Amazon: Australia’s not ready

Australian retailers are completely unprepared for the arrival of Amazon, new data show

Digital marketing agency DataSauce – which was founded by the former head of digital at Catch of the Day, Tzvi Balbin – conducted an online survey looking at understanding of Amazon’s offer, including its premium services.

The retail giant is currently setting up in Australia, hiring more than 100 people in Sydney for roles in logistics, IT and security; DataSauce says its local warehousing will allow it to “dramatically” expand the kinds of products it can deliver.

The survey found that while 90% are aware that Amazon is on its way, only half (48%) knew about the Amazon Prime offering.

This is a premium service that offers shoppers free and fast shipping options, charging only an annual fee of $100.

About 60 million US households have signed up for the Amazon Prime service.

Amazon also offers a service called Amazon Now, which promises to deliver products such as groceries in under an hour. Both of these premium services have the potential to blindside the efforts of Australian retailers, DataSauce warns.

“The Amazon Prime offering is more advanced than almost any of the services offered by retailers in Australia,” Tzvi Balbin says.

“This means that even those who have upped the ante with quicker delivery times may still struggle to compete with this service and match the level of investment.”

The online survey also found that 71.3% of respondents shop online, meaning they’re prime candidates to want to use the Amazon Prime service.

It also found that Paypal remains a favourite payment option for respondents, despite new layers ZipMoney and Afterpay claiming to be dominant market players.

Mr Balbin trialled the Amazon Prime service a number of times on a recent trip to the US, and says the sheer ease and speed of the service has the potential to derail a number of Australian retailers.

“Amazon Prime in particular could be a game-changer in the Australian retail space. For many retailers, trying to compete with one or two day delivery and free shipping may prove too much for them to be able to compete,” he says.

Mr Balbin advised Australian retailers not to try and beat Amazon at their own game and their deep pockets, saying retailers need to instead focus on the one thing that truly sets them apart from their competition.

“You’ve also got to look at how omni-channel your business is, so the shopping experience is seamless.

“A number of physical retail outlets are optimising their customer experience so it’s seamless offline and online. It’s not enough to have in store pickup and claim to provide a true omni-channel experience,” he says.

“At the end of the day, to beat Amazon you need to focus on their weaknesses. Niche down, build and nurture a fanatical community, tell a story and leverage loyalty. After all, Amazon is a one size fits all.”

Last month it was hinted that Amazon could be making moves to enter the US’ pharmaceutical market, possibly targeting uninsured Americans and/or those who have high insurance deductibles and so pay high cash prices for their prescription medicines.

Due to Australia’s pharmacy ownership rules, Amazon cannot enter the pharmaceuticals space in this country, but the Pharmacy Guild says it is keeping an eye on Amazon’s activities.

“We will be watching Amazon’s arrival with interest, but have no information as yet on their approach to selling medicines in the Australian market,” a Guild spokesperson told the AJP earlier this year.

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