Business Advice

How will Amazon impact SMEs?

- June 19, 2017 3 MIN READ

Amazon is now reportedly worth over $430 billion dollars according to FactSet. It is a behemoth of a company that is going to shake up the Aussie retail sector. Some might say this ‘shake-up’ is well overdue. Small businesses, brands and retailers alike need to be prepared and this might be the kick in the pants that some businesses need.

While others believe that improvements in the economy will benefit ‘all’ participants in the economy and is likely to improve the online retail eco-system, it will be very interesting to see what happens when the online retail giant is up and running in Australia.

Friend or Foe?
Some small businesses will see Amazon as a major competitor while others will see it as a strategic partner. Amazon are super focused on customer satisfaction. A lot of it is geared towards customer reviews, lower prices and fast delivery, resulting in a better offering by the suppliers and a better or more convenient shopping experience for the customer.

Small business and Amazon
For brands and small businesses like Willi Footwear it’s a great avenue for us to introduce and sell our products to a wider audience. The problem with the current major online retailers in the ‘summer footwear’ category in Australia (such as The Iconic and Surfstitch) is that they still have a ‘buyer’, the ‘gate-keeper’ who says which products can and can’t be sold on their website.

Customers shop online to find items not available in retail shops

Amazon on the other hand allows almost any product on their platform (as long as you meet their product guidelines and listing rules) which is a great opportunity for niche, lesser known brands to get in to the market. Of course, on the flip-side people might prefer The Iconic and Surfstitch because the products they sell have been assessed by a ‘buying team’ and align with their core values and beliefs.

What is FBA – ‘Fulfilment by Amazon’?
In the US and other countries, the costs to small business for Amazon’s storage and order fulfilment come in much lower when compared to other 3rd party logistics companies. It is a simple, cost-effective process. In the US, Amazon Prime customers can get free overnight shipping to anywhere in the country! The only suppliers that can offer this on Amazon need to be using FBA (Fulfilment By Amazon). Assuming Amazon roll out a similar scenario here, then suppliers should be involved in FBA if it aligns with their processes.

More products to choose from or choice overload?
On the Amazon marketplace, the popular products with a unique selling point tend to move to the top of the pile and get a great sell-through, while the generic products are weeded out. This can include larger branded products that have nothing special to offer the customer. So make sure your product has a unique offering.

Press play! Why it’s important to have an ecommerce website

The on-going trend over the last few years shows that customers no longer only have the option of purchasing from the oversaturated brands they see in store or the products listed on the department stores website. Now you can search for exactly what you want, compare prices, get member discounts, free and fast delivery and maybe come across something cool you didn’t even know existed because you haven’t seen it in a major department store.

For the most part, the e-commerce market has grown in Australia over the last few years yet still only accounts for a small percentage of traditional brick and mortar retail sales. Our major shopping centres aren’t going anywhere and they can offer the complete destination shopping experience that many people know and love.

The problem with some of our Australian department stores is that they are all generally selling the same stuff. Customers will sometimes shop online, not for the convenience, but to simply find something special that isn’t available in retail outlets. This may call for a change in their buying criteria and allow a diversification of small niche brands and products.

It will be up to the small businesses, brands, product innovators and Aussie retailers to ‘up their game’, cut through the crap, take advantage of the e-tail juggernaut and take on the challenge that is Amazon entering the Australian marketplace.

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