AMAZON IS COMING, SO GET BUSY – INVEST IN KNOWING YOUR CUSTOMERS, UP YOUR GAME

When it comes to Amazon’s entry to Australian retail, there are many and varied opinions on the likely extent of its impact. No one knows for sure what will ensue. Will Amazon disrupt Australian retail? And if it does, to what degree? Or will it resort to a competitive fight with retailers in this diverse market Down Under?

Australian retailers believe the U.S. e-tail giant will find it difficult to replicate its business model in Australia’s retail environment, with its offer of low wages, demanding work conditions, and overnight delivery. Others debate that Amazon will present a data-driven and customer-centric strategy for its foray into the market.

Some are even drawing a parallel with Canada’s response to Amazon’s entry. Since 2011, Amazon has opened a fulfilment centre every year in Canada. However, as of May 2016, only 4% of Canada’s primary household shoppers were Prime members as compared to 37% in the US. Low population density paired with hard-to-get-to regions, makes logistics costlier and more complex compared to US and UK. Amazon’s entry may not have forced Canadian retailers out of business as in the US, but it certainly rattled them, with many investing in online shopping platforms.

While the impact on Australia is yet to unfold, for Amazon the move is largely a replication of its existing platform to a new market: an added footprint in its mission to be earth’s most customer-centric company. Irrespective of its share of the Australian retail market, one thing is for certain. Its entry will push traditional Australian retailers to up their game. Read more

Mihir Kittur - Dynamic Business - 28 July 2017