Amazon: A tsunami, not an earthquake

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The extreme emotion around Amazon opening its doors in Australia has ranged from fear and loathing to open excitement!

 

What we do know is that Amazon is BIG, INNOVATIVE and DISRUPTIVE. We also agree that Amazon will change the market dynamics considerably and some retailers will have their business models challenged. Our view is the situation is far from hopeless for Australian retailers and Amazon’s arrival may not be a ‘winner-takes-all’ scenario. We outline our views here looking at:

 

  • A brief background of Amazon, including its grocery and apparel strategies
  • Amazon’s market impact
  • How to compete? Focus on a 'start with why' strategy, data analytics, store experience and digital

 

Amazon’s impact in the Australian market may not be immediately apparent, but history tells us that Amazon plays a long game. No single Australian retailer has the clout to go head to head with Amazon. Amazon will present a great opportunity for small and new retailers who do not already have a significant investment in store and inventory management infrastructure. They will potentially benefit enormously by attaching themselves to Amazon’s ecosystem, albeit at a cost of 10 - 12 per cent of sales! 

Other established retailers could also piggy back off the surge of online retailing that Amazon will likely generate. We believe many established retailers current lines of defense against Amazon may not be strong enough. Amazon is a proven business breaker and takes no prisoners if it sees competition with weaknesses in its business model. As Jeff Bezos famously said, ‘your margin is our opportunity’!

READ OUR FIVE PAGE PUBLICATION HERE.

 
 
 
 

 Amazon infographic

 

 

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