Online retailer Amazon is sick of its long distance relationship with Aus and will be crossing the sea in September to find a home in Australia! No, you didn’t mishear me, Amazon Australia is coming!
‘Yeah so, what’s the big deal?’ you ask, I mean there has been plenty international businesses that have Australia in their global expansion sights? Well, when you offer the low prices, vast selection and fast delivery that Amazon is best known for then, of course, you could have some homegrown businesses worried.
Well, you’d think so anyway? The Commonwealth Bank Retail Insights Report found that a mere 11 per cent of Australian retailers see Amazon as a significant threat to their business, with 49 per cent reporting they were ‘unfazed’ and another 35 per cent completely unaware Amazon was even coming to Australia!
I don’t mean to panic anyone but here are some quick facts about Amazon in America
- Amazon sales account for one in every two dollars spent via e-commerce in the US
- Amazon is the fourth most used service on mobile among Americans, falling behind Google, Facebook and Yahoo
- 20% of American consumers are members of Amazon Prime
So What Can You Expect from Amazon Australia?
Cheaper Products
This is great news for consumers, not so much for fellow online retailers. Amazon founder Jeff Bezo once quoted that ‘Your margin is our opportunity’, a quote that will likely become a company mantra while developing a name in Australia. Amazon is reportedly due to perform pre-launch price audits to undercut local prices by 30%. You can expect this to have a snowball affect on other mass retailers as they drop prices in order to stay competitive. One could only hope that cheaper products won’t equal poorer quality.
An Innovative Shopping Experience
Amazon has gone to great lengths in America to innovate their shopping experience, both online and in-store. In order to make an impact from the get-go, they are likely to do the same thing in Aus. When it comes to innovation Amazon are exploring in many aspects in their business, they delivered the first package my autonomous drone, created the first zero-checkout supermarket and offer 2-hour free delivery on Amazon Prime products. I would expect innovation to be the driving force behind the Amazon’s expansion and wouldn’t be surprised if we see them trialing some completely new ideas during the businesses launching stage.
Emerging Competitor Strategies
The dividing factor for many Australian retailers will be whether they are actually prepared for Amazon’s expansion, or are choosing to remain blissfully ignorant of the impact it will have on their business. The matter of the fact is that no one has the power to stop them disrupting the market, the best they can do is prepare. As a consumer, I am actually quite excited for the waves Amazon is sure to generate. There are many Australian retailers who have become too comfortable with their grasp of the market and are in dire need of a
There are many Australian retailers who have become too comfortable with their grasp of the market and are in dire need of a wake-up call. Innovation drives change and for many retailers, a little healthy competition is exactly what they need. I think we can expect to see some drastic change in the lead-up to September with Australian retailers bracing themselves for Amazon’s touch-down.
How to Prepare
Homegrown Pride
One thing you can rely on us Aussies for is homegrown loyalty, everything from our fresh produce to furniture. Amazon will offer very competitive prices that is a definite, one thing they don’t have and won’t ever have, is the Australian made seal of approval. Australians are loyal to companies that source their products locally, are a generational family-owned business or offer a value proposition that is uniquely Australian.
This is not to say we won’t compromise this value for economic purposes, the success of Aldi supermarkets is proof of this. But if you offer the perfect combo of value for money, quality and Australian products there is no reason you will lose customers to the international big guns. Think about what makes your business uniquely Australian. Do you support any Australian charities or organisations? Are you a generational business? Do you stock work by Australian artists or designers?
Bricks and Mortar
I can’t make any promises about the future, but to begin with anyway, Amazon will operate as a solely online store that packs and sends from large warehouses. So if you’re a store that operates both online and from a bricks and mortar it’s important to consider the benefits of a physical store and play to your strengths. Offer customers in-store only promotions that are to die for! I MEAN SIMPLY TO DIE FOR! The physical store isn’t dead, not yet anyway!
Know Your Niche
If there’s one thing Amazon doesn’t have, it’s a niche. Amazon goes for the blanket effect when it comes to product selection and range. They have products that cater to every single niche from coin collectors to gamer-nerds, but are they are one-stop-shop for a particular niche? Nope!
Niche retail is on the rise, IBIS World analysts predict that niche retail industries will outperform the mass merchant retail industry in the next 5 years. So if you don’t know your niche, it’s time to get real familiar with them! The greatest weakness of a mass merchant is often their inability to completely meet the needs of a specific customer group. It is very important, now, more so than ever, to know your niche and cater to them specifically. Don’t try and do it all when you can do one thing extremely well instead.
Customers are loyal to retailers they know will stock a range of products that are perfect for them so they are not forced to shop around and pay extra in separate shipping costs.
I’m sorry if this blog sounds like I am preparing you for World War 3, trust me, I don’t want to scare you I just want to press the importance of being aware and prepared. Amazon has long challenged American retailers and the ones that found their edge survived. So why can’t you? A bit of healthy competition is good for business. So take a deep breath and you’ll be fine!