If we want to write about the consequences of Amazon’s entry to Poland, first we need to get acquainted with the sales models offered on the platform. It is important as Amazon offers solutions which are unusual on the available Polish marketplaces. FBA, the model we are talking about might tip the balance in favour of the American giant.
3 Sales models on Amazon:
- Vendor – B2B model in which Amazon buys products and sells them on the platform. A big downside is a contract signed with Amazon, which is full of unfavourable conditions for us as Amazon’s provider.
- FBM – Fulfilment by Merchant is a model similar to the Polish Allegro. The goods are listed on Amazon but they are shipped from a seller’s warehouse. The entire process related to returns is handled by a seller.
- FBA – Fulfilment by Amazon – in this model a seller ships the products to Amazon’s warehouses and they are later on shipped directly to the customers. Returns are handled by Amazon.
Officially, FBA and FBM are models available on the Seller Account, but for the purposes of this article, I have presented them as independent models.
El Dorado for shoppers
Let us start with the easier, in my opinion, part of the analysis of the consequences of Amazon’s entry to Poland, that is the customers’ situation.
In this case, it can be confidently stated that because of Amazon’s strong orientation towards a customer, the shoppers can expect a much better service. I would even venture a guess that if Amazon enters Poland and preserves its politics of customer service from the western marketplaces, it might be a beginning of an end for semi-professional attitude towards customers by a big portion of Polish online stores.
Let us remember that Amazon works 365 days a year, does not acknowledge long weekends on the occasion of regaining independence or Corpus Christi. There is no room for prolonged complaints and returns considerations – unfriendly proceedings towards a customer to avoid processing a refund for a bought commodity. Amazon will always focus on a customer, so as a seller we need to be prepared for impeccable customer service.
Additionally, the arrival of such a strong player might cause price competition among the sellers, especially taking into consideration that they battle against the companies from all over the world.
Amazon’s arrival in Poland promises better times in e-commerce for customers.
An opportunity for sellers
Basing on our sales and cooperation with several dozens of companies from different industries, we can boldly state that Amazon is the best channel to reach customers from Western Europe. Additionally, the majority of search queries on Amazon are non-branded (around 78% according to Marketplace Pulse), which means that sellers who do not own popular brands, might still compete against popular companies.
Another advantage for domestic sellers is getting acquainted with the FBA model, which even though is quite expensive, enables achieving revenue of several hundred euros each month.
For those sellers who understand western e-commerce or are ready to adjust to its standards, Amazon, like no other platform, facilitates a foreign expansion on a big scale.
Risks for sellers
Now we are approaching the part which is often ignored in the analysis of the predicted consequences of Amazon’s entry onto the Polish market. In our opinion, the entry of Bezos’s company to Poland will be a peculiar test for domestic sellers. In two-years perspective, it might turn out that those who do not adjust to the standards of the giant, will face problems gaining clients. Why? The answer is simple: Pan-European FBA.
Pan-European FBA is an extended FBA model, in which the seller ships the goods to one warehouse, and then Amazon itself moves the commodities between their warehouses, basing on the demand algorithms.
What does it mean for Polish sellers? Let us check on 3 examples.
A small Polish cosmetic company – in the majority of cases, the recognizability of these brands is very much local and based on the cooperation with influencers. The range of products does not differ much from the competition, often even the formula is similar. The companies of this kind will have to face the competitors from all around Europe, who shipping the goods to a nearby Amazon warehouse might enter the Polish market. That way, the barrier of time and shipping costs disappears. Will the Polish cosmetic companies win with the French ones? Certainly, it will be a big loyalty test for the local brands.
Electronic accessories or toys distributor – let us juxtapose two facts. The majority of distributors in these industries buys their commodities in China. As many as 40% of Amazon sellers come from China. That implies that a part of Chinese manufacturers, who provide Polish distributors with products sell on Amazon. Additionally, Amazon enables shipping entire containers of goods from China to their warehouses, which significantly limits the costs. In this unequal fight, Polish distributors must be on their guard.
Polish companies with traditions – often slow in their activities, having old-fashioned machinery park. These companies must compete with German or French manufacturers, who have modernized factories and long-time experience selling on Amazon. Paradoxically, these modern manufacturers will be able to offer better prices than domestic companies.
To sum up, to comprehend the influence of Amazon’s entry on the Polish market one has to understand the model of Pan-European FBA. All analyses based on the fact, that just like that another competitor enters the market, are only the beginning of the ponderation. Amazon is a gate for thousands of sellers from Europe and China onto the Polish market. FBA model eliminates the barrier of a distance between a local cosmetic company from Sevilla and a Polish consumer in Wrocław. It is a change which cannot be underestimated.
What can Allegro say to that?
Before we move on to Allegro, let us work through the argument that eBay’s entry to Poland was unsuccessful, so Amazon might share its fate. Comparing these two platforms is very unfortunate for one simple reason: eBay does not offer a widely available and developed fulfilment model. Only since the last year operations regarding fulfilment by eBay got some more momentum. The failure of eBay on the Polish market is caused by the fact that it is very similar to Allegro, and there is not enough room for two such entities. There is also an issue of Polish customer’s sentiment towards a good old Allegro. Amazon’s entry is a whole another case and, in this context, Allegro has a tough nut to crack.
In our opinion, eBay will lose the most when Amazon enters Poland. Allegro will keep its position for some time, but in two-years perspective, it will give its space to Amazon. A much bigger and more diverse product catalogue, an extreme focus on the customer, bigger possibilities of internationalizing sales will influence the situation. Of course, Allegro still will be strong on the Polish market, but will it stay in 10 of the most popular marketplaces in the world? Time will show.
If you sell online and want to discuss the possibilities Amazon offers, contact us here.