currently selling on the five European Amazon marketplaces, but I want to expand further, to reach my goal of selling on all the markets served by Amazon. I think my next move should be to sell on Amazon in the U.S., because I think customers there are more used to buying products online than they are in Europe. I currently fulfill all of my orders using FBA and I would like to continue doing this for whichever marketplace I expand on to next.

My question is whether you think expanding to Amazon in the U.S. should be my next step, or if there is anything more I can be doing in Europe?

– Loris B., Italy

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Answer

Hi Loris,

Global domination should always be the long term goal. Why not dream big, when the world is so connected? We promote this as a mentality generally, and I always appreciate a seller with aggressive expansion goals.

That said, you are navigating turbulent seas around legal needs, pricing, logistics and the careful balance between investing just enough to give the opportunity a chance, and investing too much and risking your whole business.

Don’t rush this. Don’t overthink it either, but do not rush.

Amazon is not the only fruit (in the EU)

Amazon’s unified accounts make selling cross-border fairly easy. Machine translations, one-click listing crossover and built-in tools for localization make your life easy, and make leveraging FBA easier still. I imagine you already use Amazon’s Pan-European FBA?

Marketplaces are far from being conquered by the almighty Amazon horde.

But before you take on Caesar’s mindset of dominating the known ecommerce world, there are likely still swathes of the European market to tap into.

Its very easy to get carried away with Amazon’s legions of power and market penetration, forgetting there are large unconquered territories, still in Europe, outside of Jeff’s realm. As, for all its ease of use and power in Europe, Amazon still hasn’t come close to cornering the marketplace landscape.

In France, for example, you have Priceminister, FNAC, Cdiscount, La Redoute, Galeries Lafayette, Darty and more. They aren’t close to the size of Amazon, but if you want to dominate France, you can’t avoid them. Cdiscount in particular has a strong and regular buyer base.

Germany is splintered further still. Amazon is king of sales in Germania, but various other marketplaces are important like Zalando, Allyouneed and other fashion outlets.

Spain has Privalia and El Corte Inglés. The UK has Tesco, Halfords and OnBuy. Then, there are a hundred niche or cross-border marketplaces like Bol.com, Fruugo, ManoMano, and, well, loads more.

Marketplaces are far from being conquered by the almighty Amazon horde. Instead, they are popping up like wildfires not seen since Pompeii’s Vesuvius had a meltdown a few thousand years back.

And how can we forget one household name: eBay! eBay is across more territories than Amazon in Europe, and offers different, but similar, ease of expansion into new territories. You can list actively into each region, or use the Global Shipping Program if you have product in the UK. Sadly, the Global Shipping Program is not available for Italy directly.

And remember, Amazon FBA can and will ship orders to buyers from external channels. The rates are a bit higher, but many sellers forget this is even possible.

The New World

Since our European ancestors started invading the Americas, there has been a need to expand business into these territories, and rightly so. American ecommerce is huge, and is projected to grow anywhere from 20-30% annually. That’s really huge, given its already over half a trillion. Lots of zeros.

Building a presence in America takes investment, sweat, tears and time.

But much like pop singers, actors and other businesses of the past, penetrating this market is tough. America is the birthplace of modern capitalism, so buyers grow up spoilt for choice. Building a presence in America takes investment, sweat, tears and time. It’s also a huge country, with a federal system of government. Different state laws run rampant, creating additional logistics and accountancy work that you’ll need to handle.

The U.S. is an important market and being so big, I am sure you’ll find an audience, but it’s not going to be easy. You’ll need to setup a legal entity, open a new Amazon U.S. account and ship products over to a U.S. FBA center. And that’s just to be in a position to start trading locally in the region. I suspect you’ll need to spend on PPC too.

The point Matt, the point…

All I am advising, is that you probably want to expand locally, in Europe, first. There are emerging Middle Eastern marketplaces just across the Mediterranean (and some sand) which are worth considering. You have plenty of other EU marketplaces to consider, then Russia is next door and Scandinavia has small but well-known local marketplaces.

Like Caesar before you, I recommend you come, see, and conquer Europe in more detail.

Like Caesar before you, I recommend you come, see, and conquer Europe in more detail – for the foreseeable future. Given your EU FBA stock, feeding these new channels will be easier because you have infrastructure already in place.

Put your expansion to the U.S. on the longer term roadmap, once you’ve examined Europe and neighboring regions more extensively. Even India is closer than the USA, and has a solid and growing middle class who buy from Amazon, Flipkart and a few other regional powerhouses.

What you need

Let’s assume you have bought into the argument that Europe and surrounding territories are next on the list. You’re not focusing just on Amazon, but on the region as a whole.

FBA can still ship your products, but you’ll need some extra elements to your business so the other channels can be grown and managed efficiently. You can open a new channel and run it manually to a point, but let’s remember two rules:

  • Your time is precious. You don’t want to waste time on manual admin for too long, if a tool can automate it. Your time needs to be reserved for growth energy. You’ve got this far by using your time effectively, and you don’t want a growing operation to take all that from you – because you’ll eventually get stuck.
  • Scale is key. You want an operation that allows you to list on dozens of channels, yet not multiple your work dozens of times. Administering orders, listings, stock, customer service and fulfilment all needs to be as efficient as you can make it, in order to scale effectively.

While it is hard to know exactly how to guide your legions of ambition, I would suggest to always focus on some general principles. Aspects of this have been covered in past posts, so I’ll keep it brief:

Channel management

You will eventually need a tool. I don’t really see a way to expand and conquer Europe (or the world) without infrastructure built for scale. Multichannel management tools are everywhere these days.

For your position and needs, I might check out Tradebyte or Lengow. They both offer a range of European channels. Lengow is more of a feed management tool, while Tradebyte is more of a PIM system – which could help manage product data for your growing brand. They cater to different needs, so your choice of tool really depends on where you want to focus your time.

Take care to pick the software that best fits your needs. Make sure you attend demos, ask questions and take notes.

Reporting

Generate and use a profit-and-loss report on a regular basis, if you don’t already. Track every single fee, cost and rate variable, like a Roman Legionnaire scout. Keep regular tabs on as much product listing data, SKU performance data and KPI tracking data as you can muster. You need to know the direction of the market, and the costs, so you can pivot actions or focus in areas as needed. Regular, insightful reporting routines provide data so you can spot things that are otherwise easy to miss.

Consider some help

You could hire a junior employee to take on some administrative tasks. That’s one approach. Working with service providers might also be an option. You likely can’t grow quickly across a bunch of territories without some kind of support.

Make sure it’s the right kind of support, which means two things:

  1. It does not produce an overhead which will impede your growth goals.
  2. It gives you back the time to focus on those growth goals.

Anything else isn’t really the right kind of help.

The dream that was Rome

You have come this far because you focused your energy on the right things. To scale this into a bigger operation, you need to keep your time mostly focused on the same things that got you here.

But to scale this, you need automated, reliable, efficient operations too. You’ll need to invest time in getting these operations set up, but keep a long term goal to design them so that you are not relied upon for them to operate. Too many sellers fall into a trap where they are the only person who can handle certain tasks, and eventually operations becomes a barbarian horde that’s too big to tame.

In a pistachio nutshell, build your company so that it needs you very little on a day-to-day basis. Your brain power must remain focused on new products, sourcing suppliers and new expansion goals.

Have a question for us? Send it to questions@webretailer.com.

Meditating
Get multichannel selling under control
Sell on multiple marketplaces without all the headaches. Tools for inventory and marketplace management, web store connectors, feed management and more. All in the Web Retailer directory.
View Multichannel Management Tools Now

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