Challenges for manufacturers through Amazon’s cross-border sourcing
With each European country that Amazon launches in, most recently with its launch in the Netherlands (first as a translation of the German site), there is a new set of challenges for manufacturers and brands or vendors - Europe-wide sourcing in combination with Europe-wide relocations at Amazon. At Amazon, purchases are made across borders. Goods are transported daily between the currently 30 European FCs (Fulfillment Centers). Manufacturers reduce costs by making their products as internationally usable as possible. Adapters for different socket outlets, multilingual packaging and operating instructions mean that a product with identical EAN can be sold in Germany, Italy and Spain. Because of the one EAN, Amazon also uses it as an ASIN (Amazon Standard Identification Number). The item detail pages are only translated for each country. The result of this mixed situation are often changes in the sale prices on Amazon. Two examples:
- Manufacturer A is the market leader in Germany and is very keen to sell its high-priced brand cleanly. His local purchase prices are calculated accordingly. Competition in Germany is still aggressive, however, and the margin problems of the retail sector are correspondingly high, with a downward spiral of prices being observed online. Amazon prices fall only up to a defined profitability limit from which the buy box and thus the turnover of internal competitors can be left to the buyer. Direct sales between Vendor and Amazon are therefore missing. At the same time, the aim of manufacturer A is to gain massive market share in Italy. The brand is positioned much more favourably, the Italian purchase prices are significantly lower than in Germany.
- Manufacturer B is in a similarly competitive situation in Germany. He wants to boost his sales in Spain and financed by a purchase price rebate a "20% off everything" promotion on amazon.es.