How To Assess If A New Marketplace

is Worth Expanding To

Amazon is the 3rd biggest company on Earth at the moment, and it just keeps growing. While many different ventures fall under the Amazon umbrella, it’s the number of people who shop on Amazon that matters to sellers. In the past decade, Amazon has been doing their best to expand their reach and make their online shopping platform available to as many people as possible. One of the best ways of doing that was creating platforms for different countries and adding their own FBA infrastructure to those new markets.

                  Amazon Marketplaces

 

Currently there are 14 Amazon MarketplacesWith the ability to sell in any of those marketplaces, how do you know where you should expand to? Should you expand at all? If you’re already an active seller, the questions must have crossed your mind many times by now. While you can never be 100% positive that you’re making the right move, you can still gather enough  information to make an educated decision and minimize the risk of failure.

This article is all about where to look and what to pay attention to in order to assess any market and determine if it’s ripe for expansion.

Sales Volume

If products similar to yours are currently selling in a particular market, consider it a good sign. There is a plethora of software that can give you estimations on the monthly sales volumes of any item in any market. It’s important to note that no software has the permission to access the sales data for specific seller accounts. Their estimates are based on algorithms that take several factors into account, such as BSR, number of reviews, and available stock overtime. This is why it’s wise to compare data from two or more software tools.

 

Also be aware that those estimates are not dynamic. You’re only getting a snapshot of the last 30-90 days. Find more complete data by looking at historical sales to see if demand for the product is growing. Again, this piece of data alone will not be sufficient to determine true demand, but it can be useful.

You should compare the historical sales data for several of the top products in your potential niche to get as close as you can to the full picture. You may also notice that some products are doing better than others due to pricing, product property, or listing qualities. or some particular property of the product or the quality of the listings. Use these insights to gauge the potential of your own products.

It’s important to keep in mind that the numbers you uncover should be your expectation from the get-go. Depending on how well you launch your product in the new market, it may take a while to reach those numbers. On the other hand, you may be the one raising the bar! The main question sales volume research answers is “are people in this market buying these products?” If the answer is “yes,” it means there’s an opportunity here.

The Competition

If you’ve determined that there’s enough demand for your products in other markets, the next step is to gauge the competition. 

 

Start looking at review counts. The more reviews a listing has, the more legitimate it looks in the eyes of a potential shopper. It’s also a measure of customer satisfaction. If a listing has a high rating (4 stars or above) and numerous reviews, it indicates a strong competitor. Don’t be intimidated by listings that have a couple hundred or fewer reviews. Those numbers are impressive, but not unreachable. On the other hand, if you discover multiple listings with over 700 reviews, then the competition may be too tough. However, you may still have a shot, though it will be an uphill battle. If you manage to position yourself well in a highly competitive niche, there’s more profit to be made. This does not necessarily make the review count for top sellers the most important piece of information. What’s more important is the review count that belongs to listings ranked on the first page for your keywords.

Getting listed on page one for  your relevant keyword phrases is critical. If you find listings with only a few dozen reviews listed on page one, it’s a good indicator that that you can get your listing to the front page with relative ease. Keep in mind that these rankings are not permanent, and you still need to work to maintain your first page position.

 

As you research the competition, keep an eye on how many major brands also appear. Even if a branded listing has few reviews, they may have ways to quickly cultivate positive reviews—especially if it’s an established brand with some online presence.

 

Lastly, you need to pay attention to listing quality. Compare current listings against a simple checklist to see if they’re taking full advantage of all the options Amazon provides. Pay attention to things like:

-Image quality
-Density of relevant keywords in the listing copy
-Format of product description
-Whether or not the listing is in the brand registry

All of these details can help you vet the competition and discover opportunities to differentiate your future listing.

 

Keywords

Keywords are everything on Amazon. From optimizing your listing copy and backend content to formulating a PPC strategy, keywords are an ever present factor in selling on Amazon. Therefore, you need as much information as you can find on the keyword landscape of your target market.

