In the UK and US, Amazon has become synonymous with e-commerce. It’s no surprise: Amazon has the largest share of ecommerce revenue in these markets, and as such is considered the one to join or beat.
However, that doesn’t mean it will become the default leader in all territories in the long run.
Amazon’s fortunes are currently tied to the most developed markets, which means local challengers, such as Walmart-backed Flipkart in India, are looking to consolidate their presence before Amazon can gain a foothold.
It’s a move that could give these challengers the opportunity to look outside of their domestic footprint, and even try to beat Amazon at its own game.
Local markets may have the potential to develop
While local markets have the potential to grow, that doesn’t mean it will be easy or that it will happen overnight.
Generally speaking, expanding into additional markets is a numbers game. Shareholders and investors want to see growth, which means that unless market companies have their hands in several pies the same way Amazon does, they will have to expand overseas once they do. they will have reached a point of saturation in their local markets.
In terms of timelines, there is still some way to go before the potential of many key local markets is exhausted. Growth in countries like Brazil, Argentina, Nigeria, India and China is still massive, especially those with growing middle classes. And while it is true that estimates say that 70% of China’s population could be in the middle class by 2030, this particular market is so huge that it should be able to support domestic markets for a very long time.
Manage international sensitivities
Geographic boundaries and trade issues are generally no longer a barrier to international expansion, as long as markets are sensitive to more delicate issues related to cultural sensitivities and nuances of language.
Another possible concern for local market suppliers expanding into new markets is the increasing sensitivity to the carbon footprint, so the export of products could be viewed in a negative light. However, in a globalized market, stocks do not need to be held in the domestic market. As long as businesses can expand to buy warehouses as and when needed and / or have the right local partnerships, you’ll be fine.
So which ones to watch out for?
Growth will be driven by brand awareness beyond current company boundaries, a fast track to market and trust. Thus, the likely successes are those with the greatest scope and footprint. A brand like Carrefour would fit the profile best, as it offers a wide range of products, is recognized across Europe and is quickly establishing its presence in e-commerce.
Target in the United States is another interesting one because of its brand awareness globally, but again this is a long burn time – the American consumer base is large, it is therefore unlikely to extend anytime soon beyond North America.
Another world famous American retailer, however, is a different story.
Why Walmart Connect might be one to watch
Walmart Online Sales can slow down after the lockdown, but it is still the largest retailer in the world and now the second largest market in the United States behind Amazon.com. The second market it has expanded into, through a controlling stake in Flipkart, is India, which also has a huge population and a rapidly growing middle class. The latter could, in theory, become even more dynamic and lucrative than China.
Digital commerce overshadows what Walmart could possibly achieve in bricks and mortar, which is why it has invested so heavily in Walmart Connect. While people worry about specific brands in bricks and mortar – which is why Walmart has remained Asda in the UK and remains so even after Walmart sold its stores in the UK – it is not the case in digital, where buyers are more concerned with convenience than who they are. buy from.
Walmart Connect’s partnership model is a smart way to grow the brand without being accused of cultural / economic imperialism, which is a criticism that could be leveled at Amazon. As it stands, the Walmart-backed Flipkart has a window to consolidate its presence in India and we’ll have to wait and see if Walmart Connect builds on its strategy in other markets.
However, Amazon still has a trump card up its sleeve. Until Walmart has a subscription service to compete with Prime, it will stay behind.
How Amazon can maintain its growth trajectory
Prime has, without a doubt, been the foundation of Amazon’s success. If it has consolidated its hold on the most developed markets, notably Western Europe and North America, that does not mean that it does not look at the BRIC markets.
Prime is the not-so-secret weapon that sets it apart from its competition and it should be borne in mind that it has already launched the service in India and Mexico.
In fact, Prime now has over 200 million subscribers worldwide and touches people’s lives through multiple touch points. If they use it for video and premium sports offering, they could also use overnight shipping.
Amazon has also become much more than a retailer and is constantly expanding its ecosystem – from advertising to Twitch and AWS to runtime. There is still a lot of untapped potential in its repertoire and although Amazon does not need to expand its global presence as a priority, that doesn’t mean it won’t.
The question is, why wouldn’t it expand into markets with millions of consumers, especially those where it’s already part of the fabric of life thanks to Prime. We can be pretty sure that Amazon will take a more consolidated step towards India at some point – it’s just a matter of when.