in 2022. And over the 12 months to June 2024, Roy Morgan data showed, Amazon Australia acquired another 1.1 million customers, reaching 7.9 million shoppers, in a time when many retailers struggled to maintain shopper engagement.  In November 2024, Goldman Sachs found that Amazon was now the second-largest online retail business in the country, after Woolworths. Based on its current trajectory, Goldman Sachs analysts now estimate Amazon is likely to generate $6.5 billion in gross merchandise volume (total spend before fees, discounts and returns) up from $4.5 billion in the prior year.  But is this just the beginning or will the juggernaut run out of puff?  Amazon’s winning formula for scale offers a glimpse of what may come  Whilst the dynamics of the UK market are different to ours, there is much to learn from Amazon’s ability to successfully build scale in markets over time.  Over the past 13 years, Amazon has increased its dominance in the UK market, with its annual net sales growing from US$3.929 billion to US$33.59 billion over the period, meaning marketplace sales grew nearly 10-fold. As a result, Amazon sales are now estimated to equate to a quarter of all online sales in the UK in 2024, eMarketer stated. Key to its success has been its ability to drive frequency with shoppers. Among Amazon shoppers in the UK, 70 per cent now shop there at least once a month, while 17 per cent use the online marketplace weekly. Critical to its success has been driving the uptake of Amazon Prime membership, which stands at more than 19 million subscribers a month in 2024, driving frequency and stickiness of shoppers. This, combined with Amazon’s dedicated focus on building a vast fulfilment network to underpin its delivery proposition, has allowed the brand to achieve the size and scale it has in the UK. Locally, we are observing several key indicators that suggest Amazon is just getting started in our market, and it will exert greater dominance in the years to come, increasing its size, scale and dominance, as we have seen in other markets.  Key indicators Size of the Amazon Prime Subscriber Base – Data released by The Australian in 2024 shows the Amazon Prime subscriber base has reached more than 4.1 million subscribers in Australia. This is a key predictor of future growth, as the subscription provides free expedited delivery, creating a hook to drive repeat purchase with the platform over time.  Fulfilment expansion – Amazon Australia is heavily investing in expanding its fulfilment capabilities in the local market. In April 2024, it announced it planned to invest $490 million in opening two new fulfilment centres in Horsley Park, Western Sydney, with one to open later in 2025 and the other by 2026. This is in addition to the build of its state-of-the-art robotics fulfilment centre that began construction in 2023 in Craigieburn, Victoria, which is said to be targeting completion in 2025 and is said to be the size of 11 Melbourne Cricket Grounds.  Rumoured same-day delivery expansion – Following its expansion in fulfilment capabilities, Goldman Sachs has speculated that Amazon is aiming to release its same-day delivery proposition into every major city by 2026 – a proposition that most Australian retailers will struggle to rival. As convenience is such an important driver of choice for the modern shopper, it stands to reason that this will further drive adoption of the platform and support the retailer’s ability to drive increased frequency with the platform.  Category growth on Amazon Roy Morgan Research in 2024 showed that the most popular categories on Amazon Australia are books, small electronics goods, clothing, and computers and accessories. But brands operating outside of these categories should not be complacent.  In a recent Australian Competition and Consumer Commission hearing, the CEO of Woolworths cited the 6500 products across the grocery, household and personal care categories stocked in Woolworths that were now also being sold on Amazon. As costs to shop for everyday essentials have soared, shoppers are looking for new ways to save, which has led to greater demand for products in categories like pet, baby and more on the Amazon platform. This has led a number of CPGs and FMCGs to increase their investment and focus on the Amazon platform, which provides consumers with a greater selection and assortment to choose from.   How to prepare for a more dominant Amazon  Build capability now to succeed Niche and nimble digital-first brands are often able to reap the reward of a shopper’s shift to Amazon, as they inherently have the key capabilities in place to best leverage the platform to show up on the digital shelf. For brands newer to the space, the time to start building capability is now, as opposed to doing so once material market share losses are biting the bottom line. Capabilities around retail media management and optimisation, effective content generation, online fulfilment management and search optimisation – along with deep knowledge and understanding around the platform algorithm – are all important muscles to build to be successful.  Adopt a strategic approach to pricing and product selection and assortment When it comes to Amazon, it is important to consider your product and platform fit. From buying in bulk to buying solutions, the way people purchase on Amazon is different depending on the category, so thinking through your merchandising approach is important to drive sizable sales and profitability. Also, given the volume of sellers on the platform, selling an individual SKU or item may not be enough to be competitive.  Brands that are most successful are those that step back and assess the competitive landscape within the platform in order to establish the right online propositions and pricing approach for the channel and environment.  With respect to pricing specifically, also take into consideration Amazon’s free shipping minimums. Non-prime members pay for shipping on all orders below $59, which can cost around $10 to $15, depending on the order. This can put customers off from ordering, so pricing your product above the threshold may increase conversion among non-Prime customers.    Invest in retail media As with many channels, simply being there is never enough. We need to integrate our core presence with strategies to cut through on the digital shelf and this is where promotion plays a vital role. Globally, Amazon has one of the most successful retail media networks, and commands about 80 per cent of the retail ad market in the US. It is expected that, over time, its local ad network will garner greater investment. This means that to drive cut through, Amazon Ads should be a key part of your consideration set.   Educate your business and drive buy in  The brands that will succeed in a world where Amazon is more dominant are those that have strong leadership buy-in and an understanding of the opportunity Amazon and its growth trajectory afford.  It is vital that brands undergo a big education to help shine a light on the shifts occurring in the market and ensure that there is leadership buy-in and investment to maximise the opportunity. Those that don’t will need to face the reality of being left behind.