 

This is where language can become a challenge. For English speaking markets (e.g., Amazon.co.uk, Amazon.ca and Amazon.au) your concern will likely be more focused on differences in phrasing. For non-English speaking countries, you will have a tougher time making sense of things—especially within markets like Amazon.cn, Amazon.co.jp, and Amazon.in where the written language does not use Latin script. But finding the data you need is not impossible.

 

Without understanding a market’s primary language, you can still investigate a listing’s indexed keywords. This is also a great way to assess how well established your competitors. 

 

Let’s take a look at an example with this wireless phone charger from Amazon.de:

Below, you can see how many keywords it’s indexed on, what keywords are, search volumes, organic ranking, and more.

From here, you can begin to keep inventory of the keywords you might want to target in future campaigns. Hire a freelancer who speaks the language fluently to run through the keywords and translate them for you with some context. However, if you’re simply assessing the market, GooGle Translate will suffice—save the hiring for when you commit to expansion and need help with copy, PPC keyword relevance, deciphering advertising reports, customer support, emails, and social media engagement. 

 

In short, finding more relevant keywords greatly increases your odds of successfully launching and positioning your product. Keep in mind that Amazon’s A9 algorithm runs on relevance, but what is “relevant” is not set in stone. If you’re creative enough, you can index your listing on keywords that no other seller is using.. After all, creativity is one of the traits of a great Amazon seller.

Demand

Demand is not first on our list because it requires the use of previously gathered information. Keep in mind that demand is a complex metric and you can never measure it exactly. The best you can hope for is a general idea of the demand for products in your target niche.

 

Using the numbers you already have, compare the ratios between them for both markets. To better illustrate this, let’s use the rolling pin niche on Amazon.com and Amazon.ca as an example.

 

First, take the page one results for “rolling pin” on Amazon.com and combine the monthly sales numbers. Repeat this step for Amazon.ca.

 

Next, find the monthly search volume for the keyword “rolling pin” in both markets:

 

Finally, compare the ratio of sales volume to search volume between the two markets. 

These ratios approximate the number of rolling pins sold for each keyword search. In this example, we conclude that more shoppers on Amazon.com find what they are looking for in comparison to their Canadian counterparts.

 

The overall demand is bigger on Amazon.com because lot more people are searching for the product. however, the gap between supply and demand is much bigger on Amazon.ca. So hypothetically, if you’re doing well selling rolling pins on Amazon.com, there’s definitely a chance for you on Amazon.ca.

 

Again, demand calculations like this won’t give you the full picture. Page one search results can rank for many other keywords and the distribution of sales per keyword is not attributable. This sort of analysis only gives you a general idea of the gap between demand and supply.

 

If you want to do a more thorough assessment, spend some time to identify a number of listings that are doing well in the niche. Compare the total search volume for the keywords that ranked them on page one against their total sales. Once again, not all the sales for those items will come from those keywords. however, this is a more precise way for you to assess the demand. 

Margins and Pricing

It’s time to determine your take-home per product sold. This is not a straightforward calculation when you expand beyond the US.

 

Most market intelligence software tools will give you the fee structure of any product that’s already on the market. The FBA fees calculator provided by Amazon is also a particularly useful tool. While it’s unlikely you find a drastic difference in fee structures across different markets, it’s still in your best interest to double check and confirm.

 

Because of something called the “referral fee,” the variable that can make a big difference on your margins is your selling price. The referral fee is calculated as a percentage of the item’s total sold price. It’s usually at 15%, but there are some exceptions in certain categories. 

 

If you’re considering simply converting your Amazon.com price into local currency, then you’re losing out.. You need to account for several additional costs, including the cost of converting funds.

 

For example, let’s use the price comparison between two rolling pins sold by the same seller on Amazon.com and Amazon.de.

 

1 EUR equals 1.1 USD, so you can see that the price is extremely different between the two markets.. To fully put it in perspective, 29.99 EUR is 33.05 USD. While the price is surprisingly high, Amazon.de shoppers do not seem to be bothered by it. This is great news for you if you are looking to sell there. However, there is a good reason for that.

