Amazon is an American online e-commerce company located in Seattle, Washington. Founded in 1995, Amazon is one of the earliest companies to start e-commerce on the Internet. At first, it only operated online book sales. Now it has expanded its business scope and has become one of the online retailers with the most product varieties in the world.
Although Amazon is an American company, its sites are spread all over the world. It has a total of 17 sites and 175 operation centers, and consumers are spread across 185 countries and regions. Among them, in North America, Europe, Oceania, the Middle East and other regions, as well as Japan, India and other countries, Amazon is one of the online e-commerce platforms with the largest local traffic and the largest sales.
In addition to Amazon, there are also eBay, AliExpress, Wish and other cross-border e-commerce platforms. So what advantages does Amazon rely on to stand out? What are its unique innovations? The following is an explanation of the four major innovations of the Amazon platform.
First, the single product hot-selling model that emphasizes products over stores
Ali’s e-commerce platform is a model that emphasizes stores over products. Taobao sellers will spend a lot of time on store decoration and do their best to show the “tone” of the store. However, Amazon is just the opposite. It is an e-commerce platform that emphasizes products over stores. Amazon sellers generally have no concept of store decoration. Usually, a store has several different categories of completely unrelated best-selling products at the same time. There is no so-called category restriction on the Amazon platform. A store can sell products from many categories at the same time, even if the products are unrelated.
In addition, unlike other cross-border e-commerce platforms, due to its large traffic, the Amazon platform does not advocate the distribution model of multiple stock keeping units (SKUs), but prefers sellers to take the route of single product hot-selling. In short, Amazon prefers 1,000 orders per day for one product, rather than 1,000 orders per day for 1,000 products, with only 1 order for each single product. Only in the single product hot-selling model, the FBA logistics system has more value and significance.
Second, a powerful FBA logistics system
The full name of the FBA logistics system is Fulfillment By Amazon, which means that the seller sends the products in batches to Amazon’s warehouse at the destination site, and Amazon is responsible for helping the seller store the products, and when the seller receives the order, complete the order sorting, delivery and order return operations, saving the seller’s time and energy, so that the seller can concentrate on doing a good job of sales on the Amazon platform.
Amazon has established a huge FBA logistics system in North America, Europe, Oceania, the Middle East and other regions, as well as Japan, India and other countries. If the seller uses the FBA logistics system, basically local consumers can receive the product about two days after placing an order. Compared with other e-commerce platforms, which are mostly postal parcel delivery models, consumers often have to wait for more than ten days. The FBA logistics system has obvious advantages, and the products using the FBA logistics system will have a great advantage in the Amazon site search ranking compared with the products delivered by the sellers themselves!
Readers may have such doubts after reading this: There are many countries in Europe. Amazon has 8 national sites in Europe, including the UK, France, Germany, Italy, Spain, the Netherlands, Sweden and Poland. So what is the FBA logistics system in the whole Europe like? If you want to do the whole European market, do sellers need to send the goods to 8 different countries separately?
There are 3 modes of FBA logistics system in Europe.
The first FBA mode is “multi-country inventory”, that is, if the seller wants to do business in Germany, he needs to send the goods to Germany, if he wants to do business in the UK, he needs to send the goods to the UK, and if he wants to do the whole European market, he needs to send the goods to 8 different countries separately. This mode is cumbersome and inefficient, and is not recommended!
The second FBA model is Amazon Logistics Europe Integration Service (PAN-EU). If sellers use Amazon Logistics Europe Integration Service, they only need to send all products in batches to a certain country in Europe. Then Amazon will automatically allocate these inventory products to FBA warehouses in multiple countries based on estimated consumer demand. Once an order is placed in a certain European country, it will be shipped from the FBA warehouse closest to it, thus saving the cost of cross-border dispatch. The second FBA model seems to be very good, but there is a hidden danger. After Amazon automatically allocates products to warehouses in other European countries, sellers must obtain the Value Added Tax (VAT) tax number of the eight European countries through registration. Even if the seller only sells one or two products in a certain country, they must use the local country’s VAT tax number. According to the law, as long as the product has been stored in the overseas warehouse of the local country, the seller must use the local country’s VAT tax number and need to declare taxes formally.
The third FBA model is European Fulfillment Networks (EFN). This model only requires sellers to send all products to a warehouse in a European country. Amazon will not ship the products in this warehouse to warehouses in other European countries like the second FBA model. Instead, when other countries place orders, Amazon will transfer goods from the warehouses in this country, and will charge a part of the cross-border dispatch fee for each order.
Each of the three models has its own advantages and disadvantages. At the same time, choose a European FBA model that suits you according to your own needs.
In addition, sellers on Amazon UK should also note that after Brexit, starting from January 1, 2021, the two inventory sharing models in Europe, EFN and PAN-EU, will not be able to complete the distribution and allocation of FBA products across the border between the UK and the EU.
Third, new products and new sellers always have opportunities
Amazon’s product categories are completely unrestricted, and anyone can make products in any category; in addition, Amazon treats large and small sellers equally, and does not have special support and traffic inclination for so-called “big sellers”. Big sellers who violate platform regulations will also be blocked.
Amazon has been giving new sellers and new products opportunities to perform. As long as the product price is low enough, the product quality is good enough, and the operation means are appropriate, it is not difficult to surpass the head sellers. Observing the rankings of Amazon’s major categories, you will find that no matter whether it is a large or small category, the top three to five stores in the product ranking are not fixed, and the ranking has been in a state of fluctuation, showing a state of “you sing and I come on stage”.
Fourth, consumers are the most important wealth of the platform
Amazon has always been extremely concerned about consumers on the platform. Looking around the entire Amazon ecosystem, you will find that it has always adhered to a principle: consumer satisfaction is a factor that is higher than the factors that traditional companies prioritize, including retail partnerships, short-term profits, and company stock prices. Readers who are already Amazon sellers must have a deep feeling about this and deeply agree with it.
For example, after consumers receive the product, they can return it unconditionally within 30 days. When consumers choose the reason for return, if they check the product or logistics problems and other reasons that are not related to the consumer themselves, then the consumer does not need to pay the return shipping fee, but the merchant or platform will pay it.