The Amazon marketplace took the eCommerce world by storm in 2016, and its upward trend is not likely to abate this year. Amazon has been pushing hard in the last decade, and has made impressive strides every year since its expansion from its humble beginnings as an online bookstore. This year, the dominant internet retailer is expected to extend its global reach, expand into physical shops around the US, and dive further into focused logistics, AI and entertainment efforts.
New Amazon Marketplace Options
As more and more sellers join the Amazon marketplace to enjoy low-risk eCommerce debuts and high-profit business expansion with this well-established platform, growth for the internet retailer is inevitable. Amazon completed a massive Prime Day promotion last year which pulled in record membership sign-ups and boosted mid-year sales. They have obviously been gearing up for a big year, in which seller expansion into new international markets plays a big part.
The US and Europe
For US sellers to be able to take their offerings to the world, Amazon opened up avenues to over 70 countries. Amazon US sellers are also tapped into Canada and Mexico with the North American unified account option, and can enter the European market as well with the more recent European unified account. Europe is the second largest Amazon marketplace after the US, encompassing France, Germany, Italy, Spain, and the UK and representing a potential market of 300 million shoppers.
To attract more global sellers, the platform has been working on opening up local sites in several countries. With these options looming large, Feedvisor says that now is the time for sellers to prepare to expand internationally to take advantage of this open road to success. A single account in one European country allows sellers to warehouse in this one location and take advantage of FBA services to cater to the entire European market.
China, India, and Beyond
Amazon has also launched efforts to enter China and India. Efficient Era says that China is proving to be difficult with strong local pressure against foreign companies, but the platform has succeeded in attracting a lot of Chinese sellers with their Dragon Boat program. Chinese merchants can easily move their inventory into FBA with special added privileges to help them along the way.
Struggles with Indian regulatory issues are also hindering the eCommerce giant’s entry. Intensified efforts are working to grow that market, and this year may be the year that the Amazon marketplace breaks through. Amazon has invested heavily in India, and Fortune Magazine says that the company is poised to pour in another 3 billion US dollars to push its expansion there. The addition of Prime Video is only one of the perks that new subscription packages will include.
Australia could be the new Amazon marketplace of the year following the company’s search there for warehouse space. Amazon already has one warehouse in Brazil, and this could be the next marketplace in line, despite barriers such as protective customs and high import duties.
Amazon began as an online retailer to provide an alternative to traditional bookstores. The online giant has since evolved into a diverse marketplace, and is now back on the ground with their pioneering Amazon Go grocery. This 1,800 square foot swipe-and-go store is not your traditional brick and mortar shop, but offers a tech-aided shopping experience that does away with the need for dragging items to a cashier and standing in line to pay. Still a major retail opportunity, Business Insider reported that Amazon has plans of opening another 19 Go stores across the US in 2017 and 2018, plus perhaps as many as 2000 Amazon Fresh stores by 2027. Amazon books has also gone back to basics with the opening of four bookstores that feature test areas for their branded hardware like Kindle. This year will be the year this physical expansion truly takes off.
Amazon has spent the last decade building a truly impressive logistics system. Billions of dollars go into shipping costs each quarter, and this number is continuously rising as the internet retailer drives to deliver faster and to more consumers. Their recent efforts to overtake courier services has led business analysts to believe that Amazon is planning a grand logistics takeover. Amazon is currently leasing trucks, planes, and ships, and has not given up on their drone delivery project.
Disruption Magazine says that Amazon is not only trying to manage all shipping internally, but attempting to launch an app resembling Uber to connect trucks and shippers. This would put Amazon in the running against Uber acquired trucking service Otto. Both companies plan to expand their offerings to shipping by sea and air. The plan would save Amazon over a billion dollars every year. Combined with Amazon’s plans to open physical stores around the country, this massive shipping endeavor could also target other retailers in need of logistics services.
As the company takes care of more and more of its own door-to-door deliveries, shipping costs are bound to fall. The free shipping minimum on Amazon.com has already been inconspicuously lowered to 35 US dollars. As the system develops, Amazon’s logistics app will integrate pricing, routes and stops while saving on third-part commissions.
Amazon launched its nifty AI virtual assistant Alexa over two years ago, and its hardware counterpart Echo has been recently upgraded. Before Google and Apple even began with their own versions of this high-tech voice-controlled helper, Amazon was already working on its system to answer customer questions, order products and play music. To maintain its edge over the competition, Amazon has over 1000 people stepping up efforts to keep Alexa fresh, and also get this proprietary AI into third-party devices such as the GE smart lamp. Tech Crunch reported in November last year that Amazon was ready to launch its AI platform to bring the technology to outside developers. There are currently three Amazon AI tools available – Rekognition, Amazon Polly, and Lex – but the company has definite plans of adding more over the next several years.
The Amazon marketplace has been offering video on demand since 2008, but has big plans of expanding its service by tripling its current library within the year. The online retail leader has been acquiring a large volume of original movies, TV series and documentaries in an apparent bid to compete with content streaming giants Netflix and Apple. Amazon began offering its video-only monthly subscription plan just last month, expanding the service outside of the Amazon Prime membership.
Seller labs reports that Amazon will make good on its announcement last November to implement changes in shipping rates, Buy Box eligibility and media fees by March 1st of this year. To start off, sellers in the media categories will have the freedom to set their own shipping rates by region and even offer free shipping for standard delivery. Sellers will also enjoy the ability to compete for the Buy Box for all books sold in new condition. Finally, Amazon will change the Variable Closing Fees to a fixed fee of 1.80 US dollars per item, and calculate the Referral fee based on the total sales price of an item rather than a percentage of its sales price These changes can push sales for new books up while evening up the competition with Amazon and publishers for the buy box, but used books sellers are going to face even tighter profit margins.
More Smiles All Around
All in all, things are looking up for Amazon and Amazon marketplace sellers this year. There are new avenues of opportunity that sellers can take hold of right away, and more to look forward to throughout the year. This expansion plus the renewed focus on logistics also raises hopes that Amazon will be a stable platform on which to establish long-term business ventures. Sellers on and off the platform can also look into expanding from online sales to getting their products in Amazon Go stores at this early stage. Media retail might not be too hot, but lowered shipping fees could take the edge off. On the other hand, the competition generated by Amazon’s video efforts is going to be great for content producers and consumers.