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Online retailers react to Amazon

Amazon yesterday confirmed what Australian retailers have long suspected. The e-commerce giant is ramping up its retail offering Down Under.

The company announced its plan to launch Amazon Marketplace in a banner on its local website and invited expressions of interest from Australian businesses looking to set up shop on Amazon.

Amazon has not yet said when Marketplace will be open for business. A spokesperson told Internet Retailing the company is actively looking for a fulfilment centre.

But Australian online retailers are already shifting gears to prepare for the new reality.

Speaking to Internet Retailing, Ivan Lim, co-founder and CEO of online furniture company, Brosa, said he expects Amazon to make Aussies even more comfortable buying online.

“We’re excited because the idea of shopping for furniture online becomes a lot more intuitive when more Australians are doing more of their shop digitally,” he said.

“We forget that while online retailing is growing rapidly it is still a small percentage of overall retail spend so to have one of the best online retailers entering Australia will really grow acceptance of shopping online.”

Like Paul Greenberg, CEO of NORA, Lim thinks that brands that offer something unique will be well placed to compete with Amazon.

“I think business like Brosa that continue to sell their own unique products and brand plus offer a compelling customer experience (great last mile delivery, deep product knowledge, immersive selling experiences, etc.) beyond just selling a commoditized product will continue to thrive.”

Commenting on the topic before Amazon officially confirmed its Australian expansion, John Winning, CEO of Winning Group, said that retailers should be continually improving their operations, regardless of the competition.

“Amazon’s arrival will without a doubt have a huge impact on the Australian retail landscape, but if businesses are now feeling worried and like they need to prepare the issue is probably with their core business model.

“Retailers should always be improving their operations as general good business practice and if they haven’t been doing that then they aren’t being fair to their customers, which is why they probably lack loyalty and would happily and easily jump ship to Amazon.

“For years Australian retail has happily lagged behind other markets, now businesses need to start pursuing a global standard of operation to remain competitive when international players enter the market.”

The Australian Financial Review has reported that Amazon is currently in talks with local logistics partners, and Rob Hango-Zada, co-CEO and co-founder of logistics platform, Shippit, said he expects Amazon’s arrival to lift his business.

“We are excited by the announcement of Amazon’s impending entry as logistics players and retailers alike will now have no choice but to focus on customer centricity or perish,” he told Internet Retailing.

“The hundreds of retailers we work with already understand the importance of the customer experience.

“Amazon will be operating with a cost base not seen by any other retailer before and its important that Aussie retailers, particularly those with brick and mortar stores, start making changes now to compete effectively upon their arrival.”

Hango-Zada, however, stopped short of predicting that Amazon will dominate Australia’s e-commerce market the way as it has in the US.

“It remains to be seen whether Australia will follow in the steps of the US where 52 per cent of all product searches now start on Amazon (beating Google) or Canada where it has made a decent but conservative impact.”

He suggested that the Australian consumer market is more similar to Canada than the US.

“Amazon should take note of the Australian consumer sentiment which is different to that of the UK or the US. We are a market more similar to Canada and in that space Amazon’s market share has not quite dominated,” he said, citing the fact that Amazon was doing around 2.4 billion CAD in a total retail market of around 25 billion CAD.

“Whilst there will be significant disruption, Aussies will undoubtedly back a local player alongside Amazon. I think businesses like the Catch Group, Kogan, Petcircle and Booktopia have had a head start in building robust and efficient supply chains and they would be best placed to stand up to the entry of Amazon.”

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