AMAZON.com.au – Beyond Speculation

Amazon’s arrival in Australia was one of the most hyped retail events of 2017. “Huge disruption” and a “retail revolution” was predicted but despite of all the speculation it appears to have been anything but spectacular. Our Digital Shopper survey back in March showed that 48% of Aussie online shoppers had looked but not bought anything from the Amazon Australia site, with a further 40% who either hadn’t looked at it or didn’t even know it existed. We’re already hearing of marketplace sellers making a swift exit after months of low or no sales.
Speculation continues as we await Amazon to fire up all engines whilst remaining tight-lipped about their movements. We can’t tell you what Amazon will do next, but we can tell you what Australian shoppers have to say about them. We surveyed 700 shoppers who buy from either Amazon US and/or Amazon AU sites. Here’s what we found out:

Whilst 39% of Amazon shoppers have shopped both the US and AU sites in the past 6 months, 35% have not made a purchase from the AU site. Why is that?
The main reason is that the AU site prices are not so Amaz-ing, according to 40% of shoppers. This echoes widely-held post-launch sentiment and is owing largely to the fact that the AU site only went live with listings from third party sellers on Amazon Marketplace, a reason that 6% of shoppers acknowledged. Marketplace sellers are going to need to sharpen their price points if they want to compete when Amazon actually starts listing products for sale itself.
Price is not the only reason, though. Of equal importance to shoppers has been the lack of range and not being able to find what they wanted (40%). This will no doubt improve over time as more sellers jump on board and Amazon unleashes its own range, but as we’ve seen so far this process is a slow burn.
It will be interesting to see if those 35% of shoppers who have only shopped the Amazon US site will be compelled to try the AU site when, from July 1, Amazon will stop its overseas sites from delivering to Australian addresses to dodge the minefield of complying with GST legislation. Keen shoppers will need to engage a freight forwarding service and pay the GST themselves.
Before this all unfurled, we had asked Agents how the introduction of the GST to online purchases under $1000 from overseas might impact their shopping behaviour. Only 8% had indicated that they intended to keep shopping on the US site. 14% stated they would shop elsewhere and 52% were unsure. Now that shoppers will need to use a freight forwarding service to continue to shop through Amazon US, Amazon may be disappointed if they were expecting to pump the lost volume back through the new AU site. Given the prices and range on the Australian site aren’t currently up to scratch, the short-term future for Australian retailers is looking brighter.

So what are shoppers buying from Amazon AU and how satisfied have they been with the experience?

Books and electronics continue to form the core of Amazon’s business with 52% of shoppers purchasing books and 47% of shopper purchasing electronics from the Amazon AU site so far.

At the time of this survey, fulfilment by Amazon had not yet commenced. Despite not yet being able to experience the fast, low cost delivery experience that Amazon is renowned for, most shoppers were surprisingly happy with delivery cost and speed. It is also worth noting that of those who shop the US site but haven’t yet shopped the AU site, delivery time and cost ranked very low (4% and 9%) in the list of reasons that they hadn’t shopped the AU site yet. 

How Primed are Aussies for Amazon Prime?

Now that fulfilment by Amazon has been switched on, the next big anticipated offer yet to be unveiled to Aussie shoppers is the Amazon Prime membership program.

In the US, Amazon Prime offers shoppers access to free two-day shipping (and same-day delivery in eligible postcode regions), as well as streaming video/music. Most of its 90 million subscribers (nearly half of its total user base) pay an annual subscription for the service (approx. AUD$17/month or AUD$130/yr).
We explained what Amazon Prime offers in the US to get a read from Australian shoppers on their level of interest.

Of the people who were interested or unsure of Amazon Prime, it seems that while the annual fee in the US is USD$99, the AUD$99 mark is where most Australian’s deem it wouldn’t be worth it.
Given Australian Amazon shoppers have so far been happy or undeterred by delivery times or costs, perhaps the issue is simply that they do not foresee themselves purchasing enough online with Amazon in a year to justify the cost of a Prime membership?
Making things even more interesting, Ebay recently announced Ebay Plus, a membership delivery service available from mid-June offering unlimited deliveries and returns on new items for a low annual fee of $49. Pass the popcorn!

Does Prime pose a risk to existing media subscription services?

Nearly 90% of shoppers surveyed currently have at least one media subscription. Many subscribe to multiple services, so it’s fair to say that Aussie’s would be keen to consider another subscription if the value was good and the content worthwhile.
The positive news for other subscription businesses is that even if shoppers added Amazon Prime to their subscriptions, the majority (68%) claim that they wouldn’t cancel any of their existing subscriptions.

Looking Ahead

It appears that Australian online shoppers haven’t bought into the Amazon hype and don’t anticipate mass changes to their online shopping behaviour any time soon, but don’t let this lure you into a false sense of security.

Despite the slow start, Amazon have picked an opportune time to launch in Australia. Practically every week another big-name retailer is collapsing into administration. