Despite retail giant perceived as threat by most.
Australian consumers are eagerly awaiting Amazon’s entry in the local market, with almost 70% likely to purchase from the online platform. But most retailers (78%) don’t have a strategy in place to combat the global retail giant, Commonwealth Bank’s latest Retail Insights research shows.
“It seems Australian shoppers are ready for Amazon but many of our retailers are still at the drawing board,” Commonwealth Bank national manager of retail, Jerry Macey said.
“Although Amazon’s arrival is reportedly weeks, not months, away, it will have a staged entry. So there is time to put plans in place, but that window is closing. There’s still one quarter of retailers concerned about Amazon who not only don’t have a plan, they aren’t working on one.”
Retail Insights has also found an unexpected generational split among Australian shoppers. The older a person is, the more likely they are to be aware of Amazon. But older shoppers show the least inclination to buy from Amazon. In contrast, younger shoppers are more likely to buy from Amazon, despite having the least awareness of it.
“Savvy retailers will be looking to better understand their target market and provide a relevant experience for that group. For instance, younger generations want a more engaging experience in-store to prevent them drifting online,” Macey said.
CommBank’s Retail Insights report shows almost three quarters (73%) of consumers are comfortable buying Amazon branded-products. One third are likely to subscribe to Amazon Prime for extra benefits, likely to include unlimited free delivery and access to video streaming, for a fee. “Shoppers are clearly indicating their willingness to buy from Amazon and flagging a high degree of trust in the brand – before it has even arrived in the local market,” Macey added.
Almost nine out of 10 retailers are aware of Amazon’s plans to enter the local market, a rise of 27% over the past six months. Of these, the majority (52%) now perceive Amazon as a threat, up from 47% at the beginning of 2017. The proportion of those considering Amazon’s entry as an opportunity remained flat over the past six months at 13%.
Despite heightened awareness, the number of merchants who perceive Amazon as a threat and also have a plan to compete has only grown moderately, from 14% to 25%. A further 50% of retailers are working on a strategy.
“With so many retailers planning for Amazon’s arrival, we are going to see merchants ramp up activity. Those excited about expanding their channels will be learning the ropes of Amazon Marketplace, and those concerned will be considering their overall strategy including products, categories, pricing and distribution. So even if you don’t think Amazon will impact your business directly, you need to be ready for an increase in competitor activity,” Macey said.
Shoppers said their purchases from Amazon are likely to include the categories of books, gaming, music and media (47%) followed by consumer electronics/computers (35%) and household appliances (32%).
The CommBank research is based on quantitative surveys of two cohorts: (i) key decision makers from 506 small, medium and large Australian retail businesses and (ii) 1,531 Australian consumers with the data segmented across the generational groups.