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GUEST COMMENT One marketplace to rule them all … but is there?

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In the UK and US, Amazon has become synonymous with ecommerce. It’s not surprising: Amazon commands the largest share of ecommerce revenues in those markets and as such, it’s seen as the one to join, or the one to beat.

However, that doesn’t mean it will become the default leader in all territories in the long term. 

Amazon’s fortunes are currently tied to the most developed markets, which means that local challengers, such as Walmart-backed Flipkart in India, are looking to solidify their presence before Amazon can gain a toehold. 

It’s a move that could give these challengers the opportunity to look eventually outside their domestic footprint, and even to try to beat Amazon at its own game.

Local marketplaces may have the potential to expand 

While local marketplaces have the potential to expand, that’s not to say it’ll be easy, or that it’ll happen overnight.

Generally speaking, expanding into additional markets is a numbers game. Shareholders and investors want to see growth, which means that unless marketplace businesses have their fingers in multiple pies in the same way as Amazon, they’ll need to expand overseas once they’ve reached a point of saturation in their local markets. 

In terms of timescales, there’s some way to go before the potential in many key local markets are exhausted. Growth in countries including Brazil, Argentina, Nigeria, India and China is still massive, especially those with growing middle classes. And while it’s true that estimates say 70% of China’s population could be middle class by 2030, that particular market is so huge it should be able to sustain domestic marketplaces for a very long time.

Manage the international sensitivities

Geographical boundaries and business issues are generally no longer a barrier to international expansion, so long as marketplaces are sensitive to softer issues around cultural sensitivities and the nuances of language. 

Another possible concern for local marketplace providers extending into new markets are the growing sensitivities around carbon footprint, so exporting products could be seen in a negative light. However, in a globalised market, stock doesn’t need to be held in the domestic market. As long as businesses can scale up to buy warehouses as and where they’re needed and/or have the right local partnerships, then they’ll be fine. 

So, which are the ones to watch?

Growth will be dictated by brand awareness beyond the business’s current borders, a quick route to market, and trust. So, the likely success stories are those with the biggest scale and footprint. A brand like Carrefour would best fit the profile, as it offers a wide range of products, is trusted throughout Europe and is fast establishing its ecommerce presence.

Target in the US is another interesting one due to its global brand awareness, but again, this is a long burn – the US consumer base is vast so it’s unlikely to be moving beyond North America anytime soon. 

Another world-famous US retailer, however, is a different story.

Why Walmart Connect could be one to watch

Walmart’s ecommerce sales may be slowing post-lockdown, but it’s still the biggest retailer in the world and now the second largest marketplace in the US behind The second market it expanded into, via a majority stake in Flipkart, is India, which also has a huge population and a fast-growing middle class. The latter could, in theory, become even more dynamic and lucrative than China.

Digital commerce dwarfs what Walmart could possibly achieve in bricks and mortar, which is why it’s invested so heavily in Walmart Connect. While people care about specific brands in bricks and mortar – hence Walmart remained Asda in the UK and remains so even after Walmart sold off its UK stores – that’s not the case in digital, where shoppers are more concerned about convenience than about who they’re buying from.

Walmart Connect’s partnership model is a sensible way to grow the brand without being accused of cultural/economic imperialism, which is a criticism that could be levelled at Amazon. As it stands, the Walmart-backed Flipkart has a window to consolidate its presence in India and we’ll have to wait and see if Walmart Connect builds on its strategy into other markets. 

However, Amazon still has an ace up its sleeve. Until Walmart has a subscription service to rival Prime, it will remain on the back foot.    

How Amazon can maintain its growth trajectory 

Prime has, without question, been the bedrock of Amazon’s success. While it has consolidated its hold on the most developed markets, notably Western Europe and North America, that doesn’t mean it isn’t looking at the BRIC markets. 

Prime is the not-so-secret weapon that differentiates it from its competitors and it’s worth bearing in mind it has already launched the service in both India and Mexico. 

In fact, Prime now has over 200 million global subscribers and it touches people’s lives across multiple touchpoints. If they use it for the video and premium sports offering, they might as well also make use of the overnight shipping. 

Amazon has also become much more than a retailer and is constantly expanding its ecosystem: from advertising to Twitch and from AWS to fulfilment. There’s still a lot of untapped potential in its repertoire and while Amazon doesn’t need to expand its global footprint as a priority, this isn’t to say it won’t.

The question is why wouldn’t it expand into markets with millions of consumers – especially those where it’s already becoming part of the fabric of life through Prime. We can be pretty certain Amazon will make a more consolidated move on India at some point – it’s just a matter of when. 


Peter Martin, managing director of digital commerce agency SMP

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