One Year On: Unpacking Amazon Australia

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By Published On: January 22, 20190 Comments

Amazon Australia has been making waves in the local industry, but 12-months in, is it a disruptor or disappointment?

In the second instalment of Power Retail’s ‘Spotlight Series’ the company’s researchers surveyed 1,500 plus active Australian online shoppers and interviewed 89 local retailers to determine the level of impact the goliath has had on the local e-commerce sector.

According to the report, ‘Amazon Australia: Year One – Disruptor or Disappointment’? only six percent of the local market have become engaged Amazon shoppers. For instance, the study has revealed that only 31 percent of people who visited the site actually made a purchase. Respondents also said that they don’t believe Amazon Australia has the cheapest prices, with 68 percent of consumers claiming they’ve seen the same products available at lower price points elsewhere.

Grant Arnott, the managing director of Power Retail says this isn’t surprising, given the mixed reactions Amazon’s local launch was met with back in December 2017.

“Many headlines in the build-up during 2017 suggested Amazon would destroy Australian retail overnight, sending shockwaves across the market. The idea that Amazon would drop out of the sky like an alien invasion force and obliterate our retail industry instantly was ludicrous, of course,” he says.

While more than 50 percent of Amazon shoppers are underwhelmed by the marketplace’s product offerings (believing products can be purchased elsewhere), Arnott does note that the company’s ability to impact the market stretches well beyond the dollar value of its sales.

“The cyclical effect of this is that Amazon, while creating these demanding consumers, continues to evolve, increasing the expectations of its customers and by default, increasing the level of competition amongst retailers. This sounds warning bells for all retailers,” he explains.

Retailers have also noted that Amazon hasn’t been all doom and gloom at an individual business level either, with Olivia Carr, the CEO of SHHH Silk saying it’s had no impact on her business.

“Amazon Australia will have little to no impact on us in two years’ time. We focus on being a premium/luxury brand as opposed to cheapest price and available now,” she says.

However, Arnott does warn that retailers shouldn’t sit back and assume Amazon won’t have any long-term impacts on their businesses.

“Amazon Australia’s launch in December 2017 was a fizzer. However, in the 12 months since, it has set up distribution centers in Melbourne and Sydney, and launched Prime, Prime Day and Fullfillment By Amazon (FBA) locally. It has grown its selection to almost 100 million products across 29 categories… But the question remains: How will Amazon alter the e-commerce landscape in Australia, if at all?

Power Retail’s latest Spotlight Series report answers this question and more, as a detailed analysis explores how retailers should chart their path forward in an Amazon world.

The report, ‘Amazon Australia: Year One – Disruptor or Disappointment?’ is now available for purchase – click here.

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