Amazon targets Aussie market

The US online heavyweight is putting the pieces together for an Australian launch and that’s bad news for our big retailers.

Ray Ridgeway says Amazon’s arrival in Australia will shake up retailing. Picture: Renee Nowytarger

The entry of online retail giant Amazon.com into the Australian market has been seen as an existentialist threat to local retailers for some time now.

Spoken about in hushed tones in the boardrooms of retailers big and small, the ultimate disrupter is getting ready to finally make its Australian entry, but doubts remain on whether the nation’s retail sector is equipped to deal with the US giant.

British payment facilitator World First has been working closely with Amazon since 2008 and Ray Ridgeway, the chief commercial officer for World First Australia, says that following the US giant around the globe has given the company an insight into how it ticks.

“We assess which markets they are looking to enter and we set up the bank accounts so when they look to sell into the country they don’t have to worry about the payment logistics,” he said.

While Amazon’s entry has been mooted for many years, Mr Ridgway reckons the current conditions might be just right for it to pull the trigger.

“Amazon sees Australia as a $4 billion market. It’s never been seen as an attractive market but what’s happening now is that Australians are rising up the ranks when it comes to online spending.

“We are in the top 10 when it comes to online basket size, so that’s grabbing their attention.

“Also, we don’t have too many international marketplaces in the market.”

With 7,630,000 Australians aged 14 and above — almost 40 per cent of the population — buying one or more products via the internet every four weeks, the market opportunity down under is becoming more attractive. Amazon has been characteristically quiet about the latest rumours but Mr Ridgeway said there was anecdotal evidence in the sector that the US retailer was getting closer to putting the warehouses and staffing in place for a full launch. Australian retailers haven’t been shy about professing their willingness to adapt to the “bricks and clicks” paradigm.

However, Mr Ridgeway said the impact of Amazon’s marketplace model would force many established retailers to re-evaluate their game plans.

“Australian retailers will have to take this seriously and any retailers in the business of selling quick-moving, cheap shippable products are going to get hit hardest,” he said. While big retailers were moving in the right direction, he warned that countering the overall impact of Amazon on moulding customer expectations of how they shopped, what they could buy and how it was delivered would be a challenge.

He said Amazon was likely to disrupt logistics in Australia.

“The power of Amazon is the quick logistics turnaround which I don’t think we have in Australia, so they will shake things up on that front. When you buy something you don’t want to wait a week, and Australian retailers will have to change that.”

So who are the winners and losers once Amazon finally goes live?

Apart from Australian consumers, Mr Ridgeway said local online marketplace sellers would benefit.

“There’s no doubt existing local Amazon sellers will be keen to be the first merchants on Amazon Australia to ensure they get first mover’s advantage and benefit from the buzz of the new platform before competition in­creases,” he said.

“These sellers also have the experience, products and relationships to really hit the ground running.”

An Amazon “fulfillment centre” in the UK.

As for international online sellers, Amazon’s prowess in the logistics space will provide a valuable opportunity. While Australia is a small market it’s a wealthy market with an active consumer base.

Mr Ridgeway warned Amazon would be bad news for the big end retailers, ramping up the disruption dynamic in way that would force them to ask some hard questions.

But it’s not all doom and gloom, provided our retailers can leverage their traditional strengths. Amazon.com may be a wonderful marketplace but there’s a lot of junk sold on it. The trick, according to Mr Ridgeway is whether retailers can use the advantages the right way to provide greater value and quality to shoppers.