 

Many foreign countries are subject to Value Added Tax (VAT), or some form of sales tax that is calculated at every transaction. This means that most of the prices you see on foreign markets are set higher than expected in order to compensate for tax costs. This doesn’t mean you can’t get more profit per unit; it means there is another cost to consider—which brings us to another cost: shipping. 

 

If you’re having items delivered directly from your supplier’s country into your targeted market you need to ask your freight forwarder for a cost-per-item quote on the cost per item to be delivered to that location. Depending on the market and your supplier’s location, that number will vary as it also accounts for entry taxes as your inventory arrives.

Amazon marketplace Amazon marketplace

Lastly, a cost that most sellers selling internationally overlook before realizing that it’s eating away at their profits: conversion fees. Every time you convert from one currency to another, a portion of that sum gets chipped away. In most cases,  you are converting your earnings at a much higher rate. On top of that, if you are not careful you could be making many unnecessary conversions. For example, you need to make your tax payments in a foreign currency but you’ve already converted your earnings to USD. Now, you would need to convert that money back to the foreign currency to make the tax payment in the same country that you just pulled the funds out of—ultimately losing money during each conversion .

 

To save as much of your earnings as possible, find a service that minimizes your conversions and conversion rates. PingPong offers such a service along with a global currency account that allows you to keep your earnings in a foreign currency, make your VAT and TAX payments using the foreign currency, and convert into USD at the lowest rates possible.

Barriers to Entry

Lastly, you have to see if there are any legal or administrative obstacles against your expansion. Consult with professionals while researching this particular aspect of selling in a foreign market. You should especially take advice from your accountant, tax advisor, and a customs broker to ensure that your business is compliant with the local laws and regulations. In some cases, you may need to register for a business number as a foreign entity or  open and register a business entity in the country in order to operate.

 

A lot of sellers may be scared of discouraged to venture into the seemingly complex and confusing landscape that is foreign taxes, customs, and other legal issues. If your expansion is financially viable, the red tape should not hold you back. Sellers have been crossing Amazon market borders for years  with great success, and many brands have flourished internationally because of it.

 

If you have an opportunity that can result in more growth and profits for your Amazon business, it is your moral obligation as an entrepreneur to take it!

Psst…More Amazon Guides where that came from. Always be updated with the latest tips!

 

How To Assess

If A New Marketplace
Is Worth Expanding To

With the ability to sell in any of those marketplaces, how do you know where you should expand to? Should you expand at all? If you’re already an active seller, the questions must have crossed your mind many times by now. While you can never be 100% positive that you’re making the right move, you can still gather enough information to make an educated decision and minimize the risk of failure.

 

This article is all about where to look and what to pay attention to in order to assess any market and determine if it’s ripe for expansion.

Sales Volume

If products similar to yours are currently selling in a particular market, consider it a good sign. There is a plethora of software that can give you estimations on the monthly sales volumes of any item in any market. It’s important to note that no software has the permission to access the sales data for specific seller accounts. Their estimates are based on algorithms that take several factors into account, such as BSR, number of reviews, and available stock overtime. This is why it’s wise to compare data from two or more software tools.

 

Also be aware that those estimates are not dynamic. You’re only getting a snapshot of the last 30-90 days. Find more complete data by looking at historical sales to see if demand for the product is growing. Again, this piece of data alone will not be sufficient to determine true demand, but it can be useful.

You should compare the historical sales data for several of the top products in your potential niche to get as close as you can to the full picture. You may also notice that some products are doing better than others due to pricing, product property, or listing qualities. Use these insights to gauge the potential of your own products.

 

It’s important to keep in mind that the numbers you uncover should not set your expectations from the get-go. Depending on how well you launch your product in the new market, it may take a while to reach those numbers. On the other hand, you may be the one raising the bar! The main question sales volume research answers is “are people in this market buying these products?” If the answer is “yes,” it means there’s an opportunity here.

The Competition

If you’ve determined that there’s enough demand for your products in other markets, the next step is to gauge the competition. 

