How Australian Retailers can Compete with the Amazon Goliath

Posted by David Bray, Sales Director Retail, Oracle NetSuite

Australian retailers have generally lagged in adopting modern ecommerce and omnichannel commerce practices, yet its citizens are among the earliest adopters of new technology and trends.

As such, many Australian retailers are not ready for the imminent entry of Amazon and could face very tough times if they don’t lift their game. Whilst some of the larger players have been preparing for Amazon’s arrival, many of our retailers have not yet assessed the potential impact and are underprepared.

It’s no secret that the online goliath, which is due to hit Australian soil sometime soon, will cause huge disruption in the Australian retail market. With its evolved and well-established business model, go to market strategy, supply chain, experience and technology, it has a huge amount of experience to draw from.

Amazon’s applied global retail knowledge and deep pockets enable it to operate with huge volumes and thin margins, a model that conflicts with the traditional practices of existing, traditional retailers. The challenge for Australian retailers is that they’re servicing a much smaller market than the US, many segments are dominated by a small number of large players and whilst Australia has traditionally been geographically insulated to a point, the old ways of doing business no longer cut it.

Adding fuel to the fire is the novelty and intrigue of Amazon itself to the Australian consumer, combined with an increased appetite for new global retail approaches that focus on the customer. Such as the case of Netflix, which dramatically shook up Australia’s TV and entertainment market by giving consumers a 24/7 on-demand service and wider variety to choose from.

Australia’s high streets and shopping centres have already had to deal with the disruption following the emergence of international fast fashion brands like - H&M, Zara and Uniqlo.

Advice to Australian retailers 

To address the much-debated impact of Amazon on the local market, retailers should focus on differentiating their services. Ask yourself if what you’re offering is a commoditised service or product: do you have a differentiating value to retain the loyalty of your customers? Do you bring something to the market that Amazon can’t do? Therein lies your opportunity for success.

Most Australian retailers can offer a geographical presence by way of a store footprint that if utilised effectively, can be a key component of an overall consistent and cohesive offering to customers. Stores still offer a “limitless” browsing experience that even the most elegant website can’t match, a far friendlier returns process than the post-box can ever deliver, and the highest levels of personalised care possible. When retailers understand the points of differentiation that stores hold over online – and vice versa – they can maximize the power of both in a way that pure-play marketplaces like Amazon won’t always be able to do.

Brand loyalty is a critical factor for winning over competition, along with the right combination of pricing and an exceptional quality of service. A next level of customer engagement and same day delivery can help local retailers acquire an edge over Amazon which we assume would rely on external courier services and won’t have a brick and mortar presence in Australia.

Building a 360-degree view of customers and offering the same experience to them whether they are shopping online or in-store are critical, along with having complete real-time insight into inventory to anticipate and satisfy customer demand. If your website or sales staff don’t have instant information on stock availability, you will quite simply disappoint your customer and they will go elsewhere. With the right systems in place, retailers can provide a “buy anywhere, service anywhere and fulfill anywhere” offering which will ultimately drive brand loyalty.

But what about B2B?

From what we’ve seen in the US, Amazon will likely first focus on B2C ecommerce, the lower hanging fruit before entering the B2B market. The frequent question that arises here is: Does Amazon know how to succeed in B2B? Basically, B2B buyers increasingly expect the same shopping experience as consumers. The same people who buy personal goods online are also buying supplies for their companies and they demand similar services, availability, knowledge and convenience they get – and expect - on consumer sites.

The B2B market should take key lessons from the B2C realm and create consumer-like experiences that its customers expect and may already be receiving from competitors. B2B companies would do well to learn from the recent liquidation of “too big to fail” retailers, which despite heavy investment were unable to differentiate themselves from competitors or offer sufficiently high levels of service to retain consumers’ patronage. B2B businesses can raise their own customer experience quality by providing real-time inventory information, customer self-service tools like customer support forums and automatic tracking data, one-click reordering, promoting products dynamically and leveraging B2C search functionality.

As Amazon continues its path towards an Australian launch, retailers must learn to adapt quickly and use technology and strategy that provides them with these advanced capabilities as well as use the assets and loyalty they already have built, to deepen engagement with their customers. In the end, the retailers that make purchasing the easiest, the shopping experience the best and customer service of the highest quality will win.

If you’d like to hear more on the implications and opportunities for Retailers with Amazon’s arrival, join us at Online Retailer 2017, 26-27 July. To learn more on NetSuite’s involvement at Online Retailer click here.

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