Aussie Retailers Look for Delivery Solutions as the Amazon Effect Sets In

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The Australian market’s thirst for online shopping and on-demand deliveries has only grown since Amazon arrived on Aussie shores late last year and retailers are fast realising they need to fight back.

Surveying 1,000 consumers across the country, Go People’s research revealed that despite more than half (59%) of Aussies seeing Amazon as a threat to small businesses, a similar amount (47%) will still shop there.

Less than three months in and local retailers are already feeling the ‘Amazon effect’ with the market’s disruption pushing them to evolve. Businesses are realising they need to deliver the best possible purchasing experience for their customers to stay relevant.

We’re now seeing a shift towards retailers seeking alternative solutions to match or beat Amazon’s delivery options. Specialty Fashion Group Ltd (ASX: SFH), the group behind Aussie labels including City Chic, Millers and Rivers, is one of many who are reinventing its retail strategy to prioritise e-commerce and same day delivery.

The fashion group will be closing at least 300 of its 1,000 stores, leaving only the profitable ones remaining. This combined with a strong focus on e-commerce, after investing in new warehousing to offer customers a three hour delivery service, the group is looking to online sales to drive future growth.

Our research shows, when Aussie consumers decide where to shop, they now place more importance on delivery speed (41%), than the ability to actually touch and feel the product (33%).

With the NAB reporting online spending is growing five times faster than traditional retail spending, it’s clear Australian consumers are letting their wallets do the talking. For local retailers, the supposed brick and mortar advantage of being able to physically experience a product, before purchasing, is now less of an advantage than it once was.

Deloitte retail executive David White has expressed that while Amazon has arrived, it’s impact on the Australian market is far from done. “As Amazon builds out its infrastructure and services in Australia in 2018, we can expect its presence and influence on the market to grow significantly, particularly in the second half of the year and in the lead up to Christmas,” said White.

“We’ll have to wait and see the ultimate impact of Amazon’s on-shore business in Australia, but it’s important to remember this also creates opportunities for Australian retailers.

“And with so much change and uncertainty in the Australian retail landscape, 2018 could be a pivotal year for many Australian retailers.”

We’re becoming a nation of on-demand shoppers, with one in two (50%) noting the importance of same-day delivery when deciding where they shop. Local retailers need to ensure they delight their customers throughout the entire purchasing experience to remain competitive and look to see how their peers, such as Specialty Fashion Group, are implementing huge changes to survive and grow in the midst of disruption.

 

Wayne Wang is the CEO and Founder of Go People.

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