Here’s why Aussie shoppers will become hooked on Amazon

Charlotte Willis
DECEMBER 9, 201
News.com.au
THE news that Amazon will be landing in Australia next year has been generating a whole lot of buzz in recent weeks, but there’s a chance many Aussies don’t know just how much of a game-changer it’s going to be.
Amazon’s arrival is guaranteed to dramatically reshape Australia’s retail industry when it arrives in September 2017, promising to sell everything at a 30 per cent discount in a move that’s struck fear into the hearts of both small and large Aussie retailers.
“We are going to destroy the retail environment in Australia,” an unnamed Amazon employee told Watermark Funds Management chief investment officer Justin Braitling during a briefing.
Wesfarmers group managing director Richard Goyder has repeatedly warned that the US online retail behemoth will “eat all our breakfasts, lunches and dinners”, while analysts believe it could strip as much as $4 billion in sales from our local retailers, with JB Hi-Fi and Harvey Norman the most vulnerable.
Now, Australians already spend between $500 and $700 million with Amazon, ordering various goods from around the world and waiting weeks for delivery to save some money. But a physical presence in the market, meaning far less wait-time on purchases, is undoubtedly going to shake things up for our established players.
And we’re not just talking about books, movies and electronics. Amazon will sell (almost) anything you can think of. Seriously, think of the most random item imaginable and type it into Amazon’s search bar. You won’t be disappointed.
In America, where the online retail revolution launched just over 20 years ago (from a garage just outside of Seattle), Amazon has grown to prominence by selling practically everything under the sun, and at rock bottom prices.
How? With a notoriously reliable distribution system, for one thing. There’s nothing American consumers value more than efficiency, and then there’s the lure of having the freedom to purchase whatever you fancy, 24 hours a day, seven days a week, 365 days a year.
This is probably why tens of millions of Americans pay $US99 a year to subscribe to Prime, Amazon’s free two-day home delivery service, which includes extra free perks such as access to Amazon streaming videos. Think Emmy Award-winning Transparent, Downton Abbey, Sons Of Anarchy, The Wire, Boardwalk Empire, and around 5000 more, making it a serious competitor in the ruthless streaming battle in recent years.
The membership perks have continued to grow over the past 12 months. For an extra $US7.99 with Prime Now, Amazon subscribers can even get items delivered within the hour. Meaning book lovers can purchase the next John Grisham bestseller at a reduced price, duck out for a coffee with friends, and return home to find it boxed up on their doorstep.
Feeling under the weather? You don’t even have to leave the cosy apartment to get Cold & Flu tablets dropped off. Forgot your Secret Santa gift for tomorrow’s office Christmas party? Order something workplace-appropriate tonight and it will be at your door before you leave for work in the morning.
The whole thing is mighty addictive. Every day, Amazon releases a brand new list of ‘Deals of the Day’ and ‘Lightening Deals’, offering up limited-time sales. So, of course there’s the extra pressure of, ‘if I don’t buy it today, at this insanely reduced price, I might MISS OUT!’
If I sound like a consumer who has been sucked in, that’s probably because I have been. I can’t actually remember the last time I purchased everyday items like toiletries, makeup, cleaning products, or kitchen appliances in an actual store.
And let’s be real, no one actually enjoys carrying a giant 36-pack of toilet paper home under their arm. Helloooo, Amazon Prime.
But it doesn’t end there. As of last month, for an extra $US14.99 a month on top of the Prime membership, customers can benefit from Amazon Fresh. The online grocery shopping service provides unlimited daily deliveries, competing against hordes of fresh food services already operating in the US.
The company also debuted its new restaurant delivery platform, Amazon Restaurants, earlier this year, promising members free one-hour delivery from their participating local eateries. This was a bold venture, given there are dozens of wildly successful food delivery services to choose from in the US. Seamless, GrubHub, Postmates and UberEATS are just some of the bigger competitors that have saturated the food delivery market.
Then, just last week, the company announced another game-changer in food retailing. Amazon Go, a bricks-and-mortar supermarket with the deceptively simple premise of scanning a smart phone at the entrance gate, shopping for whatever you like and walking out the door. No check-outs, no card transactions, no bagging.
This is happening very soon, with the promise of opening the company’s first Amazon Go store in the US by “early 2017”.
So, when Amazon founder and CEO Jeff Bezos promises customers that Prime is “the best bargain in the history of shopping,” he’s probably not far off the money.
Speaking of money, the company surpassed $US100 billion ($134bn) in revenue in 2015 — $107 billion ($144bn), to be precise.
For Bezos, Amazon is customer-driven idea machine that has now landed the 52-year-old billionaire internet mogul a tidy net worth of $85 billion. The company was valued this year at $US350 billion.
With the assurance of an effortless and personalised online shopping experience at significantly reduced prices, it’s little wonder nearly half of US households (around 54 million) have an Amazon Prime membership, according to an report from Consumer Intelligence Research Partners.
The monolithic e-commerce giant now accounts for about 50 per cent of all online retail sales growth and 24 per cent of total retail sales growth, according to US industry data.
To use an example, during America’s “Cyber Weekend” extravaganza following Thanksgiving last month, Amazon is estimated to have attracted more than 30 per cent of all online sales.
While its difficult to know at this point just how deep the onslaught of Amazon in our own backyard will be felt, we know that the company’s long expected expansion Down Under is expected to take place next year.
The launch was originally locked in for March but was pushed back for six months in an effort to roll everything out at the same time, which means the fresh food service will also arrive in September.
Amazon has so far been coy on offering any details, but “they will be dropping distribution centres and performance centres in every state next year,” Mr Braitling told the Australian Financial Review.
He added that the e-commerce giant saw potential in Australia because prices here are too high, saying “your margin is our opportunity” would be Amazon’s “motto” for Australia.