Pros

 1. Global Reach & Customer Acquisition

Amazon’s vast global presence offers Singapore sellers unprecedented access to international markets. With nearly 2.4 billion monthly visits to its websites worldwide, Amazon provides an unparalleled platform for exposure and sales potential.

For Singapore-based businesses, this means:

• • Exponential Growth Opportunities: Selling beyond Singapore’s limited market size (population: 5.9 million) into major global markets like the US, UK, and Germany. Access to a wide range of customers, including the significant expat population in Singapore (about 29% of the total population) who are already familiar with and trust Amazon.
  • Year-Round Sales Potential: Ability to tap into various international shopping events and seasons, reducing dependence on local sales cycles. Amazon’s Global Selling program specifically supports international expansion, offering tools and guidance for cross-border trade. This can be particularly beneficial for Singapore sellers looking to establish a global brand presence.

2. Fulfillment by Amazon (FBA) and Logistics Support

Amazon’s robust fulfillment network, particularly through the Fulfillment by Amazon (FBA) program, provides Singapore sellers with a powerful logistics solution that can significantly streamline operations and enhance customer satisfaction.

Key benefits include:

• • Global Distribution Network: Access to Amazon’s vast, efficient logistics infrastructure spanning multiple countries. This is particularly valuable for Singapore sellers, as it eliminates the need to establish individual shipping arrangements for different international markets.

• • Prime Eligibility: Products fulfilled by Amazon become eligible for Prime shipping, increasing their visibility and appeal to Amazon’s most loyal customer base. Prime members spend significantly more on Amazon compared to non-Prime customers.

• • Customer Service and Returns Handling: Amazon manages customer inquiries and returns, reducing the operational burden on sellers. This is especially beneficial for Singapore-based businesses dealing with international customers across different time zones. 
  • Multi-Channel Fulfillment: FBA can be used to fulfill orders from other sales channels, including your own website, providing a centralized inventory management solution.

For Singapore sellers, FBA can effectively solve many of the challenges associated with international shipping and customer service, allowing them to compete on a level playing field with local sellers in various markets.

3. Advanced Seller Tools and Analytics

Amazon provides sellers with a suite of sophisticated tools and analytics that can significantly enhance business decision-making and operational efficiency. These tools are particularly valuable for Singapore sellers looking to understand and penetrate new markets.

Key features include:

• Seller Central: A comprehensive dashboard for managing your Amazon business, including inventory, orders, and performance metrics.
• Brand Analytics: Provides insights into customer search and purchase behavior, helping sellers optimize their product listings and marketing strategies.
• A+ Content: Allows brand-registered sellers to enhance product detail pages with rich media and detailed product information, improving conversion rates.

Additionally, third-party tools like Jungle Scout and Helium10 offer even more advanced analytics and research capabilities, including:

– Product research and trend analysis
– Keyword optimization
– Competitor tracking
– Profit calculation and inventory management

For Singapore sellers new to international markets, these tools provide crucial insights into consumer behavior, market trends, and competitive landscapes in different countries. This data-driven approach can significantly reduce the risk and guesswork involved in expanding to new markets.

Cons

1. Fees and Pricing Pressures

While Amazon offers access to a vast customer base, it comes at a cost. The fee structure can be complex and potentially eat into profit margins, especially for sellers from Singapore who may face additional challenges due to international shipping and currency exchange rates.

Key considerations include:

• Referral Fees: Amazon charges a percentage of the sale price for each item sold. These fees vary by category and can range from 6% to 20% of the product’s selling price.
• FBA Fees: If using Fulfillment by Amazon, sellers incur additional fees for storage, fulfillment, and optional services. These fees can be substantial, especially for larger items or during peak seasons.
• Monthly Subscription: Professional sellers pay a $39.99 monthly fee, regardless of whether they make any sales.
• Currency Conversion: Singapore sellers dealing in foreign currencies may face additional costs and risks due to exchange rate fluctuations. Furthermore, the highly competitive nature of Amazon’s marketplace often leads to pricing pressures:
• Race to the Bottom: The visibility of competing offers can lead to price wars, potentially eroding profit margins. Many sellers use automated repricing tools, which can quickly drive prices down in competitive categories.
• Seasonal Fluctuations: Prices may need to be adjusted frequently to remain competitive during different shopping seasons and events.For Singapore sellers, it’s crucial to carefully calculate all potential fees and factor in international shipping costs when setting prices to ensure profitability while remaining competitive.

2. Intense Competition and Market Saturation

The flip side of Amazon’s massive customer base is the equally large number of sellers vying for attention. This intense competition can make it challenging for new or smaller Singapore-based sellers to gain visibility and market share.

Key challenges include:

• Global Competition: Singapore sellers aren’t just competing with local businesses, but with sellers from around the world, including large established brands and manufacturers. There’s also particularly strong competition from Chinese sellers who often have direct access to manufacturers and can offer very competitive prices. According to Marketplace Pulse, Chinese sellers account for a significant portion of top sellers on Amazon.
• Constant Optimization: Maintaining visibility requires ongoing effort in optimizing product listings, managing inventory, and adjusting prices. This can be time-consuming and may require dedicated resources.
• Advertising Costs: With organic visibility becoming increasingly difficult, many sellers find themselves relying heavily on Amazon’s advertising platform, Amazon Advertising, which adds to the overall cost of selling.

For Singapore sellers, this competitive landscape means:
– Higher customer acquisition costs
– Potential difficulty in establishing brand recognition
– Need for unique value propositions or niche products to stand out

It’s essential for Singapore sellers to conduct thorough market research and competitive analysis before entering specific product categories on Amazon.

3. Limited Brand Control and Customer Relationship Management

While Amazon provides access to a large customer base, it comes at the cost of limited control over brand experience and customer relationships. This can be particularly challenging for Singapore sellers looking to build a strong, distinctive brand identity.

Key limitations include:

• Standardized Listings: Amazon’s product detail pages follow a standardized format, limiting the ability to create a unique brand experience.
• Customer Data Restrictions: Amazon’s policies restrict sellers from using customer data for marketing purposes outside of Amazon. This makes it difficult to build a direct relationship with customers or retarget them through other channels.
• Communication Limitations: Amazon closely monitors and restricts communication between sellers and customers to prevent abuse. This can make it challenging to provide personalized customer service or follow up on sales.
• Platform Dependency: Success on Amazon can lead to over-reliance on the platform, making it difficult to transition customers to other sales channels.

For Singapore sellers, these limitations mean:
– Difficulty in differentiating from competitors based on brand experience
– Challenges in building a loyal customer base that extends beyond Amazon
– Limited ability to cross-sell or upsell products outside the Amazon ecosystem

To mitigate these issues, Singapore sellers may need to consider a multi-channel strategy, using Amazon as part of a broader e-commerce approach that includes other marketplaces or a branded website.

Expert Insights with Syed Asadulla, founder of Project e Agency, a full service Amazon Agency.

Q: As an Amazon Verified Ads Partner, what strategies or tools will he recommend for brands to effectively leverage Amazon’s advertising platform when expanding globally?

Amazon Advertising is a powerful Ads platform within Amazon that allows the Brands to reach their potential audience by keyword bidding, re-targeting, contextual targeting, look alike audience etc. The main campaign types offered by Amazon Ads are Sponsored Products, Sponsored Brands, Sponsored Display and Sponsored TV Ads. Some of the ad types are not available in all Amazon marketplaces, The full suite of Ad tools is currently available only in the Amazon US marketplace.

When brands are expanding globally via Amazon, it is critical to have an Amazon Ads strategy to ensure the brand launch is effective and they reach the ideal audience hence maximising conversions and brand awareness. Some of the strategies recommended for the brands launching in new marketplaces are:

• Clear goals: Having clear KPIs of Revenue, ROAS and profitability can help prepare sustainable strategies that fits the brands mission and resources.

   

• Understanding the local market: It is important to understand every Amazon marketplace has its local brands, consumer habits, pricing and trends. It is critical for brands to understand the local market and then position their products and ads accordingly to maximise the ROAS.
• Long tail keyword targeting: With this strategy the brands bid higher for keywords that are relevant and have more than three words. These keywords usually are considered as low hanging fruit that can help the brands to improve their keyword ranking with lower bids and better ROAS.

Amazon Advertising platform is sufficient for the new brands to start their ads journey on Amazon. The platform offers detailed analytics and portfolio functionality to structure the products and categories while advertising. There are advanced software’s that connect to the Amazon Ads account that can help brands to automate campaigns to some extent and at the same time provide better understanding of the campaign performance. Some of the best tools we recommend are Scale Insights, Teikametrics, Helium 10’s Adtomic.

Q: What are the most common challenges you’ve observed for brands entering the Amazon marketplace, and how does your agency approach overcoming these obstacles?

A: Amazon Seller central or Vendor central backend can be quite challenging for new sellers to understand and navigate on the platform. Some of the biggest challenges which we have seen the new to Amazon brands face are:

• Understanding Amazon’s pricing model: Amazon’s pricing model can be quite complex for new sellers to understand. It is crucial to understand all the costs involved to sell on the marketplace and then price the products accordingly.
  
• FBA Inventory Management: One of the reasons for Amazon’s global success is their FBA offering, where customers can have their products delivered in same or next day. Amazon has announced major updates in 2024 that makes it hard for sellers to understand the costs involved and at the same time maintaining the KPIs setup by Amazon.

   

• Buy Box: Amazon’s algorithm uses multiple data points to rank products on the search results and at the same time offering buy box to only one seller at a time. If there are multiple sellers for a product, the sellers need to understand that just by listing the product on Amazon they do not automatically get the buy box.