In an era where eCommerce grows with online spending marking 16.8% of total retail spending, Australia stands on the brink of significant change. The amendments to industrial relations legislation, notably the “Amazon clause,” are set to transform the landscape for retailers and consumers.

Arising from “loopholes” in the legislation, this clause enables Amazon — and the broader online home delivery sector — a wider path to replicate its global instant delivery services, once thought to be impossible due to the infrastructure of our delivery networks.

The established roles of traditional delivery and retailers may be rocked with increased penetration from a faster, cheaper, broader and more agile offering from the US retail giant if they aren’t on their toes now. US sales alone for Amazon make up 37.8% of all retail sales in the US.

Understanding the change in landscape

The legislation clarifies that delivery operations to individual homes for private consumption fall outside the stringent regulatory framework applied to the sector. This exemption will allow Amazon to operate a more efficient independent contractor delivery network, bypassing the complexities associated with the broader legislation.

Research predicts that although UK national supermarket chain Tesco’s sales will rise to $101.9 billion by 2025, grocery competitor Amazon’s will soar ahead to $103.1 billion, making it the U.K.’s #1 retailer. This highlights their growing dominance, and we can predict a similar trajectory for Australia.

With around one in seven Australian households engaging in weekly online shopping in 2023, the strengthening of delivery networks looks to amplify this, reshaping the frequency and expectations of online purchasing behaviour nationwide.

Opportunities for retailers to explore

Brands must be aware of the evolving landscape, where the following opportunities can significantly influence their growth trajectory and market position.

Speed as the new standard: Speed isn’t just an advantage; it’s becoming the expectation. A more extensive Amazon network would redefine delivery timelines, offering a competitive edge to those who can keep pace.

Visibility beyond borders: The vastness of Amazon’s Australian marketplace will only grow and offer an unparalleled platform for visibility of products. It’s not just about being seen; it’s about being discovered in a sea of competitors, opening doors to untapped customer bases.

Leveraging Amazon’s expertise: Amazon’s operational and marketing prowess is a playbook all in itself. For online retailers, it’s an opportunity to harness this expertise and see growth. Since 2011, Amazon has already invested more than A$15 billion across all its businesses in Australia, including A$5 billion in 2022 alone.

Challenges to consider

As the digital marketplace adapts to new legislative frameworks, it’s crucial for brands to acknowledge and navigate the inherent challenges.

The distance between brands and buyers: Engaging with Amazon’s delivery network introduces a mediator between retailers and their customers, potentially diluting the distinctive touch that brands have cultivated—and based their customer experience around.

The cost of competition: Operational costs and policy compliance will present a significant hurdle. It’s a balancing act between the benefits of Amazon’s reach and the financial implications of their ecosystem, for example, additional fees for warehousing stock, etc.

Adapting to Amazon’s rulebook: In Amazon’s arena, their rules govern. This adjustment will require maintaining brand integrity and embracing the operational frameworks that come with Amazon’s territory, for example, compliance with order and returns policy that might be out of step with what the brand currently offers.

Looking ahead

Australia’s industrial relations legislation marks a pivotal shift in the retail landscape. Amazon’s potential to streamline its delivery network and run more efficiently outside traditional regulatory constraints presents both a challenge and an opportunity.

For Australian retailers, we believe adaptability and strategic foresight are paramount, instead of waiting for the disruption to come, retailers must use this moment as an opportunity to use more diversified delivery options, and place convenience and instant gratification at the front of their eCommerce offerings.

Sebastian Klett is general manager of Balance Internet.