The world's e-commerce giant, Amazon, arrived onto our girt shores by launching amazon.com.au on Dec. 4, 2017. Marketplace Pulse reported that within a single day of going live there were already 2000 sellers had activated offers and started selling. A year later that number had grown 10x. Amazon reports that Australia is its fastest growing marketplace in the world.
Most reports have Amazon.com.au tipped to hit $1B AUD in sales in 2020 which despites being a relative late comer to Aussie shoppers, makes it already the second largest e-Commerce website behind industry stalwart eBay.
So, why is there such a massive influx of sellers and buyers on this platform particularly?
And more importantly what are Australian brands missing out on by choosing to ignore Amazon domestically?
We will attempt to summarise the main advantages Australian brands engaging well with amazon have over their competition.
THE AMAZON BRAND – FRICTIONLESS RETAILING
Experience overseas has repeatedly demonstrated consumers trust the Amazon brand. The company is famously “customer-centric” and as a result has built a solid reputation over the years. Consumers don't have great concern over Amazon's processes and one of the most trusted and frictionless checkout processes in the world. That sales for brands doing well on amazon can in some cases exceed all other online channels combined.
LARGE FORMAT RETAIL – RANGE IS KING
Amazon doesn't discriminate against sellers when it comes to their budget and size. Whether you're dealing with handcrafted goods or household FMCG brands, setting up an Amazon store means a brand will be part of the largest catalogue in the world. Shoppers overseas flock to Amazon (often known as the “everything-store”) because they know they can see a large range all in one place. Currently Amazon is reported to have 125 million products advertised for sale locally.
Currently Amazon.com.au displays many products from overseas vendors to help pad out the range but experience in other markets has shown that as the local offerings take up the spaces, international vendors will retreat to the back pages.
FBA - EASY RETAILING
The Amazon selling experience offers several distinct advantages over other options being offered by competing marketplaces.
Arguably the primary advantage is Fulfilment by Amazon (FBA), Amazon has spent the bulk of its profits in the last 2 decades perfecting logistics and it’s safe to say they are streets ahead of all other offers. Brands simply need ship bulk orders into Amazon's central warehouses, and Amazon’s logistics network has the transaction completed and arriving on the front porch within a day or two, at an exceptionally low price for brands.
Currently engaged with the services of Australia Post, plans are underway to develop their network of fulfillment as they have done in overseas markets, bringing down costs and further shortening delivery times.
SOW NOW – REAP LATER
Brands currently investing in Amazon are enjoying tailwinds. Cheap advertising, low competition, and easy access to customers. We have seen several clients achieve page 1 ranking for minimal investment that will pay dividends to brand owners for decades to come. It will not always last.
It is still early days in Australia for Amazon so in some ways now is the best time to get your brand up and running on Amazon.com.au. This positions a brand for future growth. The AFR predicts Amazon will reach $23B in revenues by 2030 and it would be a brave bet indeed to bet against a company with this much proven track performance.
Tim is a Senior partner at machete.systems