Welcome to the jungle for Amazon "predator"
With the imminent entry into Australia, Amazon has already thrown the retail market into turmoil.
A recent poll of Chamber of Commerce and Industry Queensland (CCIQ) members and analysis conducted by Swiss Investment Bank Credit Suisse predicted ‘big retailers’ like JB HiFi, Harvey Norman and Myer would be hardest hit. Myer was predicted to shed 55 per cent of its annual earnings over five years.
But the question on everyone’s lips is will Amazon thrive in Australia?
Some experts have speculated that Australians are creatures of comfort and our online spending only equals $22 billion (7 per cent of retail expenditure) -- a fraction compared to the United States or United Kingdom where Amazon has seen great success.
But with over 16 million Australians owning a smart phone and spending on average 2.8 hours per day accessing digital information, it is safe to say the chances of Australians stumbling onto the Amazon website are high.
After conducting a survey regarding who will be greatest affected, it became clear Queensland small businesses have not realised the impact Amazon will have on them.
Amazon customers have high engagement with electrical, home, sporting clothing and children’s goods. If your business trades in these goods you need to get prepared and start innovating.
The overall impact Amazon will have is hard to quantify with rumours abound as to the roll out of the services. It has been predicted Amazon will eventually have a 14 per cent market share of all online sales, totaling 1.1 percent of all Australian retail.
Amazon has been operating on Australian shores for years now and recently launched its online video service.
The blessing and curse of being off shore was that delivery was snail-paced and expensive but sheltered from the Australian tax system to a degree. Being onshore will open the door to unparalleled speed in delivery but also exposes Amazon to increased costs.
If speculation is to be believed, Amazon’s ‘click-and-brick’ approach to Australia will disrupt and revolutionise the local market.
However, sentiment seems to indicate that it is big brand retail and grocery that will be hardest hit, at least initially. Small businesses which offer unique specialised products should not feel the pinch to any detrimental effect.
With a recent cut to Australian company taxes, small businesses should reinvest in their brand and retrain staff to be experts as Amazon is an e-commerce store of ease, not assistance.
With a growing high income population and a generation of convenience and technology addicts with an exponentially increasing access to online services, small businesses should take advantage of grants offered by the Queensland government to prepare them for Amazon’s migration down south.
Though not an immediate threat, small businesses should still treat this multi-billion-dollar predator with caution and look at ways to increase brand loyalty and differentiate their products and services.