Our Expert Speakers on the Online Retailer’s Impending Launch into the Australian Market
The “Big A” was arguably the dominant topic of this year’s Festival of Ideas. When Inside Retail Live took place, the launch of the online retailer had not yet been officially confirmed, however, the changes it could cause were discussed in almost all of the presentations, panels and debates. Our speakers assessed the damage Amazon’s entry could do to retail, outlined what Australian retailers can learn from the online giant and suggested ways in which retail businesses can set themselves apart to survive in the ever-changing industry.
“It’s a sea change for retail globally.”
Many speakers who took to the stage at Inside Retail Live recognised that the launch of Amazon will be part of a considerable restructuring within the retail business. However, our experts shared a positive outlook, suggesting a future with Amazon in it will not be as grim as some make it out to be. Jon Bird, Managing Director of Labstore Global, made the Big A the key subject of this presentation. He started by giving the audience an idea of how massively influential Amazon really is – for instance, it is by far the most valuable global brand and controls or influences 60-65 % of purchases, as a search platform many consumers use for research (even though they might buy elsewhere). Additionally, many Australians are already Amazon Prime members, making them prone to start shopping with the online retailer once their services are available. Jon Bird admitted that a lot of Amazon’s attraction is based on convenience: “As you get comfortable with it, you buy everything from Amazon”.
So how can Australian retailers face the “sea change” Amazon will undoubtedly bring about? Bird urged retail leaders to think forward: “We need to think about retail completely differently. We need to think in terms of connected customer experiences that deliver on effectiveness, ease and emotion.” Retailers can learn from forward-thinking services such as FordPass, an app enabling Ford owners to unlock and start their car, control its fuel level, find parking and service stations and much more. Bird also mentioned Tasting Room, a website offering wine tasting kits, and Book by Cadillac, which is a kind of car subscription service available in New York City. In the end, Jon Bird contended that retailers need to provide a connected customer experience that will distinguish them from other competitors in the future.
Bird was later that day backed by Steve Cox, Managing Director at Dymocks, saying that Amazon is a “benchmark” for customer experience and that brands need “to be consistent and well represented across every touchpoint”. Both Cox and Bird seem to see Amazon’s launch as a challenge, which can only be met by finding creative ways to improve the customer journey. Martin Barthel (Facebook) seemed to share their optimistic outlook, when he took the stage, along with his colleague Kate Box, on the third day of Inside Retail Live. Barthel affirmed, “It’s actually a good thing. It’s a great opportunity for small businesses”, viewing Amazon as a chance for SMBs to present their product to a greater audience via their selling platform, Fulfilment by Amazon (FBA). Furthermore, Barthel saw an opportunity for retailers “to do things better”, but admitted that “it will be tough”. Kate Box stressed the advantages Amazon has over other retailers: “They understand mobile first, end-to-end experience and embedded loyalty programs”. She encouraged retailers to start behaving in similar ways, for example by profiting from existing recommendation engines on Facebook.
Time is Money
The advantages Amazon has over other retailers were discussed during all three days of Inside Retail Live. When Paul Zahra, global retail advisor, went on stage, he argued that one of Amazon’s biggest assets is the comfort and ease it provides to its customers: “Amazon have struck a chord by thinking about what customers have the least of – time”. The online retailer has found a way “to give time back to customers”, by offering one-click orders and an easy-to-use and accessible search platform. Launa Inman, Director of the Commonwealth Bank, argued that Amazon has also benefited from the Wall Street, where shareholders are more inclined to taking the long-term view when investing. According to Inman, Australian investors think short-time, which makes it difficult for retailers to make big investments in technology, however, she contended that a prime style model could be easily implemented by many online retailers. She stressed that the advantage local retailers have over new players in the market is that they are already familiar with their environment and customers, which provides them with a solid base for further growth.
Although the exact time for the launch has not been officially confirmed, speculation suggests Amazon will be ready for business by the end of 2017. What started out as an online bookstore in 1994, has grown into the largest online retailer of the world and runs websites in 15 countries. Their customer base is enormous, with 130 million customers purchasing via the US website per month in 2016. The company is constantly seeking ways to grow further, for instance by the voice-controlled device Echo. Many experts, including Jon Bird, predict that Echo will transform retail, as households who own the device are known to buy 10 % products than ones who don’t. Furthermore, within the scope of its grocery delivering service Amazon Fresh, the American retailer is exploring the possibility of establishing bricks-and-mortar stores with a pilot project in Seattle. AmazonGo is an innovative supermarket concept that allows shoppers to enter using their mobile phones and choose products, which will be automatically deducted from their Amazon accounts – another way of giving time back to busy customers since there’s no longer any need to queue.
The Future of Retail in an Amazon World
There seem to be two lessons to learn from Amazon’s venture into food retail. Firstly, the launch of the American company could eventually affect all forms of retail, even the most basic and everyday ones. Consequently, Australian retailers need to be aware of the restructuring of the industry when moving forward and work hard to attract customers. Secondly, however, even Amazon recognises the importance of bricks-and-mortar shops, which still have many advantages over online providers. This suggests that both channels, physical and digital (as well as the merging of the two), will be important going forward. While customers value online options for the convenience, wider product range and cheaper prices, real-life shopping sprees are still hugely popular because customers like making new discoveries and receiving personal, face-to-face service. Concerning price and convenience, it might not be sustainable for Australian businesses to compete with Amazon, but the importance of personal contact in a shop should not be underestimated – in fact, research indicates that customers provided with a good service are willing to spend more money on a product. This explains why many of our speakers urged companies to put the customer first; in-store services could prove the most powerful weapon in the fight for survival in an Amazon world. Australian retailers have to be aware that Amazon is likely to beat their prices, but competing on price should not be their primary concern – instead, their focus should be on a great customer experience and own innovations, giving them an edge over their competition.
Notwithstanding, with Amazon arriving in Australia, times are going to be tough for retailers and in the end, customers should be conscious of how much they order on the website. It’s up to the retailers to offer incentives to encourage customers to remain loyal to their brands. Despite everything, the demand for uniqueness remains high and if retailers understand what makes their stores special and improve on it, there is no need to fear the Big A.
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