In this guest post, Switched on Media’s strategy director, Andrew Burger (pictured below), says Amazon’s Australia’s launch has, thus far, been rather low-key. But, he warns, things should start getting very interesting very soon…
The initial wave of disappointment is more a product of media hype than anything put forward by Amazon itself. In reality, this conservatism reflects the Amazon approach as a whole: retail constitutes a tiny amount of global profit, so short-term gain in a smallish (but stupidly dispersed) market is of little interest.
Blowing a launch with a wide range but unfulfilled shipping expectations would be disastrous for a business that values customer obsession over everything else.
It’s just the start
Amazon has ensured that their launch fulfils base needs of generic online shoppers. Consumer electronics will be key, fashion will be a slower burn, whilst baby will be the beachhead for penetrating household staples.
Amazon’s private label goods will go hard early: think the Firestick, Echo and Kindle. Whilst not immediately available, AmazonBasics will be everywhere – in 2016, Amazon’s private label batteries outsold every other battery brand online in the US.
Add a Prime Video launch budget larger than Jeremy Clarkson’s ego, eventually bleeding into the gateway drug of Prime delivery, and a big chunk of the country is addicted without even realising.
So while the next few months may be viewed as some kind of phoney war, what has and will transpire is merely a reflection of Amazon’s typical, measured (and some would say insidious) growth strategy.
The impact on Australian retail
There’s been a lot of tedious chat about the death of Australian retail, which has and will continue to prompt knee jerk overreactions – cue Gerry Harvey’s predatory pricing stock reel and Myer doing weird things like Myer Market. Whilst the change won’t be felt overnight, no amount of misplaced nostalgia will keep the old guard safe.
Whilst it may never live up to its hyperbolic billing, Amazon will, like in other markets, change the habits of Australian shoppers: expectations of experience will be elevated, trust will be commodity, shipping times will go from days to hours.
It will be a great thing for consumers and for retail – at least for the businesses willing to innovate fast and ride the wave that Amazon brings in its wake. The Iconic has been doing it for years, and if Australia Post can do something cool like Shipster, then even Gerry has a shot.
What can Aussie retailers do now?
The primal fear that has gripped Australian retail leading into Amazon’s launch will, eventually, morph into something closer to nagging guilt – and whilst inaction will lead to obsolescence, the opportunity to innovate is real.
Essentially, managing Amazon is managing another sales channel. If you don’t sell directly through Amazon, someone else likely will. If you do, feeds are your friends. Use Amazon as impetus to update how you manage inventory feeds and consider platform integration the best investment your business can be making right now.
Look into platforms like Feedonomics or GoDataFeed, then tie it all together with Segment. When Amazon AU becomes an advertising platform of serious consequence – a platform tipped to earn $1.65b in US ad revenue this year – you’ll be exceptionally well placed.
Devote yourself to understanding the lifetime value of customers who enter through not just Amazon, but Facebook, Google Shopping and direct channels, then re-engage these customers across CRM and media channels, at scale. Use the data gathered to inform future prospecting, using your highest value customers’ habits to find similarly valuable new customers.
From your big box, bricks and mortar retailers to existing local eComm kings like Catch.com.au and Kogan, it’s time to ask yourself what you are doing that Amazon can’t eventually do better, cheaper or faster? It’s critical to holistically re-evaluate your brand and customer experience to ensure you are best positioned for the turbulent period in-store.