 

Start looking at review counts. The more reviews a listing has, the more legitimate it looks in the eyes of a potential shopper. It’s also a measure of customer satisfaction. If a listing has a high rating (4 stars or above) and numerous reviews, it indicates a strong competitor. Don’t be intimidated by listings that have a couple hundred or fewer reviews. Those numbers are impressive, but not unreachable. On the other hand, if you discover multiple listings with over 700 reviews, then the competition may be too tough. However, you may still have a shot, though it will be an uphill battle. If you manage to position yourself well in a highly competitive niche, there’s more profit to be made. This does not necessarily make the review count for top sellers the most important piece of information. What’s more important is the review count that belongs to listings ranked on the first page for your keywords.

Getting listed on page one for  your relevant keyword phrases is critical. If you find listings with only a few dozen reviews listed on page one, it’s a good indicator that that you can get your listing to the front page with relative ease. Keep in mind that these rankings are not permanent, and you still need to work to maintain your first page position.

 

As you research the competition, keep an eye on how many major brands also appear. Even if a branded listing has few reviews, they may have ways to quickly cultivate positive reviews—especially if it’s an established brand with some online presence.

 

Lastly, you need to pay attention to listing quality. Compare current listings against a simple checklist to see if they’re taking full advantage of all the options Amazon provides. Pay attention to things like:

 

-Image quality
-Amount of space used in the bulletins
-Density of relevant keywords in the listing copy
-Format of the product description
-Whether or not the listing is in the brand registry

All of these details can help you get the competition and discover opportunities to differentiate your future listing.

 

Keywords

Keywords are everything on Amazon. From optimizing your listing copy and backend content to formulating a PPC strategy, keywords are an ever present factor in selling on Amazon. Therefore, you need as much information as you can find on the keyword landscape of your target market.

This is where language can become a challenge. For English speaking markets (e.g., Amazon.co.uk, Amazon.ca and Amazon.au) your concern will likely be more focused on differences in phrasing. For non-English speaking countries, you will have a tougher time making sense of things—especially within markets like Amazon.cn, Amazon.co.jp, and Amazon.in where the written language does not use Latin script. But finding the data you need is not impossible.

Without understanding a market’s primary language, you can still investigate a listing’s indexed keywords. This is also a great way to assess how well established your competitors. 

Let’s take a look at an example with this wireless phone charger from Amazon.de:

Below, you can see how many keywords it’s indexed on, what keywords are, search volumes, organic ranking, and more.

From here, you can begin to keep inventory of the keywords you might want to target in future campaigns. Hire a freelancer who speaks the language fluently to run through the keywords and translate them for you with some context. However, if you’re simply assessing the market, GooGle Translate will suffice—save the hiring for when you commit to expansion and need help with copy, PPC keyword relevance, deciphering advertising reports, customer support, emails, and social media engagement. 

 

In short, finding more relevant keywords greatly increases your odds of successfully launching and positioning your product. Keep in mind that Amazon’s A9 algorithm runs on relevance, but what is “relevant” is not set in stone. If you’re creative enough, you can index your listing on keywords that no other seller is using.. After all, creativity is one of the traits of a great Amazon seller.

Demand

Demand is not first on our list because it requires the use of previously gathered information. Keep in mind that demand is a complex metric and you can never measure it exactly. The best you can hope for is a general idea of the demand for products in your target niche.

 

Using the numbers you already have, compare the ratios between them for both markets. To better illustrate this, let’s use the rolling pin niche on Amazon.com and Amazon.ca as an example.

 

First, take the page one results for “rolling pin” on Amazon.com and combine the monthly sales numbers. Repeat this step for Amazon.ca.

 

Next, find the monthly search volume for the keyword “rolling pin” in both markets:

Finally, compare the ratio of sales volume to search volume between the two markets.

These ratios approximate the number of rolling pins sold for each keyword search. In this example, we conclude that more shoppers on Amazon.com find what they are looking for in comparison to their Canadian counterparts.

