Having completed their first Irish fulfilment centre in 2022 - which created 500 jobs and increased their commitment to faster delivery times across Ireland, 7 days a week - Amazon have recently announced they will launch a Irish dedicated store, Amazon.ie, in 2025
This move deepens their integration into the Irish market, adding to their partnership announced at the end of 2023 with An Post. The 5 year partnership with An Post claims to benefit both parties and as part of this partnership, An Post have announced they will be joining The Climate Pledge which Amazon co-founded in 2019. Businesses who sign up to this pledge aim to achieve net-zero carbon emissions by 2040.
An Post and Amazon solidified this partnership with each other by announcing the commitment to new delivery services and plans to “increase the speed and performance of Amazon’s end last-mile, middle-mile and returns operations in Ireland.” (David Redmond, An Post Chief Executive, 2023)
But what does this mean for Irish retailers?
We take a look at some of the advantages and disadvantages of Amazon entering the Irish market on a local playing field.
Advantages:
- More Visibility for Irish SME’s: Amazon has a huge customer base boasting 310 million customers worldwide. As a retailer, if you decide to list with Amazon, this could lead to more visibility both locally and globally for Irish brands.
- Shipping and Returns: Again, if you list with Amazon, as Amazon handles the distribution and returns of the products this could potentially mean it is easier for SME’s to distribute their products rather than dealing with smaller distribution networks. Amazon’s partnership with An Post also can comfort the business owners in knowing they are dealing with a reputable delivery service and that this partnership is committed to quick delivery.
- Look for outside Partnerships: Not every brand wants to deal with Amazon. The entry of Amazon.ie might actually mean that, there may be a gap in the market to create partnerships with brands that prefer to sell through local and SME online stores.
Disadvantages:
- Multinational Giant: Amazon is a multinational and uses a dynamic pricing strategy. This means prices will change based on demand, competition and various factors. Ultimately this means that retailers listing on Amazon have less control over their pricing and therefore margins, than they would on their own online stores.
- Impact Brick and Mortar Stores: We heard all about the success of Omnichannel stores at the eCommerce Live Belfast {backlink to blog when complete] event but the opening of an Irish Amazon store may have a negative effect not just on the footfall for online stores but also physical and flagship stores who operate on an omnichannel basis. More money for Amazon, less margin directly to the retailer.
- Amazon Owned Data: With the recent focus being on owned data and nurturing strong customer relationships, retailers who do most of their sales through Amazon may have a lack of clarity not just on their target markets but on individual buying habits.
- Entering Digital Marketing: Local ecommerce retailers will face significant threats due to Amazon’s extensive resources and expertise in digital marketing, particularly its aggressive strategies in Google Ads and Google Shopping. Amazon’s deep pockets allow for substantial ad spending, which can drive up the cost-per-click (CPC) for all advertisers, making it more expensive for smaller retailers to compete. Amazon’s financial strength means they do not need to be profitable from the first purchase, allowing them to invest heavily in customer acquisition and retention strategies.
- An Post Partnership: Although there are positives for Amazon partnering with An Post, it is possible that the ongoing partnership between An Post and Amazon will affect their priority of delivery services for others as they will be held to account by Amazon. Small retailers may need to plan for this especially at peak times such as Black Friday/ Cyber Monday and the Christmas Shopping period.
- Fake Reviews: Smaller retailers may struggle to rank high in search results on Amazon due to fake reviews pushing them down in search results.
Can Irish Retailers prepare in advance?
It goes without saying that Amazon entering the Irish market is sure to shake things up for both online and traditional stores. And for many, selling on Amazon itself might not be a sustainable option due to high fees and strict demands. But it’s not all doom and gloom, there are many opportunities for small and local enterprises to thrive. Here are our top tips:- Build Relationships with your Customers: While Amazon prioritises price and speed, retailers who focus on this will find it difficult to compete on this solely. Instead, focus your strategy back on the customer and foster a long lasting relationship.
- Focus on curation and inspiration: Amazon is a place to go when you know what you want, but some customers just want to browse, shop and be inspired - this is what retailers are great at offering - lean into your story-telling, inspiration and curated product catalogues.
- Personalise Experiences: Imagine your ‘local shop’ experience on your online store front. Personalise the shopping experience based on the customers buying history and habits, making the customer feel valued and understood.
- Prioritise Engagement: Retailers could also look at ways to further enhance the customer experience such as ensuring satisfaction, post-purchase support and other means of ongoing engagement to encourage repeat business.
- Loyalty Schemes: Encouraging repeat purchases through loyalty schemes can also help ensure that consumers won’t flock solely based on price.
To find out more about Clienteling you can read our blog or simply reach out to us at StudioForty9.
