Retail expert reveals why Amazon might struggle in Australia

AMAZON has been hyped as the catalyst to change shopping as we know it. But a retail expert says that won’t be the case.

AMAZON has been hyped as the catalyst to change shopping as we know it.

With the tech giant announcing it will expand to Australia, some experts and retailers have predicted it will kill bricks-and-mortar stores and close our shopping centres.

But then again, maybe not.

Associate Professor Gary Mortimer, a retail expert at Queensland University of Technology, thinks Amazon will face its own struggles when it hits Australia, and the “sky will not fall in”.

Prof Mortimer said Australian shoppers spent almost $22 billion online in 2016.

That amount may sound like a lot, but actually it only represents about 7 per cent of our shopping, meaning most of the money is going into local shopping precincts.

Australians’ online spending is insignificant compared to the US and the UK.

American shoppers spent $152 billion online last year and consumers in the UK eclipsed that at $215 billion.

Amazon infiltrated overseas markets well and has been able to compete with other online retailers, but Prof Mortimer said the online giant is unlikely to replicate its UK and US success in Australia.

Will we soon see Amazon Go stores here in Australia? Picture: Amazon

WHY IT MIGHT NOT WORK

Prof Mortimer said people were creatures of habit.

How do we get Aussies who love ducking down to the local supermarket to start shopping online?

Prof Mortimer said people were used to buying the brands they knew, liked and could afford and even for those who regularly shopped online, it’s not likely they’ll just start shopping elsewhere.

The online market is already flooded with different stores, including department stores and more independent retailers.

Prof Mortimer said every month people’s shopping lists were virtually the same, and they spent around the same amount of money.

For those Australians who buy their groceries online, they are already well-serviced with online stores like Coles, Woolworths and Aussie Farmers Direct, so Amazon would have to offer the customers a different experience.

Prof Mortimer said people have been quite vocal about what Amazon was going to do to Australia’s retailers, but believed it was “scaremongering”.

Retailers have been told they were unprepared for Amazon‘s incursion and would lose customers to the online shop.

“Only yesterday did we see Amazon officially announce they were expanding its offering to Australia and we don’t actually know what that means,” Prof Mortimer said.

“I genuinely think if it comes, a proportion of Australian consumers will trial it. But it will generally be consumers that are already using the online shopping platform.

“We know there are some frequent online shoppers and infrequent online shoppers.”

Prof Mortimer did not expect online shopping would be the only way to purchase products in the future.

He said research showed people who shopped online, would continue to do so, but those who didn’t, would continue to be non-users.

Amazon’s expansion to Australia won’t close retail stores, according to a retail expert. Picture: AAP Image/Dean Lewins

WHAT AMAZON NEEDS TO DO

“Obviously there needs to be a driver to convince shoppers to switch channels,” Prof Mortimer said. “Maybe it will have to be really low cost or could be the time it takes an order to get to a consumer.

“There needs to be an element of competition.”

Prof Mortimer said if an online store was offering delivery within 48 hours, Amazon would have to beat that.

However, it’s harder to make those promises in Australia.

Prof Mortimer said cities in the UK and the US were more populated, meaning most of the online shoppers lived around the same area.

But Australia is much more vast and less than half of us live in the three major capital cities.

“I think Amazon will need to adapt what it will offer here in Australia simply because it’s a much smaller population, it’s more dispersed, and there’s a lower proportion of retail spending,” Prof Mortimer said.

Internationally, Amazon has a range of services that differentiates it from the other online stores.

This included Amazon Prime Now, which provides faster services to members, Amazon Fresh, which focuses on grocery deliveries and Amazon Go, a chain of physical convenience stores that are checkout-free and bills shoppers through their Amazon accounts.

Amazon Global Logistics senior manager Brittain Ladd told Fairfax Media the tech giant would “launch as many services and products as possible within Australia”.

“[Amazon will] build physical grocery stores and launch Amazon Go only after Amazon has become more established in the country and analysis determines the market will support physical stores,” he said.

Amazon promises quick delivery in Australia. Picture: AP Photo/Paul Sakuma