How to compete with Amazon

Date

As you’d expect we’ve been keeping a close eye on Amazon, here are some interesting observations and statistics.

  • Amazon owns roughly half of the on-line space in the US
  • On line sales in the US count for around 12% of all retail sales
    • NZ on-line sales are around 5%
    • Australia on-line sales are around 9% (Amazon is expected to lift this to around 15%)
  • Amazon purchased Kiva (robotics) for 775m in 2012 and has c. 15000 robots employed
  • Last I checked Amazon were still loosing money even after 20 years (which does not seem to effect their valuation)
  • Amazon has as 3PL service called FBA (Fulfilment by Amazon)
  • Amazon have a drone delivery programme they are developing (its generally expected this will happen but won’t work in may areas (e.g. high density housing) and there is a lot of regulatory issues still to overcome…autonomous vehicle deliveries are likely to arrive before drones)

The biggest impact Amazon is expected to have in AU and NZ is the increase in service levels, lower prices and product range. It is expected to be a wakeup call in Australia where many sellers use cheap (therefore slow) courier services e.g. 3-7 days…Amazon services will be typically 24-48 hours and shorter…

Amazon is expected to be of a big concern to department store type businesses (Harvey Normal, Super Retail Group, JB Hi Fi etc…) Walmart in the US used to dominate at 40% market share a few years ago this is now heading down to 15%.

Some people think that Amazon won’t “storm the market” for a number of key reasons.

  • A lot of retail margins are already very low down here, there isn’t the “fat” that other markets have had that Amazon has been feasting on. Where in other markets consumers can buy products cheaper on line than in a store this may not be the case for many products in AU/NZ.
  • A lot of sellers in NZ (particularly) are already using very high service levels for their last mile delivery e.g. for all of our clients using Courier Post overnight and two day standards is actually normal so Amazon won’t make an impact there…for low cost, slow courier providers these sellers will be exposed. They should be worried.
    • I ordered some detachable laptop screens off a company in the UK on Friday (that you can’t buy here) they were delivered to me on Monday. They are very cool check out the image below ūüôā
  • A lot of Kiwi companies are trailing competing products e.g. The Warehouse has launched a trial “Prime type” offering. The Warehouse is also trialling a 2 hour deliver service..

Here are some key things to note regarding SCS as your fulfilment provider

  • We launched and have been managing a 90 minute order to door service since 2012 (refer earlier blogs)
  • As a national top 10 Courier Post account, SCS offer some amazing services through this brilliant partner at competitive pricing.
    • Deliver tonight (deliver between 6 and 9pm in AKL, CHH and WGN)
    • Saturday Deliveries
    • Parcel collect (send your shipment to a collection point that your customer chooses)
    • Parcel Leave (instructions for your courier driver to leave your order where you want it (e.g. under the bbq cover around the back)
    • Parcel re-direct (before your shipment gets delivered you can redirect it to e.g. work)
  • SCS fulfilment rates are cheaper than Amazons FBA fees
  • SCS is already developing a robot programme

The on-line space is all about the customer experience, you can bet that Amazon will be using every available delivery option to excel and exceed customer expectations, I’d encourage you to make sure you are leveraging these services through us if you need help or want more info drop me a line brad@supplycs.com

I was interested to read that¬†50% of super retail group top selling lines are already listed on Amazon. Part of the strategy seems to be if you can’t beat them join them.

An omni-channel is a strong way to compete against a pureplay (on-line only) offering so this should part of your strategy if possible.

Key takeaways

  • Don’t be afraid of Amazon but use it as a trigger to ensure your on-line offering is awesome
  • Make sure you are leveraging the amazing last mile services that Courier Post offer
    • Integrate these into your shopping cart

Cheers

Brad

Ordered on Friday out of the UK delivered on Monday

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