Amazon plans to bypass European distributors and buy products directly from brands in 2024; Amazon's international unit tripled its loss YoY to $7.75B in 2022
Context & Ripple Effects
Amazon's European operation has run on a paper-loss model for years: filings showed the Luxembourg-based unit losing €1.2B in 2021 on €51.3B in sales, paying no income tax and collecting credits — the same pattern as its €44B of European sales in 2020 with another €1.2B loss. Meanwhile the international segment's loss tripled to $7.75B in 2022, and the Q4 2022 report showed net income down 98% company-wide, putting cost discipline at the center of the agenda.
Buying directly from brands instead of through European distributors is the margin lever: wholesale markups disappear into Amazon's own first-party retail, and Q4 2023 showed why the region matters — international sales grew 17% YoY to $40.2B even while the unit bleeds.
First-order effects
- European distributors lose their largest wholesale customer as Amazon shifts to direct brand purchases for 2024, cutting them out of the supply chain they currently intermediate.
- The international unit, whose loss tripled YoY to $7.75B in 2022, gains a direct path to wider retail margins without raising consumer prices — the same playbook as Amazon's price increases on first-party devices to offset component costs.
Second-order effects
- Distributors must consolidate or reposition toward services Amazon does not internalize, since the platform's scale lets it negotiate brand terms they cannot match.
- Third-party sellers get a signal about Amazon's direction: the company was already under scrutiny over boosting its own brands when it reported US sellers averaging $200K in sales, and expanding first-party buying deepens the competition between Amazon's inventory and its marketplace.
Third-order effects
- If direct buying lifts European margins enough to erase the reported-loss pattern that produced years of no-corporate-tax filings, the Luxembourg accounting structure faces renewed regulatory and political pressure from EU member states.
- The move pushes the marketplace model toward first-party dominance: as Amazon controls more inventory directly, brands gain reach but cede pricing and customer data, reshaping who captures value in European e-commerce.
The trend: Global e-commerce platforms are converting intermediary-heavy regions into first-party retail operations as growth slows and unprofitable segments come under internal cost pressure.