Amazon, and other online marketplaces like it, could become a key factor in Australian retailers' growth plans as they recognise the potential to expand their customer reach, if the results of a new survey are anything to go by.
The survey results, which were released on 5 December, the same day Amazon’s Australian Marketplace went live, was conducted by retail management platform, Neto. It revealed that about 95 per cent of Australian online retailers plan to sell their goods through Amazon Australia within the next 12 months.
A further 18 per cent predict more than 75 percent of their sales will come from Amazon and other online marketplaces in 2018.
The survey, which involved more than 200 retailers, also revealed that online marketplaces have become a key factor within Australian retailers’ growth plans, with 39 per cent indicating they will sell in as many marketplaces as possible in 2018. Some of the technology brands already selling on the Amazon Marketplace in Australia include HP, Lenovo, Acer, Asus, Microsoft, Cisco, D-Link, Linksys and Kogan.
About 18 per cent of survey respondents predicted more than 75 per cent of their sales will come from Amazon and other online marketplaces next year, while 50 per cent predicted between five to 25 per cent of total sales will come from Amazon and other marketplaces over the next 12 months.
Neto CEO, Ryan Murtagh, said Amazon and online marketplaces were a strategic opportunity for retailers.
“The marketing machine that is Amazon and the quality of customer experience that Australian online shoppers will now demand and expect, is a great outcome for every retailer selling online. There is a huge amount of growth coming for Australian e-commerce and every retailer savvy enough to embrace the power of online and marketplaces such as Amazon will get a share of that growth,” Murtagh said.
This sentiment was further supported by the Australian Retailers Association (ARA), which stated that the Amazon Marketplace will provide a great opportunity for local retailers looking to enlarge their customer base and increase their sales, particularly leading up to the busy Christmas trading period.
ARA executive director, Russell Zimmerman said the majority of Australian retailers view Amazon’s platform as a supplementary channel to their current retail offering.
"Amazon Marketplace will provide local retailers an additional revenue stream, and Amazon’s Fulfilment by Amazon (FBA) program will enable Australian retailers to eliminate bottlenecks in their supply chain,” he said.
Online sales currently account for more than seven per cent of total retail sales, and this is growing at a rate of 5 per cent annually, the ARA and Roy Morgan Research recently revealed.
“With the advancement in digital technologies across the retail sector, we believe online retail sales will account for 13 per cent of total retail sales in the next five years,” he said.
“Retail has significantly transformed this year, and will continue to evolve every year; therefore, we encourage retailers across Australia to embrace change, and meet the demands of both consumers and the 24-hour market place. Amazon’s arrival means many things for Australian retail, it means growth, opportunity, and employment.”
Although it’s a common trait in the retail sector to ‘price match,’ it will be interesting to witness how far Amazon will drive prices down.
Analysts are relaying that there are ways traditional retailers can still retain high sales and margins. According to analyst firm, Gartner, this can be achieved through initiatives such as implementing merchandise optimisation applications, real-time specific customer offers, customer-centric merchandising and marketing, and life cycle pricing optimisation.