 

The overall demand is bigger on Amazon.com because lot more people are searching for the product. however, the gap between supply and demand is much bigger on Amazon.ca. So hypothetically, if you’re doing well selling rolling pins on Amazon.com, there’s definitely a chance for you on Amazon.ca.

 

Again, demand calculations like this won’t give you the full picture. Page one search results can rank for many other keywords and the distribution of sales per keyword is not attributable. This sort of analysis only gives you a general idea of the gap between demand and supply.

 

If you want to do a more thorough assessment, spend some time to identify a number of listings that are doing well in the niche. Compare the total search volume for the keywords that ranked them on page one against their total sales. Once again, not all the sales for those items will come from those keywords. however, this is a more precise way for you to assess the demand.

Margins and Pricing

It’s time to determine your take-home per product sold. This is not a straightforward calculation when you expand beyond the US.

 

Most market intelligence software tools will give you the fee structure of any product that’s already on the market. TheFBA fees calculator provided by Amazon is also a particularly useful tool. While it’s unlikely you find a drastic difference in fee structures across different markets, it’s still in your best interest to double check and confirm.

 

Because of something called the “referral fee,” the variable that can make a big difference on your margins is your selling price. The referral fee is calculated as a percentage of the item’s total sold price. It’s usually at 15%, but there are some exceptions in certain categories. 

 

If you’re considering simply converting your Amazon.com price into local currency, then you’re losing out.. You need to account for several additional costs, including the cost of converting funds.

 

For example, let’s use the price comparison between two rolling pins sold by the same seller on Amazon.com and Amazon.de.

 

1 EUR equals 1.1 USD, so you can see that the price is extremely different between the two markets.. To fully put it in perspective, 29.99 EUR is 33.05 USD. While the price is surprisingly high, Amazon.de shoppers do not seem to be bothered by it. This is great news for you if you are looking to sell there. However, there is a good reason for that.

 

Many foreign countries are subject to Value Added Tax (VAT), or some form of sales tax that is calculated at every transaction. This means that most of the prices you see on foreign markets are set higher than expected in order to compensate for tax costs. This doesn’t mean you can’t get more profit per unit; it means there is another cost to consider—which brings us to another cost: shipping. 

 

If you’re having items delivered directly from your supplier’s country into your targeted market you need to ask your freight forwarder for a cost-per-item quote on the cost per item to be delivered to that location. Depending on the market and your supplier’s location, that number will vary as it also accounts for entry taxes as your inventory arrives.

 

A cost that most sellers selling internationally overlook before realizing that it’s eating away at their profits: conversion fees. Every time you convert from one currency to another, a portion of that sum gets chipped away. In most cases,  you are converting your earnings at a much higher rate. On top of that, if you are not careful you could be making many unnecessary conversions. For example, you need to make your tax payments in a foreign currency but you’ve already converted your earnings to USD. Now, you would need to convert that money back to the foreign currency to make the tax payment in the same country that you just pulled the funds out of—ultimately losing money during each conversion .

 

To save as much of your earnings as possible, find a service that minimizes your conversions and conversion rates. PingPong offers such a service along with a global currency account that allows you to keep your earnings in a foreign currency, make your VAT and TAX payments using the foreign currency, and convert into USD at the lowest rates possible.

Barriers to Entry

Lastly, you have to see if there are any legal or administrative obstacles against your expansion. Consult with professionals while researching this particular aspect of selling in a foreign market. You should especially take advice from your accountant, tax advisor, and a customs broker to ensure that your business is compliant with the local laws and regulations. In some cases, you may need to register for a business number as a foreign entity or  open and register a business entity in the country in order to operate.

 

A lot of sellers may be scared of discouraged to venture into the seemingly complex and confusing landscape that is foreign taxes, customs, and other legal issues. If your expansion is financially viable, the red tape should not hold you back. Sellers have been crossing Amazon market borders for years  with great success, and many brands have flourished internationally because of it.

If you have an opportunity that can result in more growth and profits for your Amazon business, it is your moral obligation as an entrepreneur to take it!

Psst…More Amazon Guides where that came from. Always be updated with the latest tips!