Amazon enters five emerging markets! The next profit growth point?

A document leaked from Amazon recently revealed its major market layout, which will complete the layout of the world's five major emerging markets by the beginning of next year! Even if it means shrinking some of the US market, it will do so!

According to the internal document, Amazon will enter five emerging markets: Belgium, Chile, Colombia, Nigeria and South Africa. Even the timetable has been planned. Belgium is scheduled to enter in late September; the Colombian and South African projects are scheduled to start in February 2023; and Nigeria and Chile will both be launched in April 2023;

To sum up, the emerging markets that Amazon is betting on this time are Belgium, a long-established developed country in Europe, and two relatively developed markets in Africa and Latin America. Amazon plans to build an FBA logistics system in these five countries and bring in Prime members, etc. What is even more incredible is that in order to achieve the strategic planning of these five markets, Amazon is willing to sacrifice some investment in the domestic US market. Officials believe that these five emerging markets are areas that can bring long-term growth, especially Africa and South America, which are markets where Amazon has always had a low influence, which also means that for Amazon, these are two growth points to be developed.

However, from the perspective of our sellers, in economically backward countries such as Africa, India and Latin America, the profit margin of the general retail market is very limited. Even if it can bring a lot of sales, the contribution to the real profit may be a drop in the bucket.

In fact, the estimated gross profit margin of the Latin American and African e-commerce markets is indeed low, at only about 5%. In comparison, the retail gross profit margins of developed countries such as the United States and Japan are around 25%. That is to say, with the same sales volume, the profits obtained in emerging markets are only one-fifth of those in developed markets.

Even with this tiny bit of space, Amazon is now trying to grab it with great fanfare, which shows how terrible Amazon's current traffic and sales bottlenecks are. Even if the gross profit margins in the United States and Japan are higher, the market is already highly saturated, and even Amazon has a hard time taking it. The prosperity in 2020 is only a flash in the pan. As the impact of the epidemic gradually recedes, Amazon's chances of making further progress will become smaller, and the only way left is to expand into the international market.

After the news of Amazon leaked, the share prices of Jumia and MercadoLibre, two e-commerce platforms focusing on Africa and Latin America, plummeted. Jumia's share price fell by nearly 10%, while MercadoLibre's fell by more than 7%. It is important to know that the resources that a giant like Amazon can mobilize are simply unimaginable. Although the two platforms have been deeply rooted in Africa and Latin America for many years, Amazon's strong entry will definitely create huge competitive pressure on these two platforms.