Profitability challenges, complex logistics, and difficulty forecasting sales are major pain points for consumer brands that sell via Amazon in Europe and the Middle East (EMEA)—according to new research from Pattern.
Pattern’s newly published Amazon EMEA Vendor Report surveyed nearly 100 brands in EMEA to learn more about their Amazon sales activity, current challenges, and plans for the future on the rapidly expanding marketplace. 98 per cent of vendors in the survey reported experiencing problems trading on Amazon during the past year, including:
Pricing and profitability challenges – Price erosion is the most common pain point experienced by brands in EMEA during the past year, with 64 per cent of respondents citing them as “extremely” or “quite painful”. Nearly half of vendors reported experiencing unfavourable commercial terms, while only 6 per cent of respondents said discounting on Amazon hasn’t caused issues on other channels.
Complex or expensive logistics – 52 per cent of respondents said that complex or expensive logistics are “extremely painful” or “quite painful”. 51 per cent reported experiencing increasing chargebacks, and 52 per cent have faced issues getting products into Amazon’s warehouses; of those 43 per cent cited disruption to their own supply chain as the root cause.
Difficulty forecasting sales – 46 per cent of brands surveyed reported having difficulty forecasting sales, 38 per cent say that their forecasting methods are inadequate to keep enough stock in hand, and 37 per cent experience high out-of-stock levels due to Amazon’s algorithm-driven price.
Despite these challenges, brands still perceive Amazon as a marketplace for growth, with more than two-thirds planning to expand internationally through Amazon in the near future. Only 3 per cent reported that they no longer intend to sell on Amazon in the future.
Despite friction, brands still have a largely positive opinion of Amazon. 51 per cent reported feeling “very positive” or “somewhat positive” in a professional capacity, 25 per cent are neutral. More than half the brands surveyed have not yet been able to realise a profit in EMEA. Amazon sales in EMEA have fallen for 29 per cent of respondents, and another 23 per cent said sales are stable.
For the future of their presence on Amazon, 41 per cent of the brands surveyed are considering switching to a hybrid model, and 13 per cent are considering moving from 1P to a 3P model.
“This report underscores the challenges brands still face as they attempt to capture their fair share of the US$6 trillion global eCommerce market,” said Pattern Germany country manager and Director of business operations Europe Torsten Schäfer. “Profitability, forecasting, and logistical challenges are opportunities for brand partners, like eCommerce and marketplace accelerators, to play a key role in helping brands break through. Many, if not all, of these challenges can be overcome by leveraging the latest data science and global expertise. These findings make us even more bullish about the future of online commerce in EMEA.”
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