As discussed, many times before in several GO EU blogs and articles, European expansion is a critical strategy for retail businesses. Just as in the US the European retail market moves fast. Retailers are constantly being asked to do more for less. In today’s press release of the German ‘Bundeskartellamt’, they have initiated an abuse proceeding against Amazon in Europe to examine its terms of business and practices towards sellers on its German marketplace amazon.de, selling into several European countries.
Another abuse proceeding against Amazon proves again that you, as a non-European retailer, need to consider your own direct B-C sales strategy into Europe and start looking for opportunities making calculated risks. This is traditionally key to making it in the retail space in your home country and in Europe.
The ‘Bundeskartellamt’ will scrutinize Amazon’s terms of business
Many non-European retailers and manufacturers depend on the reach of Amazon’s marketplace for their online sales in Europe. Amazon functions as a kind of “gatekeeper” for European customers. Its double role as the largest retailer and largest marketplace has the potential to hinder other sellers on its platform. Because of the many complaints the ‘Bundeskartellamt’ received they will examine whether Amazon is abusing its market position to the detriment of sellers active on its marketplace. The ‘Bundeskartellamt’ will scrutinize its terms of business and practices towards sellers.”
The terms of business and related practices which might be considered abusive are liability provisions to the disadvantage of sellers, in combination with choice of law and jurisdiction clauses, rules on product reviews, the non-transparent termination and blocking of sellers’ accounts, withholding or delaying payment, clauses assigning rights to use the information material which a seller has to provide with regard to the products offered and terms of business on pan-European despatch.
A criterion for the relevance of this conduct under competition law is that Amazon holds a dominant position or that the sellers are dependent on Amazon. There are indications of both, in particular on a possible market for marketplace services for online sales to consumers. This will be examined in closer detail by the ‘Bundeskartellamt’.
The proceeding was triggered by numerous complaints from sellers about Amazon’s business practice which the ‘Bundeskartellamt’ has received in the recent past.
The European Commission has begun investigations based on European competition law into Amazon’s European marketplaces, in particular into Amazon’s collection and use of transaction data. In summer 2018 the Commission sent out extensive questionnaires to several hundred German retailers to this effect. The ‘Bundeskartellamt’s’ and the Commission’s proceedings supplement one another. Whereas the Commission’s investigations focus on Amazon’s use of data to the disadvantage of marketplace sellers, the Bundeskartellamt is examining in particular the company’s terms of business and practices towards sellers on its German Amazon marketplace.
As mentioned in my February blog ‘Expanding your retail presence into Europe’, if you’re not thinking about Europe as an expansion opportunity, it’s likely that you’re missing out when you are just selling via Amazon. At least on margin, compliance and brand awareness.
Avoid the anonymization of your brand
You’ll also want to avoid being a faceless, nameless product in a sea of products. Product aggregation sites might ensure that you’re selling a product, but it doesn’t mean that you’re building a brand. Not to mention the simple monetary aspect: platforms like Amazon take a cut of the revenue sales – anywhere from 6-18% – plus whatever other partners you may use that charge more. You could be losing almost 40% of your sales revenue. If you’re like most retailers, that cut means little to no profit. And little to no profit means that you are likely going to lose money.
You can’t rely on Amazon
Even if your business falls prey to the lure of Amazon monopoly (also known as the world’s biggest product search engine), you need to remember that Amazon isn’t even available in most European countries.
Social media creates a global marketplace
Social media is a no-brainer for retailers around the world. Not only does it give you an exclusive opportunity to have an authentic conversation with your market, it makes it easier to build a brand and reach shoppers around the world. There could be demand for your market in Europe and you’re “missing the boat.”
It probably won’t work there
What works in the U.S. may not work in Europe. Shoppers in Europe will turn to the U.S. for items they can’t get. Where U.S. shoppers have come to appreciate free shipping as a given, you won’t be able to use that as a differentiator with European customers. Free shipping doesn’t exist between Europe and the U.S. Customs in Europe want their import duties and taxes. This makes shipping a long, expensive and painful process with a surprise behind every door. It only takes one item to make or break the first impression for your new European customer.
After you’re done considering the market conditions that can impact your current retail strategies, you’ll also want to understand what challenges you’ll be facing as you turn from domestic to European markets.
If you would like to know more about how to make your brand or company stronger, more competitive in Europe, and compliant today and without selling on Amazon in Europe?
Contact us via our website or send an email to email@example.com and we are more than happy to schedule a call.