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Summary
- Amazon acquires Australian e-commerce firm Selz to fend-off competitions from rivals.
- The company is now focusing on small online traders to extend its market dominance.
- Fast-growing Shopify poses as one of the biggest challengers to Amazon.
Global e-commerce giant Amazon Inc. has acquired the Australian company Selz at an unspecified amount as it gets ready for competition from another rising retailer, Canada’s Shopify Inc.
Amazon has not revealed the deal price but said the acquisition would help maintain its market dominance in Australia and elsewhere. Shopify’s rising popularity among small vendors in Canada and the US and other markets has posed a significant threat to Amazon.
The Selz purchase suggests that Amazon has no plans to cede grounds to Shopify. The Seattle-based company said that Selz’s merchants and their customers would continue to enjoy the same relationship as they were before.
Since its founding in 2013, Selz grew by leaps and bounds. Its online platform offers a marketplace for small-and-medium-size companies to do business. The company has a headcount of around 30 people, and it was once backed by firms like Macdoch Venture and Adcock Private Equity.
In a bid to counter Shopify’s advances, Amazon had last year created a team to help replicate some of its business operations, especially their model to target small businesses.
Pic Credit: Pixabay.
Blessing In Disguise
The coronavirus pandemic had come as a blessing in disguise for the e-commerce companies. Online sales jumped as people couldn’t buy at the shops due to COVID restrictions.
Even traditional brick-and-mortar stores had beefed up their online operations to remain profitable. According to some estimates, the e-commerce segment rose by nearly 50 percent in 2020.
Furthermore, Shopify’s spectacular $5 billion sales during the Black Friday weekend has only increased the urgency for Amazon to recalibrate its strategies.
In addition, the market capitalization of the Canadian entity had risen to around $177 billion as its stocks tripled in value during the period.
A Formidable Challenge
Another concern for Amazon was the desertion of its vendors from its platform. Many of its vendors had joined Shopify which charges much less per transaction. In comparison to Amazon’s 30 percent cut per transaction, Shopify charges only 2.9 percent plus 30 cents, according to market observers.
All these factors together pose a formidable challenge for the grand old daddy of e-commerce.
