Selling internationally with Amazon FBA? A guest article by expert Micha Augstein
Those who run their own webshop know how much manpower, time, and complex processes are involved. When taking the step abroad, even greater challenges arise. Many retailers therefore choose to go through already established online marketplaces like eBay or Amazon and utilize services that go beyond just the virtual infrastructure. One such example is “Fulfillment by Amazon,” or FBA for short. Selling internationally is intended to become easier this way.
The service, which is also known in this country as “Shipping by Amazon,” offers many advantages: many new customers, growing consumer satisfaction, and easy processing. What is behind it? Does FBA really only offer advantages for shop operators and is the service suitable for every retailer or brand? A clear no – this should be stated right away.
About the Author
Micha Augstein is the founder and managing director of PARCEL.ONE, the logistics service provider for cross-border online trade. Since 2006, he has been investing in various logistics solutions and building companies. Previously, he worked in wholesale for various fashion brands.
Retailers must keep up with globalization
First and foremost, customers want to order from a shop that is trustworthy, delivers the desired products quickly, and is also affordable. Delivery from within the country or abroad is initially irrelevant. This also applies when retailers sell internationally, whether through Amazon or other channels.
A development that holds huge potential but also poses significant challenges for online retailers. The exploration of new markets – beyond national borders – opens up new sales opportunities and is a must in times of increasing internationalization if one wants to survive and grow in the long term.
Especially for “newcomers” on the international stage, large online marketplaces like eBay or Amazon offer good visibility to customers from all over the world. Additionally, they provide attractive offers to facilitate entry into cross-border e-commerce. These points are in favor of Amazon and FBA, provided that selling internationally is fundamentally an option.
Fulfillment by Amazon – what is it anyway?
The basic idea behind this offer is initially attractive for every online retailer: shop operators can easily automate their entire process by outsourcing it and refocusing on their core business and the actual development of the business. This means they hand over the order process, as well as packaging and shipping, returns processing, and even customer service and invoicing – essentially everything that requires a lot of time, space, and manpower – to Amazon.
The barriers to using pan-European shipping are low: goods from any product category are sent to the logistics centers of the online giant, which are distributed all over the world. The products are stored there and wait for their sale. Amazon answers customer inquiries in the respective local language. So, it’s a comprehensive worry-free package, for which the seller account is charged with the corresponding sales fees, but it certainly offers many advantages.
This is what you, as an online retailer, get from FBA
First of all, such fulfillment makes it easier to enter online retail or new sales channels in general – in addition to a simple start into international business. The retailer utilizes the established Amazon FBA infrastructure to sell internationally and does not have to deal with linguistic and cultural peculiarities, nor does he need to struggle with logistics providers and rates. Without significant personnel and time investment, the visibility of one’s own products can be increased on a highly frequented marketplace that has a gigantic number of customers worldwide – as evidenced by the increasing number of Prime customers in recent years.
This affluent target group – with over 100 million subscriptions worldwide (as of 2018) – not only spends significantly more time on Amazon but also has higher shopping carts. A large portion of these customers filter their search directly for Prime-only offers, which promise shipping by Amazon and a delivery time of just one to two days. Retailers who do not have this label do not even appear in the results list. This is also one reason why many sellers use “Fulfillment by Amazon.” Because then their product automatically receives a Prime label and is favored in the placement in the Buy Box.
By the way, retailers also benefit from the usually smooth customer journey processing when selling internationally through Amazon FBA. Reliable, short delivery times – usually within one day – and fast, uncomplicated returns management are no longer just a nice touch for online customers, but the desired standard. In this context, good reviews are an underestimated sales driver and a compelling argument in acquiring new customers.
In addition, the online giant is represented in numerous countries worldwide with a local platform, thereby offering the opportunity to sell goods country-specifically according to the same successful model.
