If the mainstream media coverage is to be believed, Amazon’s impending roll-out of its full marketplace product in Australia is the end of the world as we know it (for retail). If you’re in the business of selling things for money, it’s time to jump ship because Amazon is going to be selling all the things and taking all the money.
And sure, maybe the Myers and JB HiFis have reason to be a little hot under the collar. After all, they’ve been plugging away under the assumption that the Australian retail sector – characterised by its unique mix of high sales margins, impossibly high barriers to entry and low levels of competition – would remain a utopia for retailers at ‘the big end of town’ even as the rest of the world radically redefines the way we buy and sell.
So yeah, maybe a storm is coming for those guys. The good news is, you’re name probably isn’t Gerry Harvey, so you don’t have to worry too much about major listed retailers profit margins will forecasted to drop by up to 200 basis points in the next five years (what in the what now?).
What does Amazon Australia really mean for you then? Well, depending where you sit on the retail food chain, it could mean many different things. The ugly truth that isn’t quite so ugly at all is that for most people with something to sell, Amazon coming here is a good thing. For most Aussie brands and retailers, Amazon’s role as a threat or an opportunity largely depends on how willing you are to adapt, prepare and evolve.
It’s not just Amazon making money on Amazon
Last quarter 51% of all sales on Amazon were via third-party sellers. What does this mean? Well first you need a basic understanding of the different selling models available to people selling on Amazon. The short version is that like eBay, anyone can register to sell on Amazon. Of all the products sold, just over half of them are sold by brands, retailers or individual sellers. With well over $100 billion in sales last year, there’s plenty of success to go around.
Still not convinced? Here’s our top 5 reasons why you should be cheering about Amazon coming to Australia:
Built in audience
If you’ve ever run your own online store, you know it’s nothing like Field of Dreams. If you build it, they will not come. Not unless you invest a lot of time and money into marketing your site, which can be a slow burn at best. Marketplaces like Amazon come with their own built in audience, and whilst it’s true that you’re sharing that audience with a ton of other sellers, it’s better than hearing crickets at your own web shop.
In the US last year, over 40% of online sales occurred on Amazon. That’s a lot of sales. You may have also heard that online sales only account for around 2% of sales in Australia. So percentage of a percentage, best case scenario is Amazon takes a little less than 1%, right? Not the whole story. Anyone who has experienced online shopping in the US or UK knows just how far behind things are in Australia. Long waits for shipping, inflexible delivery options, huge shipping fees and poor returns policies have kept filling our online shopping baskets firmly in the much too hard basket. Not anymore – Amazon doesn’t just bring better prices, it brings a better experience which will lift the standard of online shopping in Australia, and with it the market share of ecommerce sales.
It’s a pretty simple equation. You need to go where the customers are, and the customers will be on Amazon. If you’re already selling through your own Magento, Shopify or WooCommerce store an integration solution like Codisto LINQ will allow you to list your entire product catalogue on Amazon in just a few seconds. Why wait till the Australian launch? Get ahead of the curve and start selling on Amazon US or UK today and reach over 300 million new customers!
Favourable terms
Australia’s biggest retailers aren’t shy about using their muscle to push for unfavourable terms from their suppliers, whether it be 90 day payment terms, vague trial periods or slotting fees, suppliers in Australia are used to getting the short end of the stick. Selling on Amazon put a bit more of the power back into your hands. Amazon does charge a percentage based fee for selling your goods, and they aren’t bereft of the odd nasty surprise fee, but the lion share of revenue from every sale goes back to you. You get to decide the sales price and you manage your own inventory.
For many suppliers, cash flow is king and can make or break your business. If this is a familiar struggle for you, then it will be music to your ears that the money earned from sales of your products on Amazon can be in your account within just 7 days.
A New Marketing Channel
Chances are you’re already marketing on Google. Whether you’ve employed the services of an SEO wizard or you’re using AdWords, chances are you’ve dabbled in some form of Search Engine Marketing. Guess what – Amazon is a search engine too! In fact, over 50% of product searches in the US begin on Amazon. With all the hype around Amazon Australia’s upcoming rollout, you can expect to see a lot of people searching for a lot of products, especially during the launch period. Don’t miss the chance to get your products in front of all those eyeballs.
People’s shopping behaviours continue to change, and online research has become the standard fare for many peoples purchasing journey. Having your products listed on Amazon can help grow brand awareness and increase traffic to your online store as the increasingly savvy consumer seeks out more information.
A Chance to Get in Early
There’s a lot of money to be made on Amazon, but in the USA and UK marketplaces it’s the established sellers that take the largest share of the pie. The secret to their success – they got in early, before it got too crowded with competitors. With Amazon Australia set to launch in a big way, you need to get in ASAP to get the edge on your competitors and establish your brand as an Amazon powerhouse. If you’re currently using Magento, Shopify or WooCommerce to power your online sales and you’re interested in being part of our pilot program for sellers on Amazon Australia, register here.