How will Amazon’s entry into the Australian market affect the retail industry?

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How will Amazon's entry into the Australian market affect the retail industry?

Zach Tibbs - Amazon Growth Expert, Goliath

“Amazon’s impact on Australian retailers will be dependent on how each retailer chooses to embrace its entrance. What we do know is that the success of Amazon’s model is proven; it creates a huge opportunity for companies that understand and choose to leverage it. However, it can burden those that ignore its authority in e-commerce.

“Amazon isn’t like every other platform, and it needs to be treated as such. To ensure a positive impact, Australian companies need to educate themselves on how Amazon works, and be prepared with a strategy of how they will approach the launch.”

“The Australian retail sector is likely to be disrupted significantly by Amazon’s entry. The online retailing giant will offer competitive pricing across a range of products, and use the latest technology and consumer analytics methods. Amazon’s entry will increase competition across a range of retailing industries.

“Amazon’s entry will be particularly significant for electronics, clothing, sporting goods and toys retailers, where price and delivery times are key competitive factors. Amazon’s entry will be less felt in the supermarkets industry, where Coles and Woolworths benefit from having a wide network of stores, and consumers are less inclined to purchase groceries online.”

Nathan Cloutman Senior Industry Analyst, IBISWorld
Dr Shaun Ryan Chief Innovation Officer, Executive Director and co-founder, SLI Systems

“Australian retailers are rightly concerned by the imminent arrival of Amazon. Amazon has dominated other markets because of its ease of use, incentives such as Prime membership, and its breadth of products, which mean consumers often start shopping at Amazon.

“To survive, Australian retailers need to leverage the relationships they have with their clients and the assets they have that Amazon doesn’t, such as physical stores or unique products. SLI’s quarterly global e-commerce survey shows retailers are responding by investing in new technology, with a focus on enhancing the customer experience. The net results should be a better shopping experience for the Australian consumer.”

“Amazon has the largest website in the world – so its influence on the Australian retail landscape, especially for online sellers, will certainly be disruptive.

“Amazon’s arrival will be largely felt by the big online players, which will lessen the impact for most small business retailers, at least in the early years. However, small online retailers have been experiencing significant growth of more than 22 per cent year on year recently, and with online sales growing at a faster rate than bricks-and-mortar sales, this will see pressure put on small online retailers to hold their market share against the incoming giant.

“Australian retailers need to embrace the challenge – to better themselves – and become faster, easier (not always cheaper) and delight their customers with superior customer service. You have a chance to win, but you’d better get started now.”

Jenn Donovan Founder and CEO, Inspiring Retail
Ray Ridgeway Managing Director, World First Australia

Hundreds of Australians are already selling their products on Amazon’s global marketplace. The retail giant provides an important stepping stone for small-to-large-scale businesses by allowing them to leverage the brand’s hugely popular online platform for their own purposes.

“We should therefore see a significant migration of Australian retailers of all sizes to Amazon, and eventually we’ll see international sole traders and SMEs enter the Australian retail market.

“Large retailers will be forced to become more competitive on pricing, innovate their customer service, and improve their product offering. It’ll be great news for the consumer.”

“In 2016, the online grocery channel represented less than three per cent of Australia’s grocery market, but it is undoubtedly growing. Amazon will keep consumers engaged by launching up to 120,000 products with savings from 15 per cent to 30 per cent against their competitors. Additionally, Amazon plans to offer shoppers a personalised experience … imagine walking into your local store to find half your basket already filled with your favourite products.

“However, Amazon will encounter many challenges associated with entering the Australian market and making a profit. For example, population density in other countries is much higher than Australia’s, so it may be challenging for Amazon to achieve its desired level of reach. This coupled with slow internet speeds could make it difficult for consumers to shift their supermarket buying habits.

“Time will tell if Amazon’s new technology- driven approach will capture Australian consumers, in turn paving the way for things like automated restocking based on what’s in your fridge in the future.”

Rod Arenas General Manager Commercial, FIAL

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