Amazon will be a 'huge opportunity' for small business
Written on the 23 November 2017 by David Simmons
AS AMAZON commences commercial trials of its online marketplace in Australia, one of Brisbane's young entrepreneurs has urged retailers to take a "first mover" advantage with the platform to get ahead of their bigger competitors.
It's been estimated that Amazon's entry is expected to help the online shopping industry in Australia grow at an annualised 13.5 per cent over the next five years to reach $20.1 billion.
Right now, Australian online sales account for around 7.4 per cent of total retail spending, but by 2022-23 this figure is expected to reach 15 per cent.
Business News Australia spoke to Murtagh about the impact of Amazon, what products will dominate on the platform, and what small businesses should do to prepare for the online giant's arrival.
Who do you think will benefit the most from Amazon's arrival in the country?
I think in the very first instance, small retailers have a really good opportunity to leapfrog the bigger guys and get a first real advantage on Amazon. It's going to take longer for the bigger guys to adopt Amazon to get their infrastructure and technology in place to be able to properly list on Amazon and service Amazon. But because your success on Amazon is very much driven by your position in the 'buy' box which ultimately is determined by your seller history as well as price and the fulfilment mechanism, I think for small guys, get in there early, get some really strong history and own that buy box potentially forever.
What will be the biggest challenges for retailers?
The first thing is going to be trying not to create a market place that's a race to the bottom. As a group, I think Australian retailers need to be really smart about curating a catalogue that isn't purely driven by price and as a group I think Australian retailers can get together and get value out of Amazon.
Another big challenge is how to be the best at fulfilling orders and delivering the ultimate customer experience because fulfilment and customer experience is such a big piece of the Amazon experience. I think that's going to be hard for Australian merchants to do, just given the natural geography of this country.
What are some tips you'd have for retailers about what they need to do to prepare for amazon's arrival, apart from sign up to their marketplace?
Well that's number one right, get started don't wait!
The other thing would be to really research opportunities and gaps in the marketplace when it does launch, so try to populate those gaps with your inventory and source of inventory that populates those gaps. There's a number of market research tools that do give you the ability to research what is successful on Amazon and what isn't successful on Amazon and what opportunities exist in terms of inventory gaps.
My number one point would be getting your back office in shape so you can properly service the Amazon marketplace. That means having technology in place to allow you to service your inventory in real time. Manual systems just don't work, especially on a site like Amazon where the sell through rate can be so high, you have to have real time, automated and integrated solutions.
What are some products you think will perform really well on amazon?
I think fashion definitely will do well. Any of the commodity goods are going to do well through a marketplace like that, because they're price sensitive and shoppers are aware of what the product is before they even search for a supplier. Another thing that is super successful on Amazon is consumable goods. Anything that's consumable and a repeat purchase, because they make that repeat purchase process so simple, will be successful. We already know that convenience is the number one reason people shop online and Amazon make it easier and more convenient than anyone.
Ryan will be part of a panel of speakers at Business News Australia's Breakfast Series, November 30 at Customs House, Brisbane.
Business News Australia
Author: David Simmons