The insight: Recent announcements from Amazon signal its intention to lean on international markets to power growth.

• Amazon expects to quadruple ecommerce exports from India over the next five years to $80 billion.
• The company will invest over EUR 2.4 billion ($2.8 billion) in Belgium and the Netherlands over the next three years to support both its retail and AWS businesses.
• The retailer also recently introduced 15-minute delivery in the United Arab Emirates, in addition to a two-hour delivery service.

The strategy: While international revenues represent a growing share of Amazon’s business, there is plenty of room for expansion. For example, the retailer has a strong position in the UK and Germany but is less popular in the Netherlands.

The biggest limiting factor is logistics: The retailer’s fulfillment network in many of its international markets is considerably less efficient than the one it has built in the US. This makes it difficult to deliver products speedily, increase selection, and attract Prime sign-ups.

• The company’s investments in Belgium and the Netherlands should help address those issues by enabling faster, more cost-effective order fulfillment. In turn, that is expected to encourage more sellers to join the marketplace (increasing product selection) and boost the value of a Prime membership.
• Likewise, Amazon’s ultra-fast delivery offering in the UAE is made possible by an investment in micro-fulfillment centers throughout the country, positioning the retailer to take advantage of consumers’ enthusiasm for online shopping.

Our take: To achieve international success, Amazon must continue strengthening its local logistics network. Expanding fulfillment capabilities allows it to offer its trademark delivery speed, enabling it to appeal to more shoppers. That makes it a more valuable channel for external vendors, helping to increase product selection (and revenues from third-party seller services) and keep the company’s flywheel turning.