It’s still not 100% clarified precisely when and how Amazon would enter the Danish market. Still, it will not take anybody by surprise that many eCommerce owners feel nervous about the approaching entry of the tech giant. Many questions are fluctuating among Danish sellers and suppliers regarding the management of the entry of Amazon. The most common questions deal with handling Amazon’s tendency for low pricing and how to compete with such a big e-commerce platform that offers all types of products?
In this blog post, we will offer you a “survival guide” so you will be in a better position regarding Amazon’s entry and, at the same time, capable of effectively market your products.
Amazon’s impact on the Danish market
Even though Amazon has not come to Denmark yet, a report from FDIH (The organization for Danish E-commerce) shows that Danish consumers, to a high degree, buy products online from Amazon. It’s the next biggest e-commerce platform for Danish customers, which means that 1,9% of Danish online transactions happen through Amazon’s websites in the already existing countries. According to a Danish E-eksport 72% of all customers use Amazon before they apply Google Shopping when comparing prices online. It proves that Amazon already makes heavy demands upon Danish webshops.
More than +150 million customers globally use Amazon’s mobile app to purchase on the website. In addition to this, Amazon has 100 million members in their paid subscription program Amazon Prime of which 20% buy products on Amazon each week. Moreover, there are more than 130 million types of products on Amazon’s e-commerce platform. This is why the existence of the giant increases the competition at a global level.
An analysis made by FDIH (The organization for Danish E-commerce) also shows that 8 out of 10 businesses fear that Amazon’s entry into the Danish market will lead to the closedowns of more Danish webshops. Despite optimism among Danish webshop owners, every third webshop expects that their turnover will increase by at least 25% the next year. However, the increase in e-commerce is threatened by big global offers, and each fourth webshop owner believes that price pressure from prices from giants abroad is crucial to a restricted growth for online webshops.
Should you aim at Amazon or not?
It is without any doubt a question you must have considered a lot of times, and particularly when Amazon announced entering the Swedish market in autumn 2020.
Amazon offers different solutions to distributors on their website. There exist two different kinds of subscriptions so that both big and small companies can cooperate with Amazon.
If you are an owner of a smaller business or company where you sell at most 40 products per month, it is possible to buy an abonnement that charges you 6 Danish kroner each time you make a sale. If you own a bigger business or company and want a subscription, you are charged 250 Danish kroner each month, and a sale fee per sale is added. This fee is often 15%.
In addition to the fact that you should make yourself acquainted with these two subscription solutions, you must be aware of the competitive competition in the market. By being aware of how many products Amazon sells in your industry, it is easier to decide about handling Amazon’s entry.
Amazon’s pricing strategy
It was obvious when Amazon entered the Swedish market that the e-commerce giant offered products at a meager price. Exactly for that reason, you must reflect on whether subscribing to Amazon is beneficial for your business or company.
If you haven’t got competitive prices, there is a big risk that your turnover will be affected negatively if you are a distributor on Amazon. It is so because Amazon’s algorithms are prioritizing those distributors who are selling at the lowest prices. This means that the visitors to Amazon’s website are exposed to those products with the lowest prices, which creates a risk of losing sales if you are not competitive on your pricing.
To avoid the risk of Amazon's algorithms overlooking your products, your company must get an overview of Amazon's pricing positions before establishing a partnership. It is advantageous to use a price comparison tool to monitor the competitive situation in the market and hereby optimize your pricing strategy.
Use a price comparison tool to maintain control over your price position
When you use a price comparison tool, such as PriceShape, you quickly access big amounts of data that describe Amazon's price position in the market. At the same time, you will get data and knowledge about your competitive situation. Priceshape's software makes use of price robots that scrape the online market for competitors' data. Using a price robot, you get access to Amazon's data and are free to choose which product types you want to monitor.
The possibility to use competitor monitoring to gain insight into Amazon pricing also makes it easier for you to determine a competitive pricing strategy. At the same time, you can easier consider whether it is beneficial for you to get your products on Amazon.
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