An Amazonian deal

Digital consultant Paul Boudet discusses Amazon Australia: 2019 and beyond.

I grew up in a town with a few corner shops and two local supermarkets. Despite living in a rural area, you easily found all the groceries you needed! But one day, a large supermarket opened on the outskirts of our town: it carried more groceries, had a more ‘modern’ look, fast cashier lanes, a help desk and a small café, creating a different shopping experience – more choice, faster checkout and a coffee break zone.

Fast forward two years later, the corner shops were still popular – they carried more local products than the large supermarket. One of the local supermarkets was still open, introduced fast cashier lanes and a help desk, and it was closer to home. The other local supermarket though, didn’t really introduce anything new and went out of business.

It’s been now 18 months Amazon launched its retail offering in Australia. Over this period, we’ve seen countless ‘dramatic’ headlines about its arrival and impact on the Australian retail industry.

While this was happening, the e-commerce behemoth silently asserted itself in the Aussie landscape, doubling its number of full-time employees, building distribution centres in Sydney and Melbourne, introducing Amazon Prime, expanding into pantry food and drinks, launched Amazon Advertising, etc.

Today Amazon Australia carries +100 million products (started with 7.5 million) across 20 categories.

A few searches on the marketplace will confirm the early days in its product offering: the absence of flagship brands in most categories, the lack of product reviews, the duplication of product listings, etc.

However, that’s expected from a new marketplace at the mercy of its seller base uploading thousands of products every day. A base so far doubling every four months, according to Marketplace Pulse, with now more than 25,000 sellers registered. We can only expect the product offering to naturally improve over time (for the ones who did pay attention, you’ll notice it’s better than what it was 12 months ago.)

But what does it mean for the Australian retail landscape?
It will definitely change it as we can expect Amazon to take a bigger portion of the market every year: it recorded a revenue of $17 million in 2017, $292 million in 2018 with serious backing from its parent company in the US ($77 million cash injection last year) and large amounts invested in its marketing efforts ($68 million in 2018 compared to $1.7 million in 2017). Consulting firm Bain & Company predicts could become Australia’s sixth largest retailer by 2022 and ahead of the likes of Harvey Norman, Target, David Jones, Myer, and Kmart.

But Amazon Australia is also a great opportunity for brands who see a fit selling in the marketplace: in addition to being a new, growing source of orders, selling on Amazon indirectly build brand awareness and can drive repeat customers directly to their stores, online and physical.

Thanks to the introduction of FBA and the instant product demand brought by a marketplace, we’ll see new Australian brands appearing first on, then, if successful, opening their own online and physical stores.

It’s also great news for consumers. Having lived in the USA & UK, I personally experienced Amazon at its best: great product range, relevant recommendations, unbeatable prices, same-day delivery, easy returns, etc.

We can imagine a future where Amazon Australia gives us a similar experience and more importantly, stimulates the Australian retail industry to raise the bar in technology, service and delivery, as competition often drives innovation.

So the future of the Australian retail landscape is bright for consumers and for the brands who are willing to put in the work to deliver great shopping experiences and stellar customer services to meet growing consumer expectations in a more than evercompetitive landscape!

eStar is one of Australasia’s leading eCommerce solutions companies. eStar clients include David Jones, Country Road Group, Freedom Furniture, Briscoes, Bed Bath and Beyond and many more.

An Amazonian deal