Amazon's Impact On The Retail Industry

Amazon's Impact On The Retail Industry

Globally, 40% of all online spend is directed towards digital retail giant Amazon. With its imminent arrival onto Australian shores in 2018 predicted to wash $12 billion out of the local retail market, it is clear to understand why retailers are apprehensive towards its entrance. However, it isn’t all bad news, with Amazon encouraging e-commerce innovation and modern retail marketing approaches for brands competing in the local market.

Since it’s establishment in the United States in 2004, Amazon has been labelled a digital disruptor, shaking up the e-commerce and retail industry with its speedy delivery, exceptional customer experience and lower prices. In fact, in its own market, Amazon contributed to the demise of one of their major bookstore competitors, Borders. The company also boasts a revenue of over $74 billion making it the world’s largest online retailer.

But what it is it exactly that makes the internet giant a success and has many Australian retailers fearful? One major competitive marketing differentiator that has consumers flocking to Amazon is the ability to have your purchases delivered in no time, with its same-day delivery and weekend delivery options – a choice that very limited Australian retailers offer. In fact, Australian consumers are typically required to pay a $10 fee for delivery, with their parcel arriving at their doorstep in a time frame of 3-5 business days. To make matters worse, this delivery usually occurs during business hours, when consumers are generally not home, requiring them to organise a redelivery, or visit a post office, hindering the whole convenience of online shopping in the first place. As today’s demanding customers possess high expectations and a need for instant gratification, delivery times have the ability to affect a customer’s experience. Surveys regarding Amazon’s arrival to Australia found that 90% of consumers would shop from the e-commerce giant, due to their promise of fast delivery amongst other factors and 60% believe same-day delivery is a necessity for all online retail providers.

Amazon’s continual innovation has also contributed to the retailer’s success, with personalisation techniques to encourage purchases, and more recently, Amazon Spark, a product discovery social network and “shoppable feed” launching earlier this month. A recent investigation and study into the future of modern e-commerce suggested that in order to be successful and appealing to consumers moving forward, hyper-personalisation at key decision points in the customer journey along with an integrated and seamless cross-channel engagement strategy is imperative. Furthermore, a recent study commissioned by research and IT firm, Gartner, discovered that by 2020, personalisation tactics will promote business profits by 15% and that customers believe such tactics provide more relevant and enjoyable experiences.

Amazon has noticed this and implemented a unique weather personalisation tool as apart of their customer experience strategy to drive further consumer engagement and encourage purchases. The online retail giant uses consumer data along with localised weather conditions to personalise and tailor a consumer's feed with relevant products. Further, Amazon’s Spark addition, which is similar to Instagram, lends itself to “influencers” in order further promote products that consumers may be interested in.  However, unlike Instagram, consumers will be able to directly tap on the desired product within the photo to continue towards purchasing. These initiatives are essential for integrated marketing communications and create a seamless and holistic experience, providing the customer with ultimate relevance, convenience and value. 

While Amazon’s strengths may have retailers nervous, there are also many opportunities that have arisen. Amazon’s features will enable retailers to find new audiences, as well as encourage brands to raise the bar on their current offerings to continually satisfy customer demands. In order to compete with the likes of Amazon, retailers must ensure they have established omnichannel strategies to improve a consumer’s experience.

When Amazon arrives in 2018, it will undoubtedly change the Australian retail market and the way consumers shop. While the global online retailer is extremely successful due to its convenient offerings, it’s arrival will prompt brands and retailers to look to innovative ways in order to deliver exceptional customer experiences and improve their e-commerce strategy.

RGC Advertising offers a range of advertising and marketing services in Sydney. Our team develops innovative online advertising strategies for brands with their consumers in mind. To find out more about how we can develop a strategy for your brand, please contact Richard on (02) 8883 2988 or email This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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