08 Sep Are retailers fearful of Amazon’s Australia launch?
In case you have been living under a rock for the past 20-odd years, you will be well-aware of the ecommerce giant Amazon. In fact, it is the largest online retailer by market share and sales in the world.
The question is, are Australian retailers fearful for the impending launch of Amazon in Australia; and if not, why not? They very well should be.
Perhaps I am more concerned than others, growing up in the UK, where if you couldn’t get it from Amazon; it pretty much didn’t exist. Amazon have been using clever tactics to get users on board ever since they announced their Aussie launch in 2016. I’ve already signed up and am receiving email updates; I only wanted to buy an Audio book.
There are of course question-marks around what the launch will look like in reality. Luckily for some it has been pushed back almost a year until late 2018, instead of the original date of September this year. Will they undercut the main electrical goods retailers? How will the logistics work? Will deliveries be shorter? Will they pay all of the Australian taxes? One thing is for sure, this isn’t going to be a hasty move; and no doubt they’ll put their best foot forward for all of the above.
Those who are actually concerned about the launch, which was revealed to be only 14% of retailers in a survey conducted by Commonwealth Bank; what are they doing to retain their customers?
I recently had a chat with the Head of Marketing for one of the leading Australian electronics giants, and their tactic is all about retention. Unable to undercut Amazon on all product prices or compete with their technical expertise, keeping loyal customers happy is their chosen lifeline. This can be achieved through loyalty discounts, free delivery offers and exclusive deals for returning customers. Take note from startups like Rewardle who are killing it in the customer loyalty space. This I suspect will be a successful method, at least for a while.
When push comes to shove, all customers really want is their chosen product, at the right price, in their hands as soon as humanly possible, right? As such it is a no-brainer that cutting delivery costs could and should be an option for vulnerable retailers. However, it might be worth noting that last year Amazon charged its customers USD $4bn for deliveries that cost them USD $8bn. With that in mind, retailers should be prepared to invest. Myer and David Jones see this as their biggest challenge to profitability.
Like Australian organisations across the board, retailers too are beginning to realise the value in investing in CX (Customer Experience). New and innovative digital products, for example Apple’s new iBeacon app, gives shoppers personalised messages while they’re in store, as well as micro location services. For me, technological advancements to the customers in-store experience is one method that bricks-and-mortar retailers can use to compete with overwhelmingly powerful pure-play retailers like Amazon. 94% of sales in Australia are in store as opposed to online (compared to 72% in the UK) – therefore there must be something to be said about improving in-store customer service and switching the mindset to improving the customer journey in its entirety (store; email; online; returns, etc).
There is always a silver lining. Amazon is one of the largest employers in the United States; which means thousands more jobs for Australians are set to come out of the launch. Interestingly, digital marketing agencies are predicted to benefit from the ecommerce-giant’s’ presence in the Southern Hemisphere thanks to a goldmine of opportunities for internet marketing. Although the situation look does appear bleak for some retailers, experts don’t think there will be much to be seen in the first five years (which means ample time to get fearful).