Amazon.com generates six times more revenue than the German website
In Germany, Amazon is the number 1 shopping platform, no doubt about it. But the US market holds even greater potential. Through amazon.com, the online giant generates six times the revenue. Compared to the French, Italian, and Spanish websites, the American platform even achieves ten to twenty times higher traffic and significantly more orders.
The exploration of new sales markets through the Amazon shop pages in Europe, but especially in the USA, offers not only gigantic potential for international “newbies” in terms of revenue and new customers. Just as one does not have to worry about the logistics of Amazon orders, the delivery of German goods to the FBA warehouse is also possible without much effort. Providers like Parcel.One take care of logistics and shipping and are well acquainted with country-specific requirements.
For retailers, this offers significant advantages: the various shipments destined for Europe and overseas are packed into a single cargo unit, sent to a consolidation address, and the routing is then handed over to the logistics expert. Parcel.One takes care of order picking, compliance with customs regulations, and just-in-time delivery – and sends the goods via trusted local shipping providers to the end customer or to the Amazon warehouses. In this process, shipments from multiple customers are bundled, making shipping cheaper through volume discounts.
Through FBA, retailers lose their marketing potential
Despite all the advantages for shop operators who use Amazon FBA to sell internationally, this service is not the right choice for all retailers or brands.
Since storage costs are defined by duration and space, retailers should especially consider whether it is worthwhile for large, bulky products – particularly when they are not fast-moving goods. Even when customer consultation is required, sales should be managed independently.
Retailers should also be aware that valuable marketing potential is being wasted with FBA. Building a loyal customer base – this can only be achieved with one’s own webshop. Amazon customers usually perceive only Amazon as the seller and not the retailer behind it. Customers register the logo and design of the Amazon website during the ordering process, receive their products in Amazon-branded packaging, and contact Amazon customer service for questions or issues. If retailers sell an environmentally friendly product, they have no option to choose a consciously climate-neutral packaging. The retailer’s hands are tied regarding shipping options and returns management.
However, there is another disadvantage for all retailers who sell internationally through Amazon FBA: the e-commerce giant accepts practically every returned product without examining it closely. This reflects the online giant’s strong customer orientation and, of course, the avoidance of an overwhelming organizational effort. Nevertheless, this can become quite expensive for the retailer. For instance, when high-quality but possibly only slightly damaged electronic goods are simply disposed of. If, for example, there are supply shortages and the retailer needs their products from the Amazon warehouse, the goods must first be replenished. This costs time and money.
Simply put: Your online shop, your rules! With FBA, you relinquish control over inventory, returns processing, delivery conditions, and also the sales environment. Your product is presented to the Amazon customer directly next to the competitor’s product and is in immediate price competition – not only against domestic products but also foreign ones. The competition is therefore fierce.
“Fulfillment by Amazon” – to do or not to do?
Ultimately, “Fulfillment by Amazon” – despite some disadvantages – offers a good opportunity for retailers to explore new markets, expand, and become more international. Through Amazon FBA, retailers can sell across Europe and internationally. Without significant manpower, storage space, and time investment, they can present their brands to an international audience on a gigantic marketplace. Especially the American Amazon platform holds a large sales market with its six times greater revenue and high traffic.
The FBA program is unsuitable if one wants to build a loyal customer base and improve customer relationships – additionally, as a retailer, you relinquish marketing potential to the service provider. Therefore, it makes sense for many, but not all, retailers to sell internationally through Amazon FBA.
PARCEL.ONE is a logistics service provider specifically for cross-border online trade. The startup enables online retailers to significantly reduce their shipping costs to foreign countries by consolidating all shipments regardless of the destination country and selecting the ideal service provider for each individual shipment. Additionally, the effort on the retailer’s side is significantly reduced because PARCEL.ONE acts as the sole contractual partner for all markets – with a uniform label and continuous tracking.
Image credits in the order of the images: © FrankBoston – stock.adobe.com / © Parcel.One / © Tierney – stock.adobe.com
