Online giant Amazon was expected to begin Australian operations this year, but has now said it plans to be fully operational there by the end of 2018. The postponement comes after a similar delay in Southeast Asia, where the retailer plans to challenge Alibaba’s dominance.
According to Fairfax Media, Amazon’s Australian launch will include a local version of its Prime Now program, which provides express shipping to members on products including groceries and restaurant meals. Fairfax says it will also offer online grocery delivery service Amazon Fresh.
Challenges of Amazon in Australia
Despite the delay, Amazon’s eventual arrival will no doubt have an impact on Australian retailers. A recent report from the Commonwealth Bank found that most retailers were not prepared for Amazon’s arrival. In fact, the report showed that 30% of Australian retailers are unaware that Amazon plans to enter the Australian market, and of those that are aware, only 14% have a plan in place to effectively compete.
Jerry Macey, National Manager Retail, Commonwealth Bank, said Australian retailers should consider the impact Amazon has had in other markets.
“Many Australian retailers remain unprepared for Amazon’s arrival, or may be understating the potential impact that Amazon’s presence will have in Australia,” he said. “This is somewhat concerning when you consider the impact Amazon has had on the US and other very mature retail markets.”
On a positive note, the report did find that retailers are more innovative than the average Australian business, which could help in the fight to retain market share.
“The reality is most retailers can’t effectively compete with Amazon on factors like delivery times and pricing, particularly when Amazon can sustain losses in the short term,” he explained.
“Retailers can, however, focus on enhancing specific competitive strengths, and adapting to changing market conditions is a key part of innovating to ensure your business remains relevant to customers.”
Responding to the Commonwealth Bank’s research, Paula Da Silva of retail technology provider CitiXsys, said the findings confirm what many have known for a long time now—Australian retailers must do more to combat the impact of highly-competitive international players.
“In order to remain competitive in an increasingly saturated market, it is essential that Australian retailers heed the lessons taught by international retailers to increase not only their bottom line, but customer loyalty and advocacy too,” she said.
This includes future-proofing your business by offering exceptional customer service across all touchpoints of the retail journey.
“Retailers must offer seamless, customer-first services such as click-and-collect, as well as consistent, personalised offerings of service across digital and online. Such initiatives will empower Australian retailers to retain customers in the face of sophisticated international offerings.”
By Ruth Cooper
