How have Australian consumers and retailers reacted to Amazon since its launch?
Amazon Australia launched in 2017 to a large consumer expectation, knowledge of the American brand had Australian consumers hungry for the potential offer and the plethora of products that would be available. Fast forward 19 months and the juggernaut is about to launch its second “Prime Day” and has added over 100 million additional products to its online offering, but how have consumers reacted to the brand?
A recent study by Retail Doctor Group has revealed that the uptake of Amazon Australia is looking in line with their global rollouts. As the Australian elected partners for the global retail expert’s alliance Ebeltoft group, we see a strong consistency in Amazon’s global opening strategy and employment.
Consistent to this is that 1 in 2 consumers have now visited Amazon.com.au with 18% of Australians now purchasing once a month or more. So, what does this mean for retailers trying to compete?
Consumers shop at Amazon over other retailers mainly because of price and convenience. Amazon Prime has played a large part in consumer uptake with the offering of TV streaming and free delivery, which has created a loyal group of consumers who shop with Amazon regularly. Time is the new currency for consumers, especially millennials, so Amazon has been providing customers with fast and frequent delivery. Retailers must now look internally at their end to end fulfilment models and systems to ensure they can offer this frictionless experience that customers are now accustomed to.
Amazon’s launch highlighted the distinction between how consumers see retailers and how a retailer sees itself. For instance, what people from Amazon saw as the most successful international launch in its history was viewed as a disappointment by the media. This has in turn had a knock-on effect with consumers and 1 in 5 stated the media has influenced their trust in Amazon.
The Seattle giant reported a $292.3 million in revenue for the year ending 2018 with the introduction of its third-party seller support service, fulfilment by Amazon and its membership subscription service, Amazon Prime. So, whilst it is making progress in Australia there is still a long way to go. Australian retailers can utilise this initial starting period to determine how they can compete, understanding their customers’ needs and what sets them apart from Amazon.
One of the main opportunities for Australia retailers is building consumer trust. The number of people who trust Amazon has reduced from 58% in 2017 to 50% in 2019, and those who don’t feel Amazon is a brand they can trust has risen from 9% to 26%. By demonstrating their credibility and listening to what their customers are saying, retailers can build a high level of trust that will enable a loyal relationship.
The physical store continues to be the most preferred shopping channel for Australian consumers, with many Australians preferring the shopping experience in a store and the ability to see, touch, and feel a product before buying it. Supporting local retailers was also one of the main reasons why consumers don’t shop at Amazon. Retailers can build on this to demonstrate their heritage in Australia and in the local community. In addition, they can provide customers with additional in-store experiences such as training and tutorials.
Today marks the launch of Amazon Prime day 2019, and expectations are high given the success of its inaugural event last year. This is another piece of the puzzle for Amazon to build its consumer base and loyalty. Special offers and bargain prices will be available for two days for Prime members enticing the non-members into the Prime community. With 1 in 3 Australians now having purchased on Amazon.com.au they will be expecting to receive bargain deals direct to their inbox today. It will be interesting to see the success of this years Prime day given the increase in consumer awareness and understanding of Amazon.