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Why Amazon is the greatest opportunity in Australian retail

Amazon is more of an opportunity than a threat for Aussie retailers, writes Brenton Gill. 

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Sure to strike fear into the heart of any retailer or e-commerce player, Amazon has its sights firmly set on Australia and will start to make its presence noticeably felt in the next 12 to 24 months. In the ‘lull before the storm’, retailers who are not prepared to fight the e-commerce giant need to defend themselves against the effects of upcoming disruption.

Amazon is currently acting somewhat like a trojan horse and without fully knowing Amazon’s plans for Australia, the only way to prepare is to follow the latest announcements and preemptively
forecast future plans. In other words, Australian retailers need to understand its potential – and assess the threat.

Amidst news of robotics, automation, and drone delivery swirling in the media, one play in particular is important to note – Amazon’s move into the transportation market. Not only a means to
cut costs, it is a strategic move that will enable the retail giant to fully own the end-to-end customer experience via last mile delivery.

Although Amazon is the greatest threat to Australian retail, it is also the greatest opportunity . In a way, Amazon’s entry into Australia will force the hand of retailers to improve their operations in order to focus more on the customer. In turn, this will change business strategy to focus on optimising supply chains that enable better fulfillment, and better service standards through
fulfillment via the use of technology.

E-commerce heavyweight Catch Group shares the same sentiment, previously stating that the company reached record sales growth partly due to the arrival of Amazon. More suppliers are also cropping up, attracted by increasing customer numbers. It is important to remember that Amazon is a disruptor and a facilitator, taking away certain opportunities with one hand but enabling new opportunities with the other.

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Points of innovative difference

Like Apple, Spotify and Virgin, Amazon’s ‘customer-centric’ business model is the key to success. Innovation is driven by the needs of the people, utilising the possibilities of technology. By promoting customer centricity, Amazon is optimising every potential workflow or business process surrounding customers. Amazon starts with the customer and works backwards, as stated in one of their core values – ‘customer obsession.’

Disruption is normally viewed as creating a new market that didn’t exist before. However, it is more about identifying a new product or service that offers consumers a solution to a problem or need. Australian retailers need to pivot their business strategies around the customer, focusing on customer experience as the most crucial determining factor in overall business success.

Amazon’s Australian Potential

Amazon has a “test and learn culture,” which allows Amazon to disrupt markets around the world on a large scale. One of the main points of difference that Australia has compared with the United States, and the world, is the ability to test new models.

Perhaps the perfect combination, Amazon and Australia have a unique opportunity to create never seen before capabilities for the retail sector. As the Australian market is in a current phase of ‘uberfication,’ Australia is an ideal test bed for all new ‘uber-like’ initiatives. Although able to test new models, it is very difficult to execute new initiatives. With the arrival of Amazon, this is poised to change.

Australia has a high-density population in localised areas, which means that “fly or die” strategies can be tested quickly. Companies can either succeed or fail fast testing new strategies or innovations. Australian consumers also have a great adoption of technology, which makes testing new technology or technology enabled innovations, an ideal breeding ground for innovation. All of these factors will combine to create a ‘perfect storm’ for disruption across the Australian retail sector.

What does this mean for Australian retailers?

Possibility. As Amazon makes strides in the Australian retail space, retailers are going to need to step up their game. Amazon is a market, not a retailer. Retailers need to know and understand this in order to take advantage of new opportunities and stay competitive. This means that retailers are going to have to innovate or die, and adopt new technologies and strategies to stay in the game.

As mentioned, with Amazon now entering the last mile delivery space, retailers need to take note and implement strategies that will enable order fulfillment and customer satisfaction, in last mile and overall.

Brenton Gill is the Co-Founder and Managing Director of Radaro.