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Amazon in Australia: five questions shoppers are asking

Amazon has arrived.

After months of speculation about when the US online retailer would launch in Australia, we can now experience it for ourselves. How will Amazon really change our lives?

In recent months, the predictions have kept rolling in: Big retailers’ worst nightmare, the death of family-run stores, a boon for independent retailers, a sink-or-swim moment for retailers, the grenade that will start a price war, ‘the most dynamic period Australian retail has ever experienced’.

More than 4.5 million Australians accessed Amazon’s US website during October, according to Nielsen figures. In November, Woolworths warned that suppliers risked ‘cutting their own throat’ by selling their products to Amazon. Yet others warned Amazon should be wary of the ‘Canada effect’.  Canada’s small population and large geography, similar to Australia’s, means in that country the online retailer has a foothold but not the same dominance as in the US.

With so many and so varied positions on Amazon, Deakin University marketing lecturer and customer behaviour expert Dr Alvin Lee gives his verdict on the five questions about Amazon that matter most to you – the consumer.

1. How will Amazon change my shopping habits?

‘It gives me more choice; I will look round a lot more. I was in New York recently and Amazon took over one of their major shopping centres, and it’s incredible how it’s totally different.

‘The variety and the retail concept was very different. They took over a whole chain of retail stores. Amazon actually took over supermarkets, they are not just online now. I was surprised to see Australian lamb on sale, and I could buy it and bring it to the next store and someone would cook it for me, right there in the supermarket. Convenience, price, variety, availability – it’s totally different to what is going on in Australia.

‘I suspect that my shopping habits will dramatically change depending on what Amazon is offering here in Australia. For example, my shopping habits changed dramatically with Aldi. I went from what we call a ‘shopping cart’ person; one big cart of a week with $400 worth of groceries to a being a ‘basket’ person. Now I go almost every day – buy smaller quantities, everything is fresh, and I try not to freeze anything.’

2. How is Amazon different to other online shopping outlets?

‘They are the original, the oldest and one of the most trusted brands around.

‘It’s a slightly different experience compared to something like eBay – if you compare consolidator sites like Amazon to other consolidator sites, Amazon simply has the whole breadth. They have the merchandise, it is well known they stand behind their brand, warranty-wise.

‘Although Amazon do break a lot of rules, for example VAT (value added tax) avoidance in the UK, they offer breadth and trust.’

'It’s a slightly different experience compared to something like eBay – if you compare consolidator sites like Amazon to other consolidator sites, Amazon simply has the whole breadth.'

Dr Alvin Lee,
Deakin University

3. How will Amazon integrate its online retail offer with new products like (cloud-based home voice services) Alexa and Echo to watch our shopping behaviour?

‘It just makes shopping and putting things in front of you easier. You know how you look on Facebook and suddenly the car you looked at on carsales.com.au starts popping up? It’s about trying to reduce spam and make all the communications you receive more tailored using a bit of AI (artificial intelligence).

‘All these things do (technology such as Alexa) is track browsing behaviour. The customer experience now is a ‘fractionalised experience’ where you experience brands in a very fragmented way. Every single time you encounter a brand it’s like a piece of the story. All these things do is they consolidate little pieces of the story and they put it together for you. People used to have one desktop. Now how many devices do you have?

‘I don’t think people see it as an invasion of privacy. The simple thing is if something matters to you and you are interested in it, it stops becoming junk mail. Invasion of privacy is when something comes up and you have absolutely no use for it. Whether people care or not, there seems to be no movement from those people who are concerned. People put everything on Facebook and realistically anything you put on Facebook, Facebook owns.’

4. How will Amazon have an impact on bricks-and-mortar retailers and Australian online retailers?

‘In terms of retail, Australia has always been a pretty closed shop, particularly with the big chains… Amazon will give them a run for their money and force them to up their game a little bit. At the end of the day, for the consumer, any time somebody tries to up their game or drive prices down, or do things in a different way, it benefits the consumer.

‘“Mom and pop” businesses have been going in and out of business for a long time. The only thing, unfortunately, which keeps the corner shop alive is tobacco sales. It’s not a matter of whether Amazon will put them out of business, they go out of business because consumers choose to go somewhere else. The other reason is pricing – they can’t beat them on pricing.’

5. Will Amazon’s launch make things better for Australian consumers?

‘More choice is always better. More competition is always better. It brings us a step closer to being a real serious retail market. But Amazon might find it difficult. They’ve succeeded in markets that have high density. Australia has only two places with sufficient density for their business model (Melbourne and Sydney).

The challenge for Amazon is one of scale. Starbucks is not here in Melbourne; they didn’t really make it. They were used to American density. Starbucks is in Asia, which has density.’

Interested how marketing, business and retail connect? Consider the range of business degrees at Deakin University. 

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Dr Alvin Lee
Dr Alvin Lee

Lecturer in Marketing, Faculty of Business and Law, Deakin University

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