- Local retailers have a huge window of opportunity right now to take the fight to e-commerce giant Amazon, former Amazon executive Jon Reily told Business Insider Australia.
- Given the $30 billion e-commerce space is predicted to expand enormously over the next five years, the growing pie means it’s anyone’s game to win, he said.
- With Amazon expected to take several more years to hit its strides in the Australian market, retailers are able to get ahead of the curve and cement outmuscle Amazon before it finds its footinghis thinking goes.
When Amazon announced it was launching in Australia in 2017, analysts were quick to predict the end times for local retailers.
Two years on and while that hasn’t happened yet, it likely will if Australian businesses don’t step up their game, former Amazon executive Jon Reily told Business Insider Australia.
“Amazon has been dancing with Australia for two years now but Amazon Australia is a paltry site compared to its other global sites,” said Reily, who was head of e-commerce user experience and design for the devices business at Amazon HQ in Seattle, Washington, from 2012 to 2015.
“The country is definitely in Amazon’s crosshairs but it’ll take a few years yet so Australian retailers have a huge opportunity before Amazon becomes another behemoth here.”
Analysts have found that it typically takes the e-commerce giant up to 7 years to cement its dominance in a new market. Having arrived in Australia at the end of 2017, that still leaves some time on the retail Doomsday clock.
Valued at less than $30 billion last year, Australia’s e-commerce market is expected to swell in the coming years presenting a huge opportunity for both Amazon and its Australian competitors, according to Reily, currently the vice-president of global commerce strategy at consultancy Publicis Sapient in New York.
“Australia is a unique case… for a country of its population and per capita income, it should have over $100 billion a year in e-commerce and yet it’s not even close that. That’s why it’s anyone’s game because you have several companies dipping their toes in but e-commerce isn’t widely used yet,” he said.
That’s partly a matter of having a small population spread so disparately around this sunburnt country, which makes it difficult for the American company to compete on price.
“It’s about learning how to become efficient moving things from point A to point B. The population of Australia is roughly the same as the population of Texas so there’s still not a huge push for Amazon to come here in terms of making money,” he said.
It’s this very problem that a recent $1 billion deal struck between Australia Post and Qantas aims to tackle, expanding the amount of freight that can be shipped around the country.
Those limitations, however, have also likely kept the Amazon threat at bay thus far.
Prime Day, Amazon’s biggest sales event of the year is estimated to have pulled a paltry $US2 million in Australia this year — a pittance for founder and world’s richest man Jeff Bezos.
That limited footprint in Australia hasn’t stopped it from raising the bar.
“I call it the Amazonification of expectations. Even though Amazon doesn’t play heavily in a market doesn’t mean the expectations of customers aren’t affected by that. We used to be satisfied receiving something 7 days later in the post but now we want everything delivered in 30 minutes like a pizza,” Reily said.
“Local retailers who can rise up and meet some of those heightened expectations ahead of time will be very successful.”
It’s about getting on the front foot, Reily said, rather than having to play catch-up once Amazon is established and already swallowing up market share.
“Whether or not Amazon is dominant in 2025 or 2027 depends on what Australian companies do now,” he said.
“You have to take your shopping niche and be the gold standard of what is expected digitally. If you wait two to five years, you won’t have the same chance and you’ll be stuck defending against Amazon. You can already see companies like Bunnings and Good Guys making digital strides forward of doing things. They just have to keep upping their game.”
They will likely need to survive. The latest figures show that the whole sector is under pressure as customers consistently spend less with many retailers are simply going out of business. The ability to go after an e-commerce boom, expected to grow between 15 and 20% over the next five years, may be the key to that.
It’s not just the businesses themselves that will want to succeed. While increased competition is generally good for customers, a monopoly is not.
“Jeff Bezo’s vision is to be the store for everything for everyone and you can applaud the man for having a half a century vision but I don’t want to buy every single thing across the planet from Amazon,” Reily said.
Amazon famously promises to sell everything “from A to Z”, and given Amazon.com already stocks an estimated 120 million different products — including 44 million books — it can’t be too far off.
Ball’s in your court, Australia.
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