Welcome Amazon

Soon, Amazon will enter the Nordics. What should you expect? And how does it affect you as a retailer? In the US you go to Google if you want to search. If you need to buy anything you go to Amazon. Yes, 5 years ago we thought that this would solely be an American thing and Europe is different. Well, Amazon entered Germany 10 years ago, and after a rather slow start, they now handle 33% of all online sales in Germany. And trust me, it is a matter of time before that number is 40 %.

Adapting to the Nordic market

The adoption of Amazon in the Nordics will be faster than in Germany. A lot faster. There are several reasons for this. First, they’ve learned from their experiences in Germany. It wasn’t as simple to enter the mainland Europe market as they might have thought, but eventually, as mentioned, they cracked that nut. But another, and maybe even more vital, driving force behind adopting into the Nordic market is Alibaba’s expansion, as well as other large-scale online marketplaces. The competition is fierce, and that’ll definitely help to motivate Amazon even further. 

But another, and maybe even more vital, driving force behind adopting into the Nordic market is Alibaba’s expansion, as well as other large-scale online marketplaces.

Aside from that, there’s also a more direct customer angle to this. One of the things that have worked so well for Amazon - which, in my opinion, will enable them to successfully enter the Nordic market - is their customer-centered focus. Many of the retailers we see in the Nordic market, and indeed across Europe, have a tendency to be focused more on themselves than the customer, in the sense that they have not structured their approach around their customers. 

Take Bilka, who only recently started selling their whole assortment online.  A year ago it was only Non-food. Look at Irma who still think ‘print first’ in their weekly newsletters, and you need to click four times and avoid getting lost before you can start actually seeing their goods. 

The point is that Amazon offers a much smoother buying experience. They can predict what you need, before you need it and thereby offer you what you need before you know you need it.

The point is that Amazon offers a much smoother buying experience. They can predict what you need, before you need it and thereby offer you what you need before you know you need it. The convenience approach employed by Amazon will help them gain market shares much faster this time around than it did in Germany. 

How does it affect you as a retailer?

In my humble opinion, it’s a pretty straightforward answer: 40% of the market will move to Amazon within 5 years. Is this a problem for you? Well, not necessarily. You can start selling your goods on Amazon and get rated as a preferred vendor on the platform. Best serving vendors get top rankings - so it is not necessarily the cheapest product that gets the best ranking or best location at the top of the product list among all vendors selling the same product. 

40% of the market will move to Amazon within 5 years. Is this a problem for you?

The downside of Amazon for you as a retailer is that you never ever get your customer’s data. So basically you don’t know who you’re selling to. How can you improve your service or upsale to an unknown customer? 

The best thing you can do is to analyze whether or not it will affect your business. If Amazon will affect your business then consider opening a shop on their platform (there are for now 3 different types). Then start selling. At the same time make sure to win the mobile game. If you are good on mobile, you might be able to get your customers to buy directly from you on their mobile devices. You should definitely also make it work on desktop - but, I’d say, in 80% of all use cases you should be focusing on the mobile experience (read our blog post on winning on mobile here). The reason is simple:

Your customer always has his or her mobile within arms reach. With desktop, however, you need to overcome the barriers of finding the computer, boot it, open a browser, google your domain, understand a whole lot of the stuff you have packed onto your website, (because you’ve been adding to it over the last 15 years you’ve had it) find what they’re looking for, and then complete the purchase. 

The only thing you should really worry about is when are the manufacturers going to start selling directly to the clients on Amazon?

The only thing you should really worry about is when are the manufacturers going to start selling directly to the clients on Amazon? It kind of cuts out some businesses in the value chain. Yeah, I know, they say they’ll never do it. They also said that they would never sell directly to the clients from their own e-commerce site! But that happened, which I called back in 2008. The point here is that things move fast in a digitalized World. If you are not in the lead in the digital world, your business might well be one of the first to die. 

PS Alibaba just entered Norway. The new mega marketplaces are coming!

Photo credit: Hadrian - Shutterstock.com

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