Friday, December 15, 2017

Sailing the Australia/NZ Amazon

Giant online retailer Amazon has arrived in Australia. From the news reports, one could be forgiven for thinking that it’s just about Australia. It isn’t. The arrival of Amazon into the Australasian market is huge news, posing both threat and offering major opportunities to Antipodean retailers. Which one it ends up being will be determined by the retailers themselves.

Amazon officially launched in Australia last week, and with a 24,000 square metre (nearly 260,000 square foot) distribution centre at Dandenong South in Melbourne, the company and its offerings will only grow. Hundreds of jobs are also being created in the distribution centre.

At the moment, New Zealand customers apparently have trouble ordering products to be delivered to this country. Reporting for the New Zealand Herald, Aimee Shaw wrote:
“…entering a New Zealand delivery address makes an error message pop up. "Sorry, this item can't be shipped to your selected address," the message reads. "You may either change the shipping address or delete the item from your order. You can also see if this is available to ship to your address from another seller." Further information states: "Amazon may be restricted from shipping to your country due to government import/export requirements."
Shaw notes this could be teething problems, but it’s clearly something Amazon will need to iron out—and probably will. The company sees Australia and New Zealand as one market, which makes a lit of sense: Two English-speaking countries with similar cultures and some common history, while different enough to make diverse product ranges a necessity (which is good for customers). The important point here is that Amazon intends to sell to New Zealanders, not just Australians.

Some traditional retailers on both sides of the Tasman are worried, and there really are risks. For example, it’s been a reality for years that customers go to a “bricks and mortar” store to look at products they end up buying online, and while that’s not just about Amazon, increasing its presence will probably increase the frequency of that happening. Because stores get nothing out of that behavior, many have spent time complaining about the practice instead of trying to meet the market by delivering what customers want. But even those that have set up online retailing operations may find themselves swamped by the new, more local competition.

Even so, other companies plan to embrace the opportunities offered by Amazon, for example, by joining Amazon Marketplace.

New Zealand online retailer Mighty Ape is opening a new 10,000 square metre (about 108,000 square foot) distribution centre to better serve their growing business. Because of that, they’re not worried about the entry of Amazon into the local market because until and unless Amazon opens a distribution centre in New Zealand, Mighty Ape will be able to offer faster delivery. In fact, right now it’s possible to get a product delivered in Auckland the same day its ordered, something Amazon can’t do from Australia. Mighty Ape’s new distribution centre will expand that capability.

They’re certainly not counting on having an advantage forever, though, and will look to enter Amazon Marketplace to try and grow its Australian customer base, which is currently 20-25% of the company’s business. Their business has thrived by adapting, and this is just another time they’ll need to do that.

The arrival of Amazon to the local markets in Australasia is a potential threat to some businesses, especially those that can’t or won’t evolve and adapt. But to savvy and nimble companies, there will be opportunities. Which reality will dominate? No idea. But hopefully the customer will win in the long run.

Full disclosure: I’ve ordered from Amazon USA and Mighty Ape, as well as other New Zealand online retailers. I have not received compensation of any kind for this post—not that I’m above that or anything, it’s just nothing’s ever been offered to me. So, the opinions in this post are entirely my own sincerely held opinions.


rogerogreen said...

a tricky one, you are!

Arthur Schenck (AmeriNZ) said...

Since I live in New Zealand, home of the Lord of the Rings movies, perhaps you meant to spell that "tricksy".