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Can Aussie retailers rise to the Amazon threat?

News, 20 July 2017
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SYDNEY: With e-commerce giant Amazon set to hit Australian shores, local retailers will need to lift their game to compete or risk losing customers, according to an industry expert.

Carl Hartmann, founder of Temando, an e-commerce software provider, said retailers in Australia are likely to be challenged by the superior shipping that Amazon can offer consumers. Amazon’s Prime Now service, for example, can deliver purchases within a couple of hours, something that Australian companies may struggle to match at scale.

But even Amazon will face delivery challenges in a country the size of Australia, where, Ben Franzi, Australia Post's General Manager of eCommerce Platforms and Digital, told WARC last year that the further away an Australian consumer is from a major metro centre, the more likely they are to shop online. (Read more in: Four trends shaping e-commerce in Australia.)

Temando’s annual State of Shipping in Commerce survey, released last week, revealed that 65% of respondents would ditch an online shopping cart if shipping costs were too high. Almost 60% of respondents in the same survey would be less likely to buy from a specific online retailer if they had a poor shipping experience.

“This year in our research we’re seeing a widening gap between customers’ expectations and what they’re willing to pay and what retailers are doing,” Hartmann said in comments reported by B&T Magazine.

Customers will also expect Amazon’s mobile site design, customer experience and shipping costs to be matched by Australian retailers. ‘Big box’ retailers in particular – of which Australia has many – are likely to be especially challenged by Amazon’s offerings.

“When Amazon comes, the bar gets consistently lifted,” Hartmann said, noting that the arrival of Amazon is an opportunity for brands to raise their game as much as it is a challenge.

According to data published by the Australian Financial Review, the long awaited arrival of Amazon is expected to significantly boost online shopping in the country.

While e-commerce sales make up about 7.4% of retail spending currently, that figure is expected to reach at least 11% or 12% in coming years.

Data sourced from B&T Magazine, Australian Financial Review; additional content by WARC staff

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