So, the day has arrived (almost). Amazon is expected to launch in Australia at any moment. For months, commentators have been anticipating the arrival of this hugely successful retail behemoth and to say there are mixed feelings across the country would be an understatement of epic proportions. Some are excited (mostly consumers) while others, quite frankly, are “bricking it” (mostly Australian retailers and their investors).
Unfortunately, though, it’s going to take some time yet before we can truly understand what Amazon’s arrival means for Australia. Will it destroy our retail industry as we know it, will it improve it, or will Amazon flop – challenged by Australia’s untested market and expansive continent. Who knows – but let’s take a look at some of the most compelling and conflicting arguments being bandied about.
Total annihilation?
Granted it sounds extreme but some people really are painting a very dark picture for the future of some of Australia’s retail stalwarts. It’s been reported that Amazon will slash one-third off JB Hi-Fi’s earnings while it will cut Myer’s in half! With global scale, superior logistics expertise, and no physical stores to operate, it’s predicted that Amazon will steam in and win the battle of convenience with cheaper prices, choice, and faster delivery times. And why would smaller online retailers even bother?
The game-changer Australia needs
Let’s move on from all that negativity and look at the bright side. Rather than rolling over and getting destroyed by Amazon, perhaps Australia’s existing retailers will learn from Amazon and up their game. In fact, we can already see the positive “Amazon effect” taking shape. Take Australia Post for example. They’ve recently launched a new subscription delivery service called Shipster.
In an attempt to compete with Amazon’s vast range of choice, Shipster combats mounting delivery charges when shopping online for multiple products. The service does this by offering consumers unlimited free deliveries when ordering from over 40 Australian retailers. Then there’s Woolworths supermarkets. They’ve vowed to ramp up their online deliveries and click and collect services in direct response to Amazon’s arrival.
So, here’s the thing; consumers are demanding more choice and convenience than ever before – and they sure will go wherever they find it. So, this isn’t about consumers’ blind loyalty to a global retailer they don’t yet know – it’s about existing retailers smartening up their act to stay in the game.
Absolutely nothing will happen
After all the noise and excitement there is, or course, an outside chance Amazon will drop like a lead balloon. While the retailer has enjoyed massive success in the US and UK, for example, there could be one fundamental reason for this success that puts Australia in a category of its own: Both of these tried and tested markets are incredibly densely populated. Australia is not. Australia’s vast and sparsely populated continent could make it impossible to replicate the service it has achieved overseas which relies upon local fulfillment centres pumping out fast deliveries. So far, Amazon has one fulfillment centre in Melbourne to service the whole of Australia. But give them a chance!
So – let’s watch this space.