How did an online reseller with almost no visible physical footprint grow into the second most valuable company in the world? And now that Amazon has been operating in Australia for 6 months, how has it affected Aussie retail?
When Amazon first hit the web in 1995, Jeff Bezos hoped for it to become the biggest bookstore in the world. 23 years later, there’s not much that Amazon doesn’t sell – except for fresh food, hence its acquisition of Whole Foods Market last year. Some experts are predicting that Amazon will become the world’s first trillion-dollar company in the next 12 months.
Amazon became such a behemoth for a multitude of reasons – but the most important by far was its unrivalled focus on fulfilment. Since Amazon’s inception, customers have learned to trust that whatever they buy, they’ll soon have it in their hot little hands.
Jeff Bezos’ famous penchant for prioritising growth over profit has meant that prices on Amazon have traditionally been largely unbeatable, and when you combine excellent pricing with excellent fulfilment, it’s no wonder that Amazon now processes millions and millions of sales every day.
Amazon Australia’s launch in December last year drew criticism due to its smaller-than-expected inventory. But 6 months later, when you take a look at its inventory, it is enormous – and it’s only going to grow.
This item does not ship to Australia
These seven words were the bane of early adopting Aussies shopping on the US & UK Amazon sites. But on Amazon Australia, you won’t see those seven words anywhere, meaning no more frustration of finding the perfect item at an amazing price, only to be told you couldn’t have it.
As soon as Aussies become habituated – like Americans and Brits have – to purchasing almost anything they need from Amazon at a great price, and that it will be delivered to them at breakneck speed, that’s when things will really heat up.
Yet, immediately after launch, Aussie retailers seem rather unfazed. And for now, Amazon’s arrival has hardly upset the applecart. In fact, according to the Australian Bureau of Statistics (ABS), in February this year Aussie retail sales rose by 0.6% to $24.45 billion in seasonally adjusted terms, doubling the median economist forecast that was looking for an increase of 0.3%. So for now, things are looking up – but for how long?
A quick search online shows me that I can buy the same inexpensive 4K Samsung TV from Harvey Norman, Bing Lee, Retravision, ebay.com.au, and now, Amazon Australia.
Surprising? Not really. But how long until I can buy a can of branded tinned tomatoes from Amazon Australia? According to UBS’s 2018 supplier survey, almost half of Australia’s food and grocery suppliers are now in talks with Amazon – so I’m guessing it won’t be long. And how long until Amazon will automatically send me top-ups of items that I buy with regular frequency, like shampoo or toothpaste?
With Amazon’s almost trillion dollars behind them, it’s hard to imagine that they won’t be able to provide equally good (if not better) fulfilment than Woolworths or Coles online, so what can bricks-and-mortar retailers do to compete?
Let’s get physical
Maybe retailers are unfazed because online shopping in Australia still represents less than 8% of total spend. But the taxi industry was sitting pretty for decades before it was ‘Ubered’ seemingly overnight.
To stand out and help keep Amazon from swallowing more and more market share, retailers must provide what Amazon cannot – an amazing, multi-sensory in-store experience.
As a customer, I want to squeeze my avocados to test if they’re ripe. I want to see my fresh fillet of salmon sitting on ice. I want to speak to the salesperson to see if they think I should get the bigger size of jeans. I want to lie down and test the comfort of a mattress before I take it home.
As retailers move toward self-checkouts, or even take a leaf from Amazon Go and do away with checkouts altogether, who will provide the human interaction in store? And without an amazing in-store experience, especially one with human interaction, why wouldn’t people just buy online?
The answer lies in turning every team member into a passionate, knowledgeable advocate of the goods they’re selling.
Last night I asked one of the service assistants at the deli in my local supermarket where the ham came from. They smiled and apologised for not knowing. Of course, I wasn’t expecting them to know. But with the juggernaut of Amazon Australia slowly waking up, they absolutely should.