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Is Amazon really the enemy for Aussie retailers?

 

StuartO'NeilBy Stuart O’Neill, head of business at SAP Hybris Australia and New Zealand.

The inevitable launch of Amazon in Australia has local retailers running scared. To the point outgoing Wesfarmers CEO Richard Goyder said Amazon will “eat all our breakfasts, lunches and dinners.

It might sound dramatic but considering the retail giant comprises half of online retail sales growth in the US and this is set to double in the next 10 years, it’s only natural for local organisations to have questions and concerns.

Make no mistake; Amazon is likely to be a success in Australia.

It has deep pockets, a brand name synonymous with convenience, an established and globally tested business model, and already a large Australian following. Nielsen stats show 56 per cent of Australians plan to purchase from Amazon when it launches, despite no public concrete plans for when this might be in place.

But this still doesn’t make Amazon the darkest cloud on the horizon.

The greatest threat to Australia’s retail industry isn’t the emergence of another competitor, or even one as established as Amazon. Of bigger risk to retailers is themselves – or more specifically, the customer experience they offer. And this makes the widespread fear and commotion around Amazon’s launch misguided. What we have seen in Europe and the US is that organisations who have been able to differentiate their brand survive. Those who do not struggle for relevance.

There is a strong link between customer experience and loyalty, with SAP’s 2016 Australian Digital Experience Report finding 76 per cent of consumers would remain loyal to a brand if the digital experience was ‘delightful’. The report also points to the need for local businesses to improve the experiences delivered, with 40 per cent of Australians unsatisfied with current offerings.

It is far cheaper to defend the market share you have than try to gain it from somewhere else. Retailers spend millions on marketing to buy and foster loyalty but it can be destroyed with a single bad experience. This is a more recognisable and ominous threat than Amazon will ever be.

When retailers start looking at Amazon as the greater disruptor, they’re effectively not seeing the forest for the trees. Digital disruption has already happened without Amazon’s launch, and it needs to be addressed by looking inwardly on their own businesses. Retailers have to get the fundamentals right to deliver on the expectations of today’s consumer.

Amazon
Amazon is not the darkest cloud on the horizon for retailers

This means allowing customers to direct the shopping experience they want, through the channel they want, and having it all align. All contact with a brand should be considered equal, because consumers see no distinction between their experience in a dressing room, engaging with a chatbot, or loading up their online cart. If these contact points are inconsistent, consumers will seek a better one elsewhere. Delivering on this promise is a trait Amazon has in spades.

Businesses are in the midst of a data gold rush, and retailers have the potential to know more about their customers than ever before. It is critical they use this data to inform their omnichannel strategy. Communications can be tailored, personalised and helpful, allowing consumers to feel valued. This differentiates the customer experience and therefore their brand.

Getting these elements right will go a long way to futureproofing any retail business from any competition; Amazon or others.

The importance of customer experience can’t be overstated and with more competition coming into the market it’s critical to act now. Amazon won’t be the cause of disruption in the industry, but if retailers don’t get their digital experience up to speed they still might lose their customers.

Stuart O’Neill will be speaking at next week’s retail festival of ideas, Inside Retail Live.

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