The news is out: Amazon is set to roll out across Australia over the next few years. Whilst there is no officially communicated Amazon Australia launch date, different media sources have indicated either the last quarter of 2017 or early 2018. So what does that mean for Aussie retailers?
It’s expected that an Amazon marketplace in Australia will have a staggering impact on the shape of retail and is certainly a threat to several sectors of the industry. The announcement alone in 2017 took around $200 billion off the value of ASX listed Australian retailers. Recent analysis from Credit Suisse predicted that Amazon could have as much as 5% of market share in a number of categories in just five years’ time. The brand currently holds strong sway within consumer electronics, homewares, clothing, toys and sporting goods in the US.
In Australia, a Nielsen survey indicated that electronics, books, clothes and shoes are the most likely items to be purchased through the Australian Amazon site. Younger demographics are expected to be particularly aware of the brand’s move to Australia and make purchases from the retail giant.
The challenge for local retailers is that Amazon have got their customer experience down pat. The focus is on fast delivery and affordable pricing for their enormous product range – so much so that a customer will often try a product in a local store and go home to buy it online.
Even if you’re not operating in a space that Amazon will play in from day one; it is hard to tell where they will move over time. And their market presence alone is going to drive up general consumer expectations of retail experience standards.
Image credit: Jonathan Weiss / Shutterstock.com
So what can Australian retailers do to survive Amazon’s arrival?
The first step is to start acting now! Whilst Amazon’s market entry seems some way off; the business changes required to be in a strong position when they arrive won’t be implementable overnight. They will require careful planning and execution.
Identify and serve a unique tribe
You need to ensure you’ve identified a unique niche so your offering is not seen as a commodity that can be simply obtained from Amazon or others at the lowest price and quickest delivery speed. The home-grown Aussie brand story could help to endear your target audience further to you and make them less likely to open a new tab to Amazon. But you will need more than the ‘patriotism’ card to truly stand out. If you can demonstrate your passion and mission is the same as your customers and that you have a better way of helping them fulfil this, then you will go beyond a transactional relationship and establish a tribe of loyal customers. Offering personalised service and bespoke products will help set you apart in a crowded market. Likewise, smart promotional offers and loyalty programs driven by individual customer profiles can also provide a way to differentiate your offering and reward loyalty in your tribe. Consider the full marketing mix and how each element can help deliver unrivalled, inimitable value to them.
Leverage instore experience
Bricks and mortar retailers can offer an experience that is hard for a pure eCommerce play model like Amazon to fully replicate online – and they should use it to their advantage. Creative environments that leverage the opportunity for face-to-face interaction with expert staff (and other shoppers) and stimulation of all of the sixth senses help to create a more emotional connection to your brand and establish trust. Empowering your store staff to be able to offer such unrivalled service is critical. Smart systems and processes can allow them to give complimentary product recommendations, complete real-time stock transfers from other stores and build a profile on customers for future personalisation – all adding to the perceived value of an in-store visit. Not having stock of the right products is going to become inexcusable so data-driven inventory optimisation is going to become business critical. And if you offer home delivery from in-store purchases, shoppers will expect them to meet Amazon-level fulfilment and delivery standards.
For multi-store operators another factor will also be critical – consistency of experience. Whichever store your customer sets foot in, they need to feel like it is the home of your tribe.
Match the convenience online
Amazon’s entry is going to set the new default standard for eCommerce convenience expectations – every retailer will need to raise their game with their online presence. Your online shopping experience, logistics and fulfilment will all need to be up to speed. Customers will only put up with so many delays or late parcels before turning to a retail powerhouse that they know is efficient and cost effective. Click to collect (at your store) could become a potential differentiator if you can follow it up with a great in-store experience.
Bringing it all together – seamless omni-channel experience
If your in-store and online experience are disconnected then expect to see customers take their business elsewhere. Many retailers are still operating these two sales channels with separate systems and processes causing them to sell products that are actually out-of-stock and requiring a lot of manual effort to keep everything in sync. Not acceptable in era of Amazon in Australia.
Have you got your 7S’s right?
There is a tried and trusted framework that helps to look at how well an organisation is configured to deal with changes in its environment called the McKinsey 7S framework. Looking at all of these elements and how they can help you best service your tribe would be an extremely valuable exercise in preparation for the transformational change Amazon is likely to have on the industry.
POS Systems – one element, but a critical one
One element of the 7S framework is your systems. The right POS system can help you to transform your entire retail supply chain including in-store operations, unified eCommerce, inventory & logistics, marketing & loyalty and overall business intelligence.
If you would like to find out if your retail operating systems are fully optimised to compete in the Amazon era, speak with our team today on 1300 732 618.