We know Amazon dominates global e-commerce, but has its Aussie operation turned Australian online retailing on its head as predicted? One year on, has it lived up to the pre-launch hype?
For years, Amazon Australia was the equivalent of Harry Potter’s ‘He-Who-Must-Not-Be-Named’ – the terrifying juggernaut that the Australian e-commerce industry knew would eventually arrive down under but were happy to hope they wouldn’t be seeing any time soon.
However, 12-months on from its local launch, Amazon Australia hasn’t had quite the impact it was expected to have.
In the US, Amazon currently dominates the online retail market, commanding a massive 37 percent of the online transactions made in the region. By 2021, it’s believed this number will rise to 50 percent – which is no small feat. While other online players such as eBay and Walmart fight to gain steam in the US market, Amazon manages to sprint, as its competitors are still learning to crawl. In a time when competing on price and product alone isn’t enough, the company uses Amazon Prime, Fulfilment by Amazon and features like Amazon Key, to take its customer experience to the next level.
But, how does this compare to the business’s performance in Australia? According to Amazon itself, despite a slow start, the brand is steadily building up a loyal customer and seller base, putting it in an excellent position to mimic its successful global model in Australia.
“It’s been a big year and we’re only just getting started”, Amazon’s Country Manager, Rocco Braeuniger said in the company’s Amazon Australia 2018 Trends Report. “We’re excited to continue to grow our store and invent on behalf of the Australian shoppers,” he continued.
Customers, however, still seem to be less-than-impressed with Amazon’s efforts so far. According to exclusive new Power Retail research, while 78 percent of Australian online shoppers have visited Amazon’s local site, only 31 percent have actually made a purchase, and only six percent of shoppers have made repeat purchases.
However, 98 percent of shoppers are aware of Amazon Australia, so as the business continues to grow, its loyal customer-base will likely follow suit.
Presently, the benefits Amazon offers its local shoppers aren’t as competitive as those offered to US shoppers.
Let’s take a look at the two marketplaces:
In Australia, members are offered free two-day domestic delivery on most items, free expedited delivery on eligible items and free standard international delivery on eligible items shipped from Amazon US.
Meanwhile, in America, members receive free two-day shipping, free same-day and one-day delivery, free two-hour delivery on selected items, free release-date delivery and free no-rush shipping. Not to mention extra service offerings with deliveries tracked in real-time and left inside customer’s cars, garages or homes, regardless of whether someone is available to accept the package. Plus, parcel delivery points, and much more.
The Amazon Prime customer page in Australia does not specify any shopping benefits for members when they sign up. However, the company has been expanding its product range to include things like pantry goods and pet supplies, while also offering its global store and AmazonBasics range to all shoppers.
America, on the other hand, has a list a mile long of the shopping benefits of being a Prime member, including special deals such as five percent cash back at Whole Foods and exclusive credit cards, to name a few.
Both countries are able to stream content from Amazon Video, Prime Music, Audible and Twitch Prime, however, in the US, members get access to extra benefits, like a free Washington Post trial, Amazon First Reads and access to Amazon Music Unlimited.
Across the globe, Prime has more than 100 million subscribers, with 95 million of these expected to be in the US alone. According to Power Retail’s latest Spotlight report, of the 31 percent of shoppers who have actually made a purchase on Amazon, only 22 percent of them have become a member.
In the company’s aforementioned annual report for Australia, it stated that it currently has 10,000 local sellers on the platform. While some retailers have been fast to turn to Amazon for extra revenue, others have been reluctant.
Power Retail’s research also identified that 67 percent of the retailers who are selling on Amazon Australia have experienced a modest increase in sales. Additionally, a significant proportion of those who had been expecting substantial returns have been sadly disappointed.
A slow start doesn’t necessarily mean Amazon won’t be able to eventually replicate its US success down under. Amazon has been operating in America since 1994. In Australia, it’s only been a year. On its home turf, the global company already has access to the infrastructure and delivery network it needs to offer its shoppers a better experience. In Australia, a substantial investment and significant barriers will need to be overcome until it’s in a position to do the same here.
Currently, Amazon Australia is a simplified version of its more in-depth US counterpart. Only time will tell how much this will change in the years to come, but one thing’s for sure, Amazon Australia went through multiple updates in 2018, and there’s no indication that 2019 and beyond will be any different.
Power Retail’s Spotlight Series report: ‘Amazon Australia Year One – Disruptor or Disappointment’ will be launched on Tuesday January 22, 2019. Incorporating extensive shopper and retailer input, the report provides the insights online retailers need to optimise their strategies as an Amazon Australia seller, competitor or bystander.