Amazon makes most of its money from its home country, the United States. To be fair to Amazon, there aren’t many countries that have an economy as large as that of the US, but the geographic distribution of Amazon’s revenue stream shows that the company has already reached a position of strength in most of the major economies around the world.
Of the top six global economies around the world – the United States, China, Japan, Germany, India and the United Kingdom – Amazon has five in the bag, except for China, naturally. India is growing fast but, in dollar terms, the amount of money Amazon makes is small; but the potential future growth can be tremendous, and the company has already caught up with the number one player in the market, Flipkart.
Back in 2013, Amazon’s North America (retail) segment had $41.41 billion in annual sales while international (retail) was $29.93 billion, a gap of $11.47 billion. The difference ballooned to $35.8 billion in 2016 as North America revenue’s nearly doubled to $79.78 billion by 2016, while international numbers grew modestly (relatively) to reach $43.98 billion.
However, with more than ten billion dollars in sales coming from Germany and Japan, and UK about to reach that milestone pretty soon, Amazon is the only retailer in the world to have more than ten billion in sales coming from almost four different countries.
The point is, Amazon is not the first US retailer in the world to step out of its comfort zone, but US-based retail houses have inevitably struggled whenever they crossed borders, especially into Europe. And let’s not even bring up China, which is a thorn in Amazon’s side as well. But the online retailer is the only one of several US retail giants to prove that it is possible for a US retail company to have a truly global model.
“Every retailer has tasted failure abroad. Walmart has succeeded in Canada and Mexico, but it had to pull out of Germany and South Korea. Tesco has carved out market share in South Korea and Malaysia, but it failed to establish a presence in France or Taiwan. Germany’s Metro took off in Poland and Romania, but its forays into the UK and Denmark ended in failure. Carrefour has exited several markets in Europe—including Austria, the Czech Republic, Germany, Norway, Portugal, Slovenia, and the UK—but it has broken through in others, such as Spain, Belgium, Greece, Italy, Romania, Poland, and Turkey, during the same period.”
– (Excerpt from an excellent Harvard Business Review article; well worth your time)
In a sense, Amazon has paved the way for other American retailers in several key markets. Whether or not these retailers will now be successful if they decide to use Amazon’s online model to re-enter erstwhile failed markets is questionable but, nonetheless, Jeff Bezos and his team have blazed a path for others to see, if not to follow.
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