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Amazon Australia has timed its launch perfectly for the Christmas period, but here's how local retailers can survive

Photo: James Chin Moody and his two boys.

Amazon’s delayed start in Australia is seemingly not a huge handicap, with delivery tech startup Sendle revealing the peak of the shopping season is still almost two weeks away.

Industry analysts had predicted Amazon Australia would open as a general store in November, in time for the US shopping days known as Black Friday and Cyber Monday (November 24 and 27). However, system problems reportedly found during a soft-launch two weeks ago delayed its opening to the wider public.

But now Amazon has opened in the first week of December – and this is not too late, according to Sendle co-founder and chief executive James Chin Moody.

“Almost one-in-three Australians do their shopping on the last pre-Christmas Saturday, and with Christmas falling on a Monday this year, we anticipate peak days for business this year to the weekend of 16 to 17 December,” he said.

But retail sales data shows it’s going to be a tough period for the sector. While online sales rebounded in October, up 1.5% in seasonally adjusted terms, after a 0.5% decline in September,

The Christmas shopping season is the peak sales period for retailers and Chin Moody says retailers need to have certain basics secured to survive.

“Have a holiday-specific shipping and returns policy ready. Shipping times and returns policies are critical in the November to January period,” he said.

“70% of customers look at return policies before they make a purchase during the Christmas rush… usually because they are buying gifts for others. Make sure you have a returns policy with the gifting season in mind.”

The entrepreneur also said businesses should validate delivery addresses before sending, as one in five customers make address errors while ordering online, and that retailers need to know the final courier deadline for Christmas deliveries.

“Cut-off dates vary between carriers and some stop taking new orders as early as a week out from Christmas due to high demand.”

Xero Australia has revealed that, fortunately, Australian retailers seem to be doing better than most at keeping their head afloat. The accounting software company reported that last Christmas 61.1% of retailers were cash flow positive – which was much better than the average of 54.6% across all industries.

How to survive in the post-Amazon world

Xero Australia managing director Trent Innes said that local retailers can do some basic due diligence to ensure competitiveness.

“Use your data. Many retailers collect a lot of data in their day-to-day operations but don’t fully use it. Look back at previous years’ operations to see what sold well and what didn’t, your stock and hiring levels, and profit margins across the business, in order to make more informed business decisions,” he said.

Innes said that small retailers should know exactly how much it costs to bring in extra staff.

“Hiring Christmas casuals can be significantly more complicated than just employing hired hands. With more staff comes significantly more admin,” he said.

“Make sure you consider the full costs of hiring staff, including penalty rates and additional payroll admin to ensure your business can cope.”

The post-Christmas period is also a danger area, according to the former Microsoft executive.

“Boxing Day sales can seem like a great idea to clear stock but it’s not always a wise move,” he said.

“Make sure any discounting is based on a sound pricing strategy and doesn’t trade profit margins for a quick buck.”

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