Will Amazon Transform Australian eCommerce?

There are many reasons why we love Australia. Shopping online is not one of them.

Unfavourable exchange rates, three-week delivery estimates and punishing shipping rates can make shopping online a tortuous experience. It’s so uncomfortable that many online retailers don’t even offer shipping to Australia. When I first moved to Adelaide from the US, I was stunned by how inconvenient online shopping was. Of course, eBay offers many options for smaller purchases, but shopping through the auction site leaves much to be desired in terms of warranties, return policies, and selection.

However, industry experts are saying that might all change. This July, the exemption from GST that overseas goods under $1000 now receive will expire. The impact? A more level playing field between Australian and international online shopping. This change in GST transforms the revenue prospects for many online retailers, making Australia a very attractive prospect for Amazon’s next overseas expansion. I have to say, as an Amazon-junkie American who has lived in Australia and suffered without it, I could not be more excited for y’all.

While we shouldn’t expect to see Amazon warehouses popping up this winter, Australia does provide an excellent market for their services. In addition to Australian's wealth and lack of any existing eCommerce competitors, Amazon has plenty of experience with fulfillment across large distances from its US operations.

What Would Amazon Australia Offer?

Today’s Amazon only offers its digital services like Kindle books in its Australian storefront. But if it built its fulfillment structure in Australia is along the same lines of its US operations, Amazon could fundamentally transform how Australian eCommerce operates.

Looking at what Amazon offers in the US is a good benchmark for understanding what Amazon Australia would look like.

Online Marketplace

Although Amazon first entered eCommerce as a bookseller, they now sell everything from electronics to pantry goods in their online marketplace. US shoppers can even purchase very large items, like couches, to be delivered direct to their front door.

Amazon Fresh

In some metropolitan areas of the US, Amazon offers its fresh grocery service Amazon Fresh. Amazon Fresh delivers fresh foods, like produce and dairy, to your home at no extra cost and at prices that compete with or beat local grocery stores. Right now, Citi Market Analysts don’t expect to see Amazon Fresh offered anytime soon, but as Amazon’s presence grows and matures in Australia they could conceivably enter this space.

Amazon Prime

Oh, the wonders of Amazon Prime. As an American, I can confidently say that Amazon Prime is the best service I have ever subscribed to. I love it more than cable television. I would rather have Amazon Prime than a Costco membership (I don’t have to pick, thank goodness  – Costco is also tremendous). Amazon Prime is catnip to the online shopper.

Amazon Prime is a yearly membership, priced now at $99USD. With free, two-day shipping, exclusive deals and discounts, and free returns on many items, Amazon Prime makes it easy to never visit a brick-and-mortar store again. From books to clothes, tea to couches, Amazon will deliver your latest order in two days. For FREE. Yes, even on Sundays.

In the US, Amazon Prime also includes a large digital library of commercial-free, streaming music and videos that includes top-performing media like Adele, Taylor Swift, Marvel movies, and complete HBO Series.

If Amazon chooses to build its fulfillment operations along the lines of its US market, Amazon Prime is a definite possibility. And just as it has transformed eCommerce and Logistics in the US, Amazon Prime would transform Australian eCommerce and Logistics and postal services.

Shopping Subscriptions

Amazon offers a Subscribe & Save option on many household necessities. From nappies to toothpaste, flour to laundry detergent, you can create bundles of household goods to be delivered on a regular schedule. In the US, Subscribe & Save offers discounts of 5-15% on the already-low prices. For example, I have a subscription that appears on my doorstep every two months that includes things like toothpaste, paper towels, stain remover, tea, and sunblock. Amazing.

Digital Services

Amazon also offers a huge, competitively priced library of music, books, and video in the US. Now, with the addition of its new smart home devices in the Echo and Fire TV ranges, Amazon could provide Australians with a digital media consumption and shopping experience that rivals that of Google and Apple.

Will Amazon Prime come to Australia?

When Will Amazon Expand to Australia?

Are you excited? I am, and I don’t even live in Australia anymore.

Unfortunately, don’t expect to see a smiley-face box appearing on your doorstep anytime soon.

Amazon is likely planning its expansion to Australia as you read this but there probably won’t be any big moves made in 2017. Still, by 2020 you could conceivably be saying “Alexa, order two dozen free range eggs” to your Echo Dot and making omelettes the next morning.

What Will Amazon’s Impact be in Australia?

Amazon has the potential to transform the way Australians shop. Aside from price comparisons and Amazon Prime, its massive inventory of products and services would offer sharp competition to online selling giants like eBay. From an article discussing Amazon’s potential expansion:

Based on other developed markets and recognising eBay's large presence in Australia, we expect Amazon could reach $3.5-4 billion in revenue...This would be about 14 per cent of all online sales and 1.1 per cent of all Australian retailing. 

-Craig Woolford, a Citi Retail Analyst

Additionally, Amazon Australia would create thousands of jobs in its operations, logistics, support, and management, all based in Australia. It could also transform the way the post works: in San Francisco, for example, the United States Postal Services (a federal service) delivers on Sundays and delivers fresh groceries like eggs and produce.

What Should Australians Do in the Meantime?

Amazon likely won't be storming the Australian market for a few years yet. That gives Australian businesses time to prepare. The prospect of this eCommerce giant entering the market is probably making many Australian businesses nervous. While understandable, Amazon does not spell the doom on Australian businesses.

Instead, Australian businesses can look forward to two opportunities. Amazon allows businesses to sell and market their products, creating low-cost entry opportunities to Amazon's marketplace. These product listings compete against one another fairly and there are even opportunities to sponsor products within the results page. This means that businesses who choose to sell their products with Amazon can look forward to increased visibility, especially if they list their products during the first months of viability.

In the meantime, Australian businesses should look towards ensuring that their eCommerce experience is up-to-snuff and easy-to-use for consumers. Whether your business already has an eCommerce store or is looking to build one, ensure that your business is making the most of the opportunity to sell online. If you would like to learn more about our favourite eCommerce, Shopify, you can do so here. Otherwise, you may be interested in learning the best tips for optimising your eCommerce store.

 

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