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How Amazon is tapping into on-demand culture

Imagine a future where you can start cooking a meal only to find you’ve forgotten a key ingredient. You speak into a magic wand attached to your refrigerator and order the item and it’s delivered to your door soon afterwards.That future will soon be a reality thanks to Amazon.

With its new product, the Dash Wand, in conjunction with its Prime Now on-demand service, customers can order what they want, when they want it. Although these services are not available in Australia just yet, Amazon is fast making its move onto local soil.

Meeting on-demand needs has become the new benchmark for retailers and those with the means are able to compete on a new level. But few are innovating like Amazon. According to Fast Company, Amazon’s focus is on allowing people to save time, not money. In a fast-paced world, time is now the most valuable product a company can offer.

What does Amazon in Australia mean for our traditional retailers?

Traditional retailers are already feeling the impact of mega-companies such as Amazon transforming the digital shopping experience, believes Professor Pasquale Sgro, Head of the Department of Economics at Deakin Business School. But this pressure on Australian incumbents is set to increase as the company moves to set up local warehousing and distribution.

‘The presence of Amazon will just intensify the competition,’ he says. ‘What the retail landscape will be like in 12 months time is unclear in terms of how the large current retailers will adapt and survive.’ Prof. Sgro suggests there will always be a place for physical retail stores, but those that survive will need to improve their customer experience.

Despite operating primarily online, Amazon is also setting standards for physical retailers. Prof. Sgro highlights Amazon Go, a retail offering that allows customers to scan items using an app then walk straight out of the store. The store is fitted with sensors that detect which items you’ve taken, and automatically charges your credit card.

‘If Amazon decides to move into the supermarket space in Australia and can provide quality products at a low price, Australian consumers will be better off,’ he says. ‘If this competition proves to be too harsh for our existing supermarkets, then some rationalisation will take place.’

 

'The presence of Amazon will just intensify the competition. What the retail landscape will be like in 12 months time is unclear in terms of how the large current retailers will adapt and survive'

Professor Pasquale Sgro,
Head of the Department of Economics, Deakin Business School

Is the future of shopping online-only?

In the coming years, there’s no doubt digital shopping services will become incredibly sophisticated. But this doesn’t necessarily mean the complete death of physical stores.

Amazon is developing a drone delivery program called Amazon Prime Air, which will deliver small packages more efficiently than road couriers. The company has ambitious plans to deliver goods to customers around the world in 30 minutes or less.

Despite this, Prof. Sgro suggests that such operations won’t wipe out retailers entirely. ‘There will always be a place for physical retail stores where the shopping experience is more real than virtual but needs to be made more attractive and less of a chore,’ he explains.

Prof. Sgro suggests that in order to compete against retail giants like Amazon, Australian businesses can expand their digital services and ensure that the shopping experience they offer is enjoyable.

The disruption could have an impact on the retail workforce, though. Like in any widespread industry shift, Prof. Sgro predicts some unrest: ‘some labour will be shed and some retrained as the retail industry adjusts,’ he concludes.

Interested in the future of business? Consider the range of business degrees at Deakin University.

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Professor Pasquale Sgro
Professor Pasquale Sgro

Head of Department, Economics, Deakin University
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