Amazon takes on Australia

What does this mean for Australian Retailers?

By 2021 Amazon is expected to make up 50% of the entire US ecommerce sector. It’s also just confirmed reports that its first Australian fulfilment centre will be in Melbourne, which will stock hundreds of thousands of products. Australian Director of Operations, Robert Bruce, announced “This is just the start”. 

With Amazon lurching forward at record speed, how can Australian retailers avoid losing their market share? 

Amazon is moving in – fast.

The all-devouring Amazon is set to take a $12 billion chunk out of the Australian retail sector within the next decade. That means a profound impact is imminent – particularly where department stores are concerned as, along with eBay, they are expected to be hit the hardest. 

However, that doesn’t mean other retail outlets are out of the woods as it becomes all too clear that Amazon will attempt to out-bid any sector where price is the key motivator behind a purchase decision. Electronics, apparel and sporting goods are all expected to be affected. Yet, in terms of ecommerce, Amazon is set to compete on range and delivery (rather than price) because Australian retail prices are already similar to those in the US. That means that current Aussie service-based offerings are now at risk of being outdone – and despite this, a price war is still predicted to break out! 

The Commonwealth Bank Retail Insights Report released in March this year announced that 49% of AU retailers said they’re not fazed by Amazon’s plans to enter the local market. But the reality is Amazon’s got money to burn and is more than comfortable with making large upfront investments. Since only 14% of Australian retailers have plans in place to compete with global brands, could this be seen as being overly confident? 

What Amazon’s got that you haven’t.

When you think of ecommerce you conjure up images of Amazon or eBay. That’s because they’ve been setting the standard worldwide for years now. In fact, they practically invented the ecommerce we know today. 

Aside from their long history of dominance, their platforms are also innovative and highly customer or buyer centric. This is ultimately where their prowess lies along with delivering a large product range at great prices. But there’s more to it than that. Here are a few other elements that make Amazon particularly threatening:

  • Amazon Marketplace: An unrivalled source of secure income.
  • Amazon’s shopping app: Encourages mobile ecommerce. 
  • Affiliate Programme: Allows businesses to earn income by advertising Amazon products and its online retailers. 
  • E-business Self-publishing Platform: Designed to help writers sell their own books, movies and music online.
  • Online Order Fulfilment Programme: It’s highly sophisticated, making it attractive to online retailers.

Can anyone else spot an opportunity here?

It’s not all good news for Amazon. There are many challenges that await them in Australia. Firstly, it’s a nation almost as large as the US but sparsely populated, which will drive up delivery costs. Though not yet confirmed, it is being speculated whether Amazon Prime shopping club will even launch nationwide because delivery within 48 hours in Australia is considered out of reach. Secondly, wages in Australia are higher than in most developed countries, which could undermine their high-volume, low margin business model. 

But we can’t deny it. Amazon moving in on Australia will cause retailers a fair few headaches, however for the opportunists among us, a slight shift in approach could create new opportunities to generate fresh waves of business. Let’s take a look:

1. Buddy up
There will always be strength in numbers. Co-operation and even collaboration between Australian retailers is an opportunity to outplay Amazon. 

2. Get intimate 
Does one size really fit all? By embracing innovation and personalisation you’ll soon find your business gaining the competitive edge. Convenience and competitive pricing is no longer good enough so it’s time to think outside the box or try going niche. 

3. Deliver flexibility 
In an economy where impatience and limited attention spans are the key drivers for change, it’s time to provide customers with exactly what they expect – flexible online delivery options and one-click buying. By simplifying the checkout process, you will capture the trust and dependence of your customer. They want an easy life. Be the one to give it to them and they’ll keep coming back.

4. Nurture loyalty
Cross-channel reward programmes and gift cards are more important than ever to build up customer loyalty online. Customers want to feel valued and a small gesture of appreciation will go a long way in ensuring they stick around.

Be part of the solution with Solutionists.

Sometimes, the greatest inconveniences bring about the greatest changes. At Solutionists, we offer fully integrated, customer-centric and innovative ecommerce platforms that are designed around your specific business goals. Let’s get excited and work together to carve out alternative pathways.

In order to help Australian retailers keep – and grow – their market share we’ve developed a unique offering that includes:

  • Strategic integration with Amazon marketplace
  • Creation of personalised yet customer-centric online shopping experiences that will readily stand up and compete with Amazon
  • Support for multi-freight providers to help them offer flexible delivery options
  • Conversion rate optimised checkout experience 
  • Seamless integration with ERP, CRM and POS systems to support in-store loyalty, gift card redemption online etc.

So, if you’re ready to take on Amazon, we’re ready to help you! All you have to do is get in touch by giving us a call. 

Auckland +64 9 630 3074        Sydney +61 2 8355 7014         Melbourne +61 3 8579 1330


author:

Sina Braeuning

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