Amazon will be investing over $1.6 billion in five new operational sites over the next two years including warehouses and delivery centres. When at full capacity, these sites will create over 4,500 jobs; a combination of unskilled roles with on-the-job training and highly skilled roles to work in conjunction with robotics.
“We’ve spent the last six years building a critical infrastructure that allows us to deliver on our customer mission. We feel good about where we are now, but we know we have a long way to go,” Amazon Australia country manager, Janet Menzies said.
Since launching the Amazon Australia website six years ago, Amazon has expanded from a single fulfilment centre to 19 sites around the country including fulfilment centres and delivery stations, and extended its range to over 200 million items across 31 categories.
“One of the questions I often get asked is how has Amazon strategy changed, given the cost-of-living pressures? First of all, we’re conscious of the cost-of-living pressures. We talk to customers all of the time and they tell us that they’re doing it tough, and we can see their changing purchase behaviour.
“One thing that drives us is providing value. You can’t have a mission of customer obsession, if you’re not obsessed with making sure that every dollar that someone spends with you delivers a good outcome.
So when people ask me, how are you changing your strategy to meet these moments, I say we’re not changing anything. Our focus will continue to be on delivering a broad product selection and offering fast and free delivery, combined with competitive everyday pricing, as well as key sales events to build excitement and bring the best deals to our customers.”
Amazon recently commissioned a survey, in conjunction with economics, strategy and policy consulting firm, Mandala Partners, to understand the impact of online shopping on the economy.
“One finding that stood out to our team – as it resonates with what we’re trying to accomplish – if you look at the prices of products online during these inflationary times, they’ve actually declined. When you look at the impact of online competition and lower prices delivered by online players, it’s actually worth $3,500 back in the pocket of the customers over the study period,” Menzies said.
Convenience – not only through speed but reliability
Amazon Australia delivers on convenience by offering a range of 1,200 pickup points around the country with Amazon Counters and Lockers, in addition to late evening and weekend deliveries. Adding to that convenience is same-day reattempt.
“We know that customers value a great delivery experience. It’s not only about speed, but it’s about reliability. When you place an order and see the promise date, that’s what drives us to deliver and hit the promises we’ve made,” Amazon Australia general manager of delivery, Anthony Perizzolo said.
“Whether you’ve ordered Prime Free One Day for delivery the next day or with Subscribe and Save for delivery next month, we’ve made a promise, and we have to nail it.
“Apart from reliability and speed, we know customers love free delivery. In 2022, we launched Prime Free One Day in Sydney and Melbourne. Last month, we expanded that program to an additional five cities across the country including Brisbane, Geelong, Gosford, Newcastle and Wollongong.
“I often get asked, ‘how does Amazon deliver so quickly?’ The key is ensuring our operational sites are located as close to our customers as possible. It sounds simple but strategically they must be located in the right place. Subsequent to that, when you place an order, we pick and pack that order in our fulfillment centre closest to the customer at the point of shipment.
“Our technology determines which last mile channel for that package, whether it’s through a commercial carrier or Amazon’s internal delivery business, Amazon Logistics. If it’s the latter, the package will travel to one of 12 strategically located delivery stations across the country, where our teams undertake the sorting process to build an optimised delivery route. Amazon Flex drivers will then pick up those packages for the final mile.”
“We’re bringing the Delivery Service Partner (DSP) program to Australia, specifically Sydney, Melbourne and Brisbane, which is exciting. This program enables entrepreneurs to start their own logistics business to undertake deliveries for Amazon by leveraging our technology and value-added services to help them build and scale their new business.”
Building capacity to expand product selection
Product selection is one of the core propositions for Amazon with a mission to create an experience that allows customers to find everything they need in one place.
“We need the ability to grow the selection, as we’ve done over the last six years, to offer over 200 million products, but we’re not going to stop there,” Amazon Australia general manager of retail, Matt Benham said.
“We’ve got big brands and private label brands but one of our core propositions is third-party sellers and the ability for them to add selection to keep prices low and offer an attractive experience for customers where they can access everything they need.
“On a global level, over 60% of Amazon’s sales are through third-party sellers. Bringing that closer to home, here in Australia, we have over 14,000 third-party sellers. It’s about adding to the site experience and ensuring Amazon is the place to shop for everything you need, while helping small and medium sized businesses by building their multichannel capability.
“One way we do this is partnering with the operations team in our Fulfilment by Amazon (FBA) program on the basis of our advanced technology logistics capability. This means if a seller is sending their product into Amazon, we store, pick, pack and ship that delivery on behalf of the seller to customers. We know from our customers that they want fast and free deliveries, which drives customer loyalty. It’s a good opportunity for us to continue to grow these Australian-based sellers and continue to add to the overall proposition.
“Value is another core pillar. Not only do we add to our selection to reduce cost and invest back into price, we’re also trying to offer more value through our programs. There are three programs in particular that our customers have told us they love.
“The first is Subscribe and Save, offering an additional discount. For the majority of products, it’s a 10% discount if you sign up and select a regular delivery pattern for products such as laundry detergent, and these subscriptions have grown more than 40% year-on-year. It’s not only the value of additional discounts on already strong prices, but the promise of delivery timings.
“The second program is Amazon Renewed, providing a balance between sustainability and cost-of-living by refurbishing products to offer them back to customers at a more affordable price. These products are backed by a 180-day supplier guarantee, on top of our regular returns process. It provides an opportunity for us to invest back into offering products to customers at a more affordable price.
“The third program is Amazon Warehouse for pre-owned, used or open box products, again offering them at a lower price. We perform quality checks and assurances and make sure any changes to the product are clearly described on our website. From an experience perspective, customers who are searching for products will be able to see new, re-used or used products, allowing them to choose their preference.
“Customers are also engaging in our value proposition with Amazon Prime which provides entertainment benefits, in addition to fast and free delivery. Amazon has invested in 28 Australian original content productions. One of the successes has been our investment in local content and it’s an area where we’re going to continue to invest in value to give back to our customers.”
Feature image: Amazon general manager of retail, Matt Benham, country manager for Australia, Janet Menzies and general manager of delivery, Anthony Perizzolo.