Is Amazon FBA Market Expansion
The Key To Success?

You start selling on Amazon, manage to create a successful brand with great reviews, fantastic organic ranking and keep achieving your revenue goals on your main marketplace, but eventually get stuck, where you can’t grow any higher within your niche market, what would be the next step?

A lot of individual FBA businesses tend to reach a peak which they cannot surpass because of lack of means to grow and scale their businesses, this could be due to not having enough capital or simply not having the expertise to go further. That’s why we often see one-person businesses remain that way until they fail, reach their peak and stabilize, or get acquired.

Geographic expansion within Amazon FBA Markets is possibly the most logical step for a lot of sellers, in order to grow their revenue, profits and in general scale their business.

When we compare FBA businesses to other e-commerce independent brands, we can see why expanding on Amazon might seem “easier”, as expansion can be just a few clicks away. Amazon provides a very accessible process for sellers to be able to expand to other existing countries, through different programs.

But is it doable for everyone?

FBA Market expansion can be somehow tricky. As to every decision there are pros and there are cons to it and it’s up to the sellers to analyse and understand if the brand and products have potential in other markets and when and where to dive in.

Pros and cons of expanding on Amazon MarketplacesLet’s start by overviewing the PROS:
  • It is very accessible to sell and therefore expand across EU, thanks to the PAN EU logistic network.
  • Amazon US is as big as all of the EU markets combined and expanding there will get the brand exposed to great demand for your products.
  • If you have started in the US, it is also fairly easy to start selling in Canada and Mexico.
  • Selling in the UK became easier as well, as the marketplace reactivated on EFN post Brexit.
  • New emerging markets with big opportunity gaps to fulfil demand.
  • Most SKUs get reviews shared so the ASIN doesn’t start from scratch.
  • Seller history remains intact, and as we all know, even if at a small scale, it is still a factor that affects organic ranking.
  • Contribution margin goes up, thanks to greater economies of scale due to larger purchase orders to suppliers that bring COGs (Cost of Goods sold) down.
  • Same Product – 10 x profit. By expanding you make your brand and product globalised and get higher dollar returns. The effort made to develop the product is differently rewarded just selling in one market than selling it in ten. You get the point.
Everything seems quite optimistic thus far, however as most things in life, the CONS sometimes overweight the PROS:
  • You would need strong investing power to be able to afford new units, new shipments, storage fees, reinvesting to before you see a full ROI (Return on Investment), administrative fees (i.e – VAT compliance, duties), possibly employee’s salaries to handle the new workload, and additionally, you might need native teams to get the best of your presence internationally so an increase in internal costs needs to be taken into account.
  • It can be time consuming – this is when usually business turn from one person to a team. As tasks start accumulating it is crucial to be able to cover all parts of operation, while being comfortable and adapted to working with different languages and .
  • Conducting market research should be the first step to expanding your business into newer markets. Each market is different and their consumer behaviour even more so, which is why your current process operations may not work in a completely different market. Market and consumer research is needed prior to deciding to launch your products into new countries.
  • Some products might need rebranding or repackaging in the respective native language and cannot share the same ASIN from the initial marketplace. If this is case, strong investing power is required.
  • Supply chain becomes the most important part of the business, because when having a larger volume, the stakes on the logistic side become extra important, and messing that up can cause serious damages.
  • Legal authorities’ complications and higher bureaucracy.
  • Creating brand awareness and creating/managing an omnichannel strategy outside amazon can become a challenge, as you might want to have the different social media channels, content creation actions and websites subdomains in different languages.

At the end, each brand is different and has its own advantages and disadvantages. All variables must be measured and be taken under consideration to assess which option is more balanced at that specific stage of the business – to expand or to not expand.

THE BRANDHERO SOP:

There are many approaches and different SOPs (Standard Operation Procedures) that describe the best way to expand within Amazon. At the end of the day, as previously mentioned, it will depend on your business. At BrandHero, we look at each brand individually before starting to open our SOPs, but in general these are the steps we recommend taking in order to have a less risky approach:  

  1. Create a brand product catalogue and brand awareness in the main market you already know and maximise its potential in order to get the needed cash flow to take the next step, whether that is to geographically to new markets or within the same market (e,g – through introducing new products or bundles).
  2. Study demand and competition for every ASIN in each potential new market and make data-driven decisions, assessing if the risk reward ratio is positive per each ASIN. If it isn’t, don’t risk it.
  3. After deciding to go forward with one or more ASINs, start by getting all the legality in place, and the new amazon marketplace open with ASINs created. Some markets require more documentation than others, but once you have decided you want to expand you must have all required documents ready, the marketplace in amazon opened, and ASINs synchronised before anything else. Sometimes there are counter backs or issues with VAT, legal numbers, special documentation for products, errors in synchronisation of reviews, etc. You want to avoid delaying this part of the process, as placing the purchase order when you cannot sell yet, can become an expense.
  4. Depending on investing power, experience, and labour power you can decide to expand one or multiple SKUs, to one or multiple markets, as long as you remember, don’t bite off more than you can chew. Small successful steps are always better than big steps which end up in failure. For small business sellers, kindly be aware of your cash flow as overestimating it is one of the most common ways to lead a business or expansion to failure.
  5. Place a small purchase order per SKU and ship directly to amazon by a fast-shipping method to test the market, and see how consumers respond, check advertising cost and then evaluate if its profitable to sell those SKUs in the new market.
  6. If you decide to continue, then place a larger order and use cheaper freight methods like boat or train to get a higher contribution margin. You might also consider in this stage to find a local 3PL to have your goods stored with low storage fees.
  7. Once the SKUs are launched in a new marketplace; gather data, optimize and repeat until you have covered all the interesting markets for your business.

Is Amazon FBA Market Expansion The Key To Success?

Is your brand ready for expansion? Is it even the right next step for it? If you lack the knowledge or capital to scale your brand, might be time to consider looking for a partner. At BrandHero we can assist to scale your business through our Amazon-Centric Marketing Agency – Amazing, or we can partially or fully acquire your business to take it a step forward. Reach out using the form below in order to get a free evaluation.

Jorge Arenas Granados

Jorge Arenas Granados

Amazon FBA Specialist

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