April 2, 2020
How Amazon will affect ecommerce in Australia

How Amazon will affect ecommerce in Australia

Amazon recently announced that it’s launching operations in Australia. Including establishing warehouses in every state, improving the delivery systems here, and stocking products in more than 30 categories. This is going to be a fantastic thing for consumers, but a real threat to eCommerce businesses and retailers. In fact, in the US Amazon accounted for 43% of all online retail spending in 2016. So how will Amazon affect eCommerce in Australia? Well, firstly it’s going to put a big downward pressure on prices. Especially as it can afford to forgo profit for a very long time to expand its market share. It’s also going to shift the expectation of consumers around the speed and cost of delivery, which is fantastic across the board for this country. And thirdly, when it combines its Prime membership, its Alexa assistant, and its echo device, it’s going to make it really, really easy to buy from Amazon and very difficult to compete against. So how will Amazon affect marketing in Australia? Well, because of the size of its website it’s going to dominate organic search for both, generic and branded search. It’s also going to be spending a lot of money on advertising across the search networks and the social networks to really expand its market share, which is going to increase the cost of advertising within those categories and push some advertisers out. And because Amazon is going to become a huge platform in its own right you’ll be able to drive a lot more sales by leveraging sponsored listings within specific categories or ranking there for free. So how should you respond? Well, in my opinion your #1 goal should be to build relationships with your customers. You can do that by offering loyalty programs, adding value to their lives through content, leveraging email marketing to its full effect, and focusing above all on growing your email database. You’re also likely not going to be able to compete against Amazon on delivery. So you’re probably much better off to let them handle all the logistics and you focus on marketing instead. You might also want to consider creating your own product line and your own brand as that is something that Amazon can not undercut you on, plus then you can use their platform as another channel for distribution. So what’s next? Amazon is coming to Australia and they’re going to be a game changer. So if you run an eCommerce store my advice is not to wait until they get here, but start making changes today.

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