Game of Brands: Why Global E-Commerce is More Than Amazon (and a Major Opportunity for D-to-C Brands)

The global e-commerce landscape would, at this point, be unimaginable without Amazon.com. In fact, Amazon is often used synonymously with the term e-commerce: Amazon is e-commerce. However, this statement doesn't hold up if you take a closer look at the market shares worldwide.

Amazon’s market share in Europe is just 9.8 percent as of September 2020. In North America, the online retailer accounted for more than a third (37.9 percent) of all online purchases, but in Europe, the figure was less than 10 percent. Of course, this makes Amazon an important player, but not a monopolist in the European e-commerce market.

Expanding Outside of Amazon

To understand Europe's e-commerce landscape and the success of individual brands, you need to know about the markets and preferences of consumers in each country.

While Amazon tops the list of most-visited online stores in the U.K., Ireland, Germany, and France, the company doesn't even make it into the top five for booming e-commerce countries like the Netherlands, Denmark, and Sweden. There, consumers are spread out among online retailers specializing in product categories, like H&M, Zalando, or Bol. Even in the countries where Amazon leads the online market, smaller domestic retailers occupy an important place in the e-commerce landscape. In France, Amazon's competitors are Cdiscount.com and Auchan, which generated net sales of €2.33 billion and €1.4 billion, respectively, in 2019.

Opportunities for New Direct-to-Consumer Brands

Based on this global variety of platforms, there's enormous potential for the development of direct-to-consumer (D-to-C) brands and independent sales channels. Through diverse, highly personalized marketing channels, internet users can be directed from a wide variety of websites, search engines or social networks to relevant e-commerce sites where they can buy the desired product with just a few clicks. This allows country-specific differences in internet usage behavior to be taken into account and performance marketing measures to be easily adapted.

D-to-C eliminates the need for a middleman, and this is where the advantages lie. Customers enter into a direct trading relationship with the manufacturer of their products. Customer service is provided directly through the vendor, meaning problems and inquiries can be addressed and resolved immediately. Users' needs can also be identified directly by evaluating or analyzing their shopping behavior. This enables brands to move agilely in different markets and address local cultural differences. Only brands that understand the conditions in the individual markets and respond to them will be successful with their expansion.

Who is Building the Biggest House of Brands?

It's clear that people around the world respond to brands that aren't limited to a single platform. This has always been the case in the history of retail, and the fact that it continues to be accurate, even in the digital era, isn't surprising.

Today, we see large retail groups like Unilever, Procter & Gamble, and Whirlpool bringing together the world's biggest consumer brands under their umbrella, making them some of the most successful companies in the world. This "House of Brands" business model is what will allow large, digital retail groups to keep growing and playing on the global field alongside Amazon. The question is, who will build the most successful house of brands, and which brands will be able to prove themselves and scale outside of their existing channels and domestic markets?

It's not about who can unite the most brands under their roof, but who can scale the brands the fastest and most effectively. The next Unilever, Procter & Gamble, or Whirlpool won't be a classic house of brands, but rather a launchpad that gives brands the push and guidance they need to expand and grow.

The next big players will emerge where promising brands meet companies that can offer the best method of scaling with technology and experience. One thing is clear: the Game of Brands has only just begun.

Peter Chaljawski is the founder and CEO of Berlin Brands Group, a vertical commerce company.