Amazon USA provides sellers access to various buyer acquisition and distribution capabilities – unaffordable elsewhere.
Amazon Australia is rapidly growing with little media exposure – yet it is light years behind its USA parent capabilities.
The Australian operation is held back by a failure of Australia’s competition laws. Count how many big brands still need to be added to Amazon Australia compared to the USA platform.
Australia is the land of least competition for the most prominent businesses – where duopolies concentration in Australia is one of the highest in the western world – and some of the most prominent businesses (privately) refer to Australia as their – Treasure Island – the country where they gain some of the highest operating margins in the world.
Australians – pay more on average because of a lack of competition – and a failure of competition policy.
USA Size
- An e-commerce platform with more than 150 million subscribers,
- A logistics operation that employs hundreds of thousands of people,
- Its market share is greater than the next 14 competitors combined.
- Walmart was the world’s biggest retailer – with a logistics operation bigger than the world’s most significant military( USA). Amazon is even larger now.
How
The company’s decades of significant investment have resulted in a business without credible direct competitors:
The Big Change
For the last five years, most products sold through Amazon USA are not Amazon products but third-party sellers through the Amazon Marketplace.
MarketplacePulse reports that Amazon charges around 50% of third-party businesses’ gross revenue to sell and deliver.
Amazon is a megascale infrastructure business — providing systems, services, capacity, and labour. No longer just an e-commerce business.
Amazon is selling its online shopping infrastructure and distribution to other suppliers and retailers —its checkout, payment processing, and order fulfilment, which even traditional large retailers struggle to be efficient.
Buyers love it – you can order all sorts of products; the prices are low, shipping is often free, they arrive fast – returns are easy.
The problems
- Amazon USA search results are full of advertising and sponsored results that push relevant, well-reviewed options far down the page.
- A growing proportion of its marketplace inventory comes from unknown brands, with weird names like Fkprorjv and BIDLOTCUE.
- The search algorithms yield results that appear to be the same product repeatedly included time and time again —sometimes with the same photos—but with different names, sellers, prices, ratings, and customer reviews.
- There are roughly 2 million third-party sellers; many are foreign manufacturers looking for more direct access to customers in the USA,
The Wall Street Journal reports that Amazon’s USA customer satisfaction has fallen sharply in recent surveys.
The issues highlighted are COVID-related delivery interruptions, poor search results, and low-quality items.
Are more products low-cost junk?
Amazon lets mainly Chinese manufacturers and merchants sell directly to US customers – it is an enormously valuable infrastructure machine—these sellers are in the millions across virtually every category on the Amazon USA platform.
The problem is supplier quality control – Amazon’s interface has more no-name, low-quality products with congested advertising on its search results – reducing the buyer’s value.
The systems buyers depend on Amazon – its reviews, search results, and recommendations may need to be more accurate – doubt remains if these have become fake systemic-wide reviews.
Is Amazon slipping and showing its age?
Amazon has the unilateral power to change its policies and fees – instantly revoking access to its platform at will.
It has withdrawn access to thousands of Chinese sellers in recent years because of alleged review fraud.
Amazon has its work cut out to give buyers greater control and value today.
Significant mega-trends occurring that your business may benefit from,
- Turn your products and services into a subscription business,
- Marketplace businesses – where you platform like businesses – is a fast-growing business model,
- Adding simplicity and extreme buyer value is the key,
Regards
David
