Aussie retailers need to wake up to the reality that Amazon is on its way

05-Oct-2017 - Last updated on 05-Oct-2017 at 12:00 GMT

Related tags Online shopping Retailing

Most retailers are woefully unprepared for the imminent arrival of Amazon in Australia, even though it has been an open secret for most of this year that the American insurgent will arrive in the market.

While some are preparing from Amazon’s arrival, the “vast majority” are a long way from being ready, according to retail expert Tzvi Balbin.

Balbin, a digital marketing consultant at DataSauce, believes that Amazon’s online service will be a world away from what Australia’s bricks-and-mortar retailers currently provide.

Charging customers an annual fee of around A$100 for free and fast delivery, the Seattle giant has already enlisted some 60m American households to its Prime service.

While Australians can already buy limited products from Amazon, an much bigger service including groceries will launch probably later this year. Dedicated local warehousing for this will enable the company to dramatically expand the kinds of goods it can deliver.

It is currently hiring more than 100 staff in Sydney for roles in logistics, IT and security. It has also secured the lease of a former Bunnings Warehouse space in outer Melbourne, in what will likely become the first of many "fulfilment centres" in Australia.

Its online store will promise cheaper prices, faster delivery times and access to a greater range of products, including groceries.

“The Amazon Prime offering is more advanced than almost any of the services offered by retailers in Australia,” said Balbin.

“This means that even those who have upped the ante with quicker delivery times may still struggle to compete with this service and match the level of investment.”

In a survey retailers organised by DataSauce, 90% of respondents said they knew Amazon was on the way, but just under half were aware of Amazon Prime.

Amazon also offers in some markets Amazon Fresh and Amazon Now, a service which promises to deliver products such as groceries in under an hour. Both of these premium services have the potential to blindside the efforts of Australian retailers.

“Amazon Prime in particular could be a game-changer in the Australian retail space,” Balbin said, advising retailers not to try to beat Amazon at its own game, but instead on focusing on the one thing that sets them apart from their competition.

“A number of physical retail outlets are optimising their customer experience so it’s seamless offline and online. It’s not enough to have in store pickup and claim to provide a true omni-channel experience,” he added.

“At the end of the day, to beat Amazon you need to focus on its weaknesses. Niche down, build and nurture a fanatical community, tell a story and leverage loyalty. After all, Amazon is a one size fits all.”