Amazon Prime king hit still to come: Intel exec

The head of retail for technology giant Intel has warned that Australian retailers should be worried about Amazon.

Jon Stine of Intel says Amazon’s Prime service is a “critical competitive weapon’’

The head of retail for global technology giant Intel has warned that all Australian retailers should be worried about Amazon, describing its Prime service — which could land in Australia this year — as a “critical competitive weapon’’.

Jon Stine, who leads Intel’s global sales and strategy for the retail, hospitality and consumer goods sectors, said Amazon was driving an accelerated evolution of retail as it went beyond just being a site that sells products to becoming a “de facto first stop for shoppers’’.

And he warned that the launch in December of Amazon Marketplace was just the beginning, with that product an “elementary’’ offer compared to the threat of Amazon Prime.

“Every retailer should be worried about Amazon and Amazon Prime, because it is a brilliant competitive platform,’’ Mr Stine told a meeting of Australian retail executives in New York in the lead-up to the National Retail Federation’s annual conference.

Speaking to an audience that included executives from key retailers such as Bunnings, Dan Murphy’s and Telstra, Mr Stine said Prime was proving an incredibly powerful tool to attract shoppers.

“There is the tremendous affinity that Amazon Prime creates in a shopper because of the all the services (it) delivers or provides, the ease of payment, the proactive set of services and the breadth of services from music to tickets to commerce and the like.

“It just makes it so easy to work through Amazon for all kinds of things. (It is) friction-free and they make it very easy and they think for you: would you like this, would you like that, you bought this in the past. So a just extremely brilliant service is what it is.’’

Prime has proved popular in the US, with a report from Consumer Intelligence Research Partners stating that there are 90 million Prime members, or three out of four of the nation’s 116 million households.

Prime can cost as little as $US99 a year. It delivers a host of benefits like downloads of TV shows and movies, music, access to the Kindle library, data storage and large discounts for purchases on the main Amazon site.

“Those services, payment services, services of (customer) recommendation, services of other things you can get and buy — that becomes a critical competitive weapon.”

Retailers needed to be aware that retail in the future, with Amazon Prime a major player, would be more than just selling a product to a consumer.

“The most important thing is to understand that it is not just product. The relationship with the shopper is about the four Ps (price, product, promotion, and place), but it is also the services that a retailer provides and are increasingly as important as the product and the price.’’

Mr Stine said Amazon was positioning itself as the entry point for consumers.

“Amazon’s impact is substantial in the capabilities (it) offers, it is substantial in the loyalty and the affinity Amazon has engendered in shoppers. It has become a de facto first stop for shoppers when they are beginning their shopping journeys.”

But he said it was nonsense to argue the arrival of Amazon heralded a “retail Armageddon”.

“Stores are closing, skies are falling? — nonsense. This is not an era where people are not shopping; they are shopping but in different ways and different places.

“It is not retail Armageddon. Shoppers continue to shop. Is retail going away? Heavens no.”

Eli Greenblat travelled to the NRF convention courtesy of Microsoft