Here's why Amazon's global expansion won't come easy

Amazon would like to strengthen its global footprint, but the e-commerce giant faces roadblocks and challenges today that did not exist in the company's formative years.

It's been nearly 27 years since Jeff Bezos founded Amazon, so it's hard to remember a time when Amazon wasn't an e-commerce leviathan and Bezos one of the richest men in the world.

Today, nearly half of American online retail purchases are made via an Amazon order, so the opportunities for growth might seem limited. But the same can't be said beyond U.S. borders as the Seattle-based, online retailer continues to pursue opportunities abroad.

In its early days, Amazon could replicate its domestic offering for continued growth. Today, however, it must grapple with nationalistic politicians and tough local competitors, which make Amazon's global dominance efforts far more difficult.

Amazon global expansion faces challenges

So far, Amazon's quest for global dominance is starting at a slow pace.

The fact that the best new opportunities Amazon could find last year were the Netherlands and Sweden -- two tech-savvy countries with roughly the population of New York State and Michigan, respectively -- suggests just how challenging foreign expansion has become.

The Netherlands has shaped up to be a tough fight. Many Dutch consumers have stayed loyal to, a homegrown marketplace, according to analysts at Pattern, a global e-commerce consultancy with headquarters in Lehi, Utah. In February, drew 83.7 million mobile and desktop visits, compared to 23.6 million on, Amazon's Netherlands site.

Growth in Sweden has also been a challenge. Amazon's Swedish site,, reached 10 million visitors a month after the first few months -- which is not bad for a new site in a country with a population of 10 million -- but traffic has plateaued, said Lara Jelowicki, Pattern's international director.

"It's a more expensive market to sell in, and so sellers … are having to look at pricing before deciding which products to list," Jelowicki said.

Ironically, one of Amazon's toughest competitors in Sweden may be Amazon itself.'s cost structure means Swedish consumers can often save money and have more choices if they shop via another European Amazon storefront, Jelowicki noted.

"We have seen a similar growth pattern in other markets where Amazon has launched, such as Australia," Jelowicki said. "There will be a tipping point when it starts to ramp faster, though this may take a couple of years."

In other markets, the competition is even tougher -- formidable enough, sometimes, to hold Amazon at bay altogether. In South Korea, for example, local e-commerce leader Coupang delivers every product within 24 hours and offers 7 a.m. deliveries on some items, even when they are ordered at midnight.

Of course, a company that generates nearly $400 billion in annual revenue has options, and Amazon has made some important acquisitions internationally. For example, Amazon bought, a Middle Eastern online marketplace, for $520 million in 2017 and converted it to Amazon branding in the United Arab Emirates ( in 2019 and in Saudi Arabia ( in 2020.

Three to rule them all

But Jagdish Sheth, a corporate strategist and marketing professor at Emory University's Goizueta Business School in Atlanta, said the most significant competition between marketplaces, ultimately, won't be fights over customers but for suppliers.

"You have to have vendors who are willing to give you merchandise on your platform," Sheth said.

On that score, Amazon may have its work cut out for it: The company's two most formidable competitors -- Alibaba in China and Flipkart, an Indian company largely owned by Walmart -- are geographically much closer to many of the world's suppliers.

Such regional connections could prove quite valuable, Sheth said. He noted, for example, that India now has the largest diamond cutting industry in the world. With Flipkart's connections to those diamond cutters, Walmart should be able to sell not only to the Indian market, but to the U.S. and China.

Amazon, on the other hand, is geographically distant from both. In Sheth's view, this leaves Amazon with no choice but to compete hard against both Alibaba and Flipkart on their home turf for global expansion.

"They are becoming global players," Sheth said. "To equalize, Amazon has to go to countries where those two market exchanges are very dominant."

If, as a retailer, the company that Bezos once wanted to call "the Everything Store" has nowhere to grow, how is the global platform market likely to evolve?

Perhaps the easiest outcome to imagine is a world where three platforms dominate sales, as is often the case in a variety of sectors. Sheth, who is also co-author of The Rule of Three, argues in his book that this structure tends to be the shape of most mature markets.

Right now, Alibaba seems likely to be the most powerful player, followed by Amazon and Flipkart, in Sheth's view. But he also sees two other contenders that need to be taken into account: Reliance Retail and Shopify.

Reliance has hundreds of thousands of tiny 400 square foot to 600 square foot grocery and dry goods stores all over India, which could give them an advantage in delivery, according to Sheth. Local shops will profit from nationalist sentiment too, which makes it easier for Reliance to promote itself as a local player, despite a $15 billion investment by Facebook.

In addition to Reliance, Sheth noted that Amazon should keep an eye on Shopify, headquartered in Ottawa, Canada.

Shopify is a sort of WordPress for small business -- a commercial engine that makes it possible for even the smallest niche seller to set up a working e-commerce storefront quickly and easily. And the stores Shopify powers have grown quickly despite lacking a major Amazon-like brand.

Jelowicki of Pattern said she agrees that Shopify is likely to evolve into a serious competitor. "More than a million businesses are trading on the platform, and it is signing some interesting partnership deals to expand its reach through cooperation," she said. Shopify companies already operate in 175 countries and cleared a total of $120 million in sales in 2020 -- nearly double the 2019 take.

At first glance, it looks likely that when AWS CEO Andrew Jassy takes over as Amazon CEO after Bezos steps down from the role in August, Amazon's e-commerce platform will face increasingly tough competition as it seeks new global markets.

Then again, maybe Bezos' strategy will merely move into another phase. Another Bezos venture, space travel and shipping startup Blue Origin, recently completed its 15th consecutive successful test flight. As the company motto says, "Earth is just our starting place."

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