What will it mean for online retailers in Australia?
Our friends at statista sent this very unassuming chart. I didn’t think too much of it to start with. We all know #Amazon is big! Then, but hang on – bigger (nearly twice the size) for U.S. online shoppers than all search engines? As big as all retailer’s channels combined…. I must admit, it started to get my attention. The little online bookstore that could!
With the recently announced Amazon acquisition of Whole Foods for a quick USD$13.7BN or so, and the rumoured offer of USD$9BN for #Slack fresh in my mind, I thought about the announcement that Amazon is coming to Australia. What does that mean and what does it look like?
We have already felt the impact of Amazon Prime Video and Amazon for books. I’ve purchased a range of non-book products from Amazon for the last five years or so now. International deliveries are handled with ease. What will that look like once they hit Australia….?
Let’s have a quick look at where they are now. In Alexa, the sites in the top sites lists are ordered by their 1 monthly Alexa traffic rank. The 1-month rank is calculated using a combination of average daily visitors and pageviews over the past month. The site with the highest combination of visitors and pageviews is ranked #1. Amazon already rank at 24th spot in the Alexa list of top websites in Australia at that level they are in good company with the likes of: What does that mean for Aussie online retailers? They are already here and can flick the switch on the increased range of products for immediate traction……
Digital buyers have continued to increase their online penetration in Australia and are forecast to continue to do so. Purchases are shifting from bricks and mortar to online for a host of reasons, but the fact remains that the trend in is continuing and e-commerce sales in Australia are growing. 10.5% increase year on year from USD$8.64bn in 2015, to USD$9.55bn in 2016 with forecast growth of USD$1bn to USD$1.5bn per year for the next five years. Aussie online retailers will have to share their growing market with a big competitor. The online growth will assist in softening the impact that Amazon will have.
It is also likely that the growth will continue stronger than expected.
In the list of global markets with the highest online shopping penetration as of 4th quarter 2016, Australia ties for eighth place with Canada and Singapore with 60% while the U.S. is fourth on 67% and the UK leads the pack with 76% penetration rate. Australia, whilst know as an early adoption market, is lagging the U.S. and the UK by 7 and 17points respectively in the online shopping penetration stakes.
So what does all this mean for the Aussie online retailer? We better get our act together. Currently, the first stop in Australia is the search engine, who happily direct clients to your website depending on PPC spend or your SEO. As Amazon starts to penetrate the market (and they are very good at marketing) the balance will begin to shift and start to look more like our first graph.
So, forewarned is forearmed. Time to prepare but what can we do?
Here’s a list of things that may help you prepare for the rise of Amazon in Australia:
- Marketing activities (growth):
- Understand your target market. Define your “Customer” and “fish where the fish are”.
- Develop high return marketing strategies to drive new business your way.
- Make sure your website is fully optimized for conversion and don’t stop A/B testing!
- Business Processes (profitability):
- Ease of doing business – make sure your customer’s ordering process is simple and seamless. Don’t be the reason the start to look elsewhere to fill their demand.
- Ensure your supply chain is tight as a drum end to end.
- Ramp up your client communications and tracking visibility to keep them in the loop on the progress of their order.
- Client Retention (Sustainability):
- Once you have them, you want to keep them. Keep in touch. Everything from regular updates on their delivery progress to informative newsletters. Don’t forget the phone and face to face as well.
- Reward Referrals. Your clients can be your greatest sales team. Let them know how much you appreciate their referral!
- Keep delivering value. The reason your clients came to was that you delivered value for them. When you stop, they will look elsewhere. Keep innovating, value comes from a multitude of areas.
- Above all, ask for help if you need it.
- Focus on what you do best and seek assistance for the aspects of your business that you are not as knowledgeable at.
- Leverage relationships – your network will have wealth of capability and referrals can greatly reduce the risk when selecting a service provider.
- Seek technicians in their field of expertise. It will ensure you deliver a better outcome in the long run.
So, what action will you take? One thing is for certain, if you take none, it’s highly likely you will feel the Rise of Amazon on your bottom line.