Switzerland and Sweden have a couple of things in common. First, the names seem to be similar enough in many languages so that mixing up both countries is a very common phenomenon. Second, there are certain commonalities in regards to people’s mentality, for example a tendency to avoid conflict (for me, as a German living in Sweden and working with Swiss companies, there has been and still is a lot to learn). Third, in neither of the two countries, Amazon is operating its online store. This is in so far remarkable as I know that many people in Amazon’s core markets cannot even imagine anymore how life would be without the e-commerce giant. The reality from a customer perspective: It’s a bit inconvenient.
For the Swiss, Amazon.ch forwards directly to Amazon.de, offers free standard shipping above a certain order value, and obviously there’s no language barrier navigating the site. However, if you order from Switzerland which is not part of the European Union, you might end up having to pay additional customs charges in order to be able to pickup your package. In Sweden and the other Nordic countries, people are also forced to order from Amazon sites in other European countries (or the U.S.). Local versions in Nordic languages don’t exist. In Sweden, amazon.se is only a parked domain.
In the light of Amazon’s ambitious smart home platform Alexa (which one also might call an “operating system”), the absence of Amazon’s store from various of the smaller countries in Europe leads to a couple of interesting questions.
It’s not hard to guess that Amazon CEO Jeff Bezos wants Alexa to become the center of people’s homes. Thanks to the tight integration with Amazon’s online store and Amazon Prime services, in its core markets such as the US, Germany and the UK, the Seattle-based juggernaut can rely heavily on cross-promotion and the promise of increased customer convenience through integration, leveraging its ubiquity in the retail and digital entertainment segment to sell Echo (and Alexa). But in countries where Amazon is not even operating a local store, convincing people to get Echo or another Alexa-powered smart speaker (such as Lenovo’s) is a much tougher deal. What’s the point if you cannot benefit from one of its core use cases. Also, in these countries, Amazon often does not even capture people’s share of mind in everyday life. So reaching them will require costly marketing campaigns and could turn out to be quite an uphill battle.
So here are the questions which Amazon’s Alexa push brings up for me:
- Will Amazon or Amazon partners put any effort (such as language localization – Alexa currently only is available with English or German language) or money into promoting and supporting Echo and/or Alexa in countries in which Amazon does not operate a store and only has a tiny market share?
- Will Amazon actively start to work on increasing its e-commerce market share in these countries even without a local store? There are signs that this is happening: Since at some point in 2016, orders on Amazon.de coming from Sweden, Denmark, Finland, the Czech Republic, Hungary and Slovakia are also eligible for free standard shipping on qualifying orders over 39 Euro. A fact which I discovered only now, while writing this piece. I have doubts that most Swedes are aware of this.
- If Amazon & partners won’t do much to promote Echo and Alexa-powered devices in countries without a local Amazon store, who will fill that gap? There would be an opportunity for a competitor to quickly capture that market and to create market entry barriers for Amazon. It could be Google, Apple or Microsoft. Or a local competitor maybe? The Swiss online retailer Brack.ch took inspiration from Amazon’s Dash button and released its own “Order Button” to let people make quick purchases by pressing one physical button. However, creating a personal assistant that you can talk to is a different kind of biest. A lot of excellence in the field of AI is required. It’s not guaranteed that startups could come up with a solution en par with those of Amazon, Apple, Google or Microsoft.
- Will Amazon launch its retail presence in many more countries, now that it opens itself up to a whole universe of new market opportunities through Alexa?
In the end, the key question waiting to be answered is this: Does Amazon consider Alexa to be a stand-alone platform intended for an active global market roll-out or will it, at least for now, be primarily positioned as a tool to drive sales and strengthen customer lock-in for Amazon’s retail and digital content division in Amazon’s retail markets?
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