Amazon’s less than impressive impact

On the local retail landscape.

Amazon Australia officially launched just over a year ago, but online retailers and consumers are still waiting to see its full effect.

Amazon was touted as a force that would disrupt the Australian retail industry but the short and long-term impact of its arrival remains uncertain, according to a new report by market research firm Power Retail, with only 6% of shoppers engaging with it and only 31% making a purchase.  The report also found that 68% of shoppers do not think it’s the cheapest option, and a majority could not find their desired product on the first search. Also less than 50% believe it has unique products.

The survey questioned over 1,500 Australian online shoppers who had made a purchase in the last six months and interviewed 89 multichannel retailers with mixed reactions, according to Power Retail, managing director, Grant Arnott.

“Many headlines in the build-up during 2017 suggested Amazon would destroy Australian retail overnight, sending shockwaves across the market. The idea that Amazon would drop out of the sky like an alien invasion force and obliterate our retail industry instantly was ludicrous, of course,” he said.

“This comprehensive report is enlightening on a number of levels, giving retailers key insights into Amazon Australia’s impact on retail and customers to date, and also unveiling the new breed of sophisticated and highly demanding online shoppers spawned in the Amazon era. The cyclical effect of this is that Amazon, while creating these demanding consumers, continues to evolve, increasing the expectations of its customers and by default, increasing the level of competition amongst retailers. This sounds warning bells for all retailers.”

The site is not achieving industry standard levels of customer recommendation either, with a Net Promoter Score (NPS) of -7 against an NPS online retail benchmark of 35. Amazon in the US has an NPS of 61.

According to Arnott, Amazon Australia’s launch in December 2017 was a fizzer. However, in the 12 months since, it has set up distribution centers in Melbourne and Sydney, and launched Prime, Prime Day and Fulfillment By Amazon (FBA) locally and grown its selection to almost 100 million products across 29 categories.

He said the question remains. “How will Amazon alter the e-commerce landscape in Australia, if at all? This report considers this and other questions as retailers try and chart their path forward.”

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