Canute and the Amazons
Canute and the Amazons – Your guide to how Amazon works
With this paper, there is finally a basis which serves to explain the advantages and disadvantages of Amazon in a structured fashion. Due to its strong growth and negotiating power, Amazon has proven that is has indeed become its very own market. The competition in e-commerce is increasingly becoming supplementary and this fact has led to very strong conflict of interest among the affected manufacturers and retailers. E-commerce strategies, which were considered promising two to three years ago, are suddenly being nullified by Amazon’s market power. The question is no longer “with or without Amazon,” but rather “what can I do there?” The authors manage to guide us through the jungle of options with some entertaining anecdotes and have a lot of exciting insider information about how to optimize selling on Amazon.
LEARN MORE IN THIS WHITEPAPER:
- What Amazon is and how it works
- The evolution of a typical relationship between Amazon and a manufacturer and, ultimately, four steps to improving collaboration with Amazon
- How you as a manufacturer can secure the key competitive advantage.
- Strategies and guidance derived from practical experience for your maximum success on Amazon
Get Your Free Whitepaper Now:
Where does the online product search start compared between 2015 and 2016: Amazon dominates the search entry with 55% – Source: BloomReach Studie, 2016
MORE INFORMATION ABOUT THE CANUTE WHITEPAPER
Is this white paper for you?
If you answer one or more of these questions with “yes,” then, by all means, continue reading!
• Do you work in management, marketing or sales for a company that manufactures products?
• Have you heard in your industry about difficult annual talks with Amazon? Or have you ever experienced an unpleasant surprise yourself?
• Have you seen how Amazon is creating its own products on neighbouring or comparable markets?
• Are you already suffering from this new competition?
• Do you want to understand Amazon’s system and its future direction in order to make better decisions for your company?
• Do you prefer reading short and clear texts to extensive ramblings?
Yes? Then you are at the right place with Canute and the Amazons.
CHAPTER 1 AMAZON – THE A, O AND Z
What is Amazon, how does Amazon work and why is Amazon relevant?
Usually, questions are answered in the order in which they were asked. However, especially in the case of Amazon, it makes more sense to start with the question of relevance and work back to the starting point. After all, you first have to understand what Amazon really is in order to comprehend its relevance and function. First of all, the obvious answer to our question—Amazon is a particularly large, exceptionally successful online retailer—is definitely too short.
Why is Amazon relevant?
This question is easiest to answer of the three: Amazon‘s size makes it relevant. Amazon is relevant to manufacturers because, as a retailer, it dominates the fastest-growing channel, e-commerce.
The hard figures are impressive. Amazon as a whole made $135.98 billion in sales in 2016. It continues to dominate the US retail e-commerce market, having a clear majority of 53% of the e-commerce growth. Its international subsidiaries are also performing very well. Every year since 2009, Amazon Germany has had growth of up to 33%. Its revenue has more than quadrupled over seven years. In 2016, amazon.de had 10.4% of all Amazon sales, making it Amazon’s largest international subsidiary. The other subsidiaries are growing rapidly as well. Amazon Japan’s revenue increased by 30.7% from 2015 to 2016. Amazon UK has also experienced double digit growth in sales since 2014.
As it concerns sales, Amazon is of particular relevance. For many consumers, the company is synonymous for e-commerce as a whole. Just as information is “googled,” products are searched for on Amazon, even if the purchase is made elsewhere—which is becoming increasingly less likely. Amazon‘s cost structure is extremely optimised and its lower prices can almost always surpass the in-store retailers and some other online retailers. Owing to not only generating its own revenue but also making its sales infrastructure accessible to other vendors, Amazon operates on two fronts, thereby generating another significant portion of sales in online trading through its own platform. Amazon does not publish these figures, but experts estimate the numbers as comparable to Amazon‘s own sales. Unfortunately, the actual figures are not available; therefore, any estimates about the sales figures must be taken with a grain of salt because Amazon deliberately maintains very confidential accounting procedures and convolutes its sales so that they are never really visible to outsiders. This is characteristic of two other features, apart from Amazon‘s sheer size, which makes it hold special relevance for manufacturers: its desire for territorial expansion and profit minimisation.