While expanding your Amazon business globally is often a natural next step for thriving sellers, the process is not always as clear-cut as it seems. A recent survey conducted by Pattern, a global marketplace seller, revealed studies outlining brands' most significant challenges when selling on European and Middle Eastern Amazon marketplaces.
The Top 3 Hurdles of Amazon Sellers Selling Globally
Margin Pressure: A significant number of respondents revealed that selling globally, they've faced a certain level of price erosion. Many sellers are said to have been negatively affected by it, especially this past year. The challenges of price erosion, whether due to unfavorable commercial terms, fees, etc., have hurt businesses by eating up a significant chunk of their margins with little to no profit on their products.
Challenging Logistics: Dealing with shipping and storing inventory in global marketplaces can be an incredible nuisance if you're not prepared. Many of these challenges can feel like they're out of your hands, from stocking concerns to customs governing imports and exports. A great way to remedy the stresses of these logistical issues is by hiring a customs broker.
Lack of Actionable Data: Analyzing data to make strategic decisions is a critical part of any business. However, 83.3% of survey respondents claim a lack of available resources to assist in the matter, affecting their ability to forecast sales or note customer data.
Dealing with these hurdles is difficult but hardly impossible. Many sellers find success in growing their brands on these marketplaces. Despite the hardships, 98.2% of those surveyed have every intention to continue maintaining a presence through these channels. Like any new venture, educating yourself of potential challenges beforehand will allow you to succeed as you scale in new marketplaces.
Want to take your brand to the next level, but you’re strapped for cash? If you’re eligible, Amazon’s new program in partnership with Lendistry could be the solution for you. A joint pilot program has been launched to help small and medium-sized businesses grow on Amazon through short-term loans of up to $100,000 with competitive, affordable rates.
Historically, Lendistry has offered support to minority-led communities, typically to serve urban and rural small businesses. Now, with Amazon, they’re working together to support e-commerce businesses as many online ventures continue to grow.
Sellers are using these loans as working capital for:
Trying to start a business without a consistent cash flow can be incredibly challenging. This is why programs like these can help brands out by supporting them through the fragile states of their venture.
Gone are the days of private label dominance and organic search term results prominence. Lately, the shift in who dominates the search results is evident when you're shopping on Amazon. Ad spend has become competitive and expensive, and big brands are still paying their way up to occupy prime real estate on the world's largest e-commerce site.
The number of sponsored ads results has increased from 3 to 6 alongside other opportunities for ad space throughout the page. Jason Goldberg, Publicis's Chief Commerce Strategy Officer, says that organic search results are declining. This can be incredibly hurtful for smaller sellers trying to gain more visibility on the platform. Without the budget for ad spend, organic search results require serious effort to compete.
The figures are apparent in the most recent Amazon revenue report. The revenue that arose from the company's advertising model grew from 87% to more than $7.9 Billion.
Funnily enough, Jeff Bezos, the CEO of Amazon, often remarked that he hated spending money on Ad spend. His view can be summed up to this quote "Ads are the price you pay for when your product is unremarkable." However, his ideas changed over time when in 2018, Amazon's ad budget had a 72% increase with at least $1.8 billion. This event pushed Amazon to the 5th spot among U.S advertisers and represented the biggest increase among the top 10 Companies.
Amazon's change of pace is reflective of the current changes made in the Amazon advertising model. You have to be willing to pay or be cast into the search results abyss to play the game.