launches in Sweden
After three years of rumors about Amazon seeking to enter the Nordic marketplace, on October 28th, 2020, Amazon added its 17th marketplace in the region. Sweden is the 7th European nation to join the platform, making it Amazon’s smallest market in terms of e-commerce spending and GDP. At launch, less than a hundred sellers had formally joined Amazon, but more than forty thousand were present. To date, that is a larger seller presence than any previously launched Amazon market.
The expansion initiative into the Nordic region’s largest economy is a logical move by the retail behemoth who has seen massive profit increases from the COVID-19 pandemic with customers looking to avoid physical stores. As with all Amazon’s business decisions, it is a strategic move that aims to add on to the global marketplace presence for the company. It also allows retailers to find customers from across the Nordic region, even if will likely cause them to incur higher than normal transaction costs.
Growth Of E-commerce Worldwide
E-commerce is arguably one of the fastest-growing industries in existence today. 52% of global sales in 2019 came via online marketplaces. In that same year, European e-commerce grew by 14.2%, with the COVID-19 concerns massively accelerating Amazon’s growth by over 63% (so far).
Many different aspects contribute to customer Amazon’s market expansion decisions. They are looking to acquire buyers with the highest intent to purchase, customer loyalty, and sales of customer shopping data. They also focus on the betterment and enhancement of customer services, recognizing it as being foundational to their success.
When businesses join the online retail market, leveraging the name and power of Amazon should be strongly considered. Selling on the platform has many pros, but also some downsides, all depending on the business’s goals and financial situations.
One of the primary keys to success for Amazon is attaining customer loyalty. The best example of this is the ever-growing perks of Amazon Prime. Benefits include free expedited shipping, streaming shows/originals, books, magazines, music, and exclusive deals. Perks are only continuing to grow. Even in countries where Prime is not available, certain featured perks of it still are.
This customer loyalty focused strategy gravitates more people to shop from Amazon, growing the company’s revenue and beefing up the bottom line. If we consider that Amazon is already attracting people who intend to make purchases when they arrive, the platform supplants other online retailers where there is more of a ‘browse before you consider buying’ type of approach.
The increased ‘intent-to-buy’ visitation to Amazon helps grow how much Amazon can monetize from form ads. In 2020, Amazon’s ad review will increase at a rate of upwards of 20%, outpacing Google in the long run in terms of annual growth.
Of course, one of Amazon’s most prized commodities is the shopper’s data. The twist is that neither the consumers nor vendors get to access this data. Instead, Amazon redirects it to advertisers, allowing them to better promote their products, online and offline. Having user data allows advertisers to take a more targeted approach to cater to the consumer’s needs and increase conversion rates. To be privy to consumer data costs a minimum of $50,000. This gives large brands an advantage, of course.
Amazon also allows for the criteria for shoppers to be parameterized down to the purchasing price point, review qualifications, and listings. That means that Amazon wields incredible power to influence what consumers buy, letting them have more access to better purchasing experiences and to build consumer trust.
The Sweden Market Launch
The launch was announced on August 4th. On August 11th, an email was sent to other sellers, most notably in other EU markets, informing them of the upcoming Sweden launch and inviting them to attend.
The giant seller number is due to most of the sellers being from other Amazon markets around the globe. It is common for new marketplaces to launch with an initial supply of sellers from other places. Most of the forty thousand to join represented the Chinese, UK, Italian, Spanish, French, and German markets. These sellers were able to join the new Swedish expansion with just a click of a box.
Amazon has its brand name on its side, but it will need to work to establish itself in the Swedish market much as it would anywhere else. Once they establish a strong foothold in the region as a viable channel of sales, they will likely seek to expand further into the Nordic region. This is nothing earth-shattering, as new arrivals to markets, no matter how large, need to prove to retailers who might be interested in distributing their products through them that it is an investment worth their time. That is not however a reason not to more deeply investigate the opportunities, as well as drawbacks, for sellers to begin selling through the Amazon marketplace.
Bumps In The Road
While such an expansion is notable for both Amazon and Sweden, it did not come without its hurdles. For one thing, Amazon is not offering Prime membership to any Swedish customers. They will however fulfill the order deliveries for free for any purchases over 229 Swedish kronor (the equivalent of $26), including for third-party seller sold items.
Many of the listings for products on Amazon Sweden are just auto-translated listings from Amazon marketplaces in other countries, which certainly results in an initially deep catalog of consumer choices, but also has the unintentional outcome of poor translations. While some of these are amusing, some of the translations are quite offensive.
Amazon aims to grow its fulfillment market moving forward. Hundreds of thousands of third-party sellers in Europe are already operating, allowing for the smooth delivery of sold products to Amazon within a 2-3 day period.
The costs of establishing new markets are also coming down with the use of auto-translated catalogs and reviews. This gives Amazon more incentive to enter markets previously regarded as not being significantly large enough to make financial sense. To that end, Poland will likely be Amazon’s next expansion point, as it hosts many of the platform’s sellers and contains multiple fulfillment centers already.