suppliers to offer niche and specialty products to customers. Other retailers interested in evolving their strategies might benefit from this simple model, which helps explain the big picture and how to position yourself for success when competing with Amazon. The horizontal axis categorises an online retailer according to its product range:  Niche players target a specific segment with a differentiated service or curated range. An example is Appliances Online, which offers full-service installation of home appliances.  Category retailers are based in one category, or a few related categories, such as Booktopia or JB Hi-Fi.  Multi-category players offer products from several unrelated categories. Examples include marketplaces like Amazon, Ebay and Catch, and retail conglomerates like Wesfarmers and Woolworths, even though their brands operate independently. The vertical axis categorises an online retailer according to its delivery model:  Combined delivery is when the consumer normally receives products in one delivery, when ordering through Amazon Prime, for example.  Split delivery is when the consumer typically receives several deliveries, such as with Ebay, where most sellers currently dispatch products independently. Let’s assume that in a few years Amazon will offer a similar range and fulfilment model in Melbourne and Sydney to its current UK proposition. Amazon would sit in the top-right quadrant, offering products from every category (including fresh) in one combined delivery. The challenge for competitors is that if Amazon sits alone in the “blue ocean” of the top-right quadrant, it will have a superior customer proposition to most other players. They will be left fighting in a “red ocean” of cut-throat competition for a dwindling share of sales. Let’s look at some specific examples. Niche retailers Strong niche retailers have least to fear from Amazon because the latter is unlikely to compete head-on. Amazon will sell whitegoods, but for customers looking for hassle-free installation Amazon will struggle to match Appliances Online’s exceptional customer proposition and product knowledge. Category retailers The challenge for category retailers is that Amazon may match their range and also offer combined delivery. If you currently buy books from Booktopia and clothes from The Iconic, Amazon can make your life simpler by delivering everything in one go. My prediction is that many of these retailers will either become niche players, seeking to differentiate themselves so they are not competing directly, or will collaborate with other retailers to offer a combined delivery option. Multi-category retailers These retailers are at greatest risk but also have the greatest opportunity. The risk comes because if their business model stays unchanged, Amazon will have a superior offer – a similar or better range but ordered and delivered together. The opportunity comes if these players can find a way to consolidate fulfilment. Delivering the goods Ebay already looks to be pursuing this strategy, having recently announced a partnership with Fulfilio. This is a fascinating development, believed to be a world-first for Ebay, and hats off to the Australian team for such a bold move. Catch Group is enjoying fantastic success with its new marketplace and already possesses Australia’s most sophisticated pick-and-pack operation. Catch also looks to have the potential to offer combined delivery across a number of categories. Perhaps the most interesting situation is that facing Wesfarmers and Woolworths. Wesfarmers in particular could match Amazon’s range across their portfolio of brands (groceries, liquor, hardware, general merchandise and office supplies) if it chose to co-locate in a single fulfilment centre. The massive challenge is that it would require a transformation of Wesfarmers’ business model – not to mention its culture – to enable collaboration. With the decision to spin off Coles, it seems that Wesfarmers has decided not to pursue such a strategy. From a shareholder perspective, this may be the right decision. However, it remains an extraordinary opportunity for anyone interested in retail strategy, as Wesfarmers is one of the few companies in the world with the potential to match Amazon’s range without relying on third-party suppliers. For anyone still unsure whether Amazon will be an important player in the Australian market, relative stock market valuations provide a sobering reality check. Valuations are based on the market’s collective assessment of future prospects and, at the time of this writing, Amazon is worth around nine times the combined value of Wesfarmers, Ebay and Woolworths. Retailer market capitalisations in AUD million, as of August 10, 2018. Within a few years Amazon will have a much stronger hand in Australia than most retailers currently selling online, if the latter do not find a way to either differentiate themselves or consolidate deliveries and extend their range. But recent moves show us that some of Amazon’s largest Australian competitors are moving in the right direction. Jonathan Reeve is Eagle Eye general manager for Australia and New Zealand. He is also the author of Retail’s Last Mile: Why Online Shopping Will Exceed Our Wildest Predictions.