Is Amazon Really The Enemy Of Aussie Retailers?

Stuart O'Neill

The inevitable launch of Amazon in Australia has local retailers running scared—to the point outgoing Wesfarmers CEO Richard Goyder said Amazon will “eat all our breakfasts, lunches, and dinners.”

It might sound dramatic, but considering the retail giant comprises half of online retail sales growth in the U.S. and is set to double this in the next 10 years, it’s only natural for local organisations to have questions and concerns.

Make no mistake, Amazon is likely to be a success in Australia

Amazon has deep pockets, a brand name synonymous with convenience, an established and globally tested business model, and already a large Australian following. Nielsen stats show 56% of Australians plan to purchase from Amazon when it launches, despite no concrete public plans for when this might happen.

But this still doesn’t make Amazon the darkest cloud on the horizon.

The greatest threat to Australia’s retail industry isn’t the emergence of another competitor, even one as established as Amazon. Of bigger risk to retailers is themselves – or more specifically, the customer experience they offer. And this makes the widespread fear and commotion around Amazon’s launch misguided. We’ve seen in Europe and the U.S. that organisations that have been able to differentiate their brand are the ones that survive. Those that do not struggle for relevance.

There is a strong link between customer experience and loyalty, with SAP’s 2016 Australian Digital Experience Report finding 76% of consumers would remain loyal to a brand if the digital experience was “delightful.” The report also points to the need for local businesses to improve the experiences they deliver, with 40% of Australians unsatisfied with current offerings.

It is much cheaper to defend the market share you have than try to gain it from somewhere else. Retailers spend millions on marketing to buy and foster loyalty, but it can be destroyed with a single bad experience. This is a more recognisable and ominous threat than Amazon will ever be.

When retailers start looking at Amazon as the greater disruptor, they’re effectively not seeing the forest for the trees. Digital disruption has already happened without Amazon’s launch, and to address this, retailers must look inward and get the fundamentals right to deliver on the expectations of today’s consumer.

Amazon is not the darkest cloud on the horizon for retailers

This means allowing customers to direct the shopping experience they want, through the channel they want, and having it all align. All contact with a brand should be considered equal, because consumers see no distinction between their experience in a dressing room, engaging with a chatbot, or loading up their online cart. If these contact points are inconsistent, consumers will seek a better experience elsewhere. Delivering on this promise is a trait Amazon has in spades.

Businesses are in the midst of a data gold rush, and retailers have the potential to know more about their customers than ever before. It is critical they use this data to inform their omnichannel strategy. Communications can be tailored, personalised, and helpful, making consumers feel valued. This differentiates the customer experience and therefore their brand.

Getting these elements right will go a long way to future-proofing any retail business from any competition, whether it comes from Amazon or others.

The importance of customer experience can’t be overstated, and with more competition coming into the market, it’s critical to act now. Amazon won’t be the cause of disruption in the industry, but if retailers don’t get their digital experience up to speed they still might lose their customers.

For more on creating a customer experience that earns loyalty, see A Winning Formula To Make Customers Happy.

Stuart O'Neill

About Stuart O'Neill

Stuart O’Neill is the head of business for the ANZ region for SAP Hybris. In this role, Stuart has helped champion e-commerce adoption amongst leading telecom and retail customers globally, leading the strategic Customer Engagement and Commerce line of business for SAP in ANZ. A technology sales professional with deep industry knowledge, Stuart has spent the past six years evangelizing an industry-wide shift to ecommerce and the cloud in Europe, Asia and Australia and has helped position hybris as a leader in the ecommerce market in Australia and NZ. Stuart has spent the last 15 years working in the networking and e-Commerce industry in both Europe and Asia and is recognized as one of the leading experts in ecommerce in Australia. His expertise has been garnered through his experience working as a sales professional with leading players in the industry including Nortel Networks, Cisco, Fujistu and Digital River. Stuart has travelled extensively, and has lived and worked in Europe, Asia and the Middle East. Stuart holds an MBA specialized in Marketing and bachelor’s degree in Civil Engineering.