A third of Aussie consumers are prepared to switch to Amazon

Internet Retailing

10th May 2017

Australian consumers eagerly awaiting Amazon’s arrival Down Under won’t be swayed by loyalty to their existing merchants, new research shows.

In a survey of 1,000 active online shoppers, which e-commerce platform Neto conducted one week after Amazon announced its plan to enter Australia, nearly 1 in 3 respondents said they planned to move their purchases when the e-commerce giant arrives.

Although 65 per cent said they would stay loyal to a brand’s own website if offered a discount, the majority (82 per cent) said they shop online for ease and convenience not price, which drives less than half of respondents (46 per cent) to buy.

According to Neto CEO Ryan Murtagh, this means online retailers shouldn’t enter a “race to the bottom” on price to compete with Amazon, but rather invest in their back-end infrastructure.

“Efficient and nimble back-end infrastructure always translates into a better customer experience and more sustainable profits,” Murtagh said.

“Amazon itself doesn’t need local warehousing, inventory, and customer support to sell to Australians. They’re investing in these because they recognise the value of having local back-end infrastructure that can provide fast, flexible fulfilment to customers, further improving a value proposition that’s already proven immensely successful the world over.

“Australian retailers should invest in building up back-end capabilities that directly influence what they can offer customers if they want to gain a competitive edge, rather than giving in to price pressures and undermining their future profitability.”

Half of survey respondents said they expect to be able to return products via both physical stores or courier and postal services, and 47 per cent want to check stock availability across all channels while in-store.

“Brands can no longer expect to stand out by offering e-commerce capabilities: our research found that 52 per cent of consumers now expect every retailer to offer their own online store,” Murtagh said.

“The real points of differentiation now come from how effectively they can manage inventory, logistics, and support services like after-care and returns across numerous channels, and the extent to which they can use these services to give consumers the choice and convenience that they’re after.

“Smart Australian retailers will be avoiding the hyperbole about price-wars and focusing on building out their cross-channel capabilities to support customers wherever they want to shop and receive their products, including Amazon itself,” he said.

Murtagh said Neto is already preparing to launch an Amazon plugin that will add the marketplace to the range of payment, accounting, and last-mile services that the platform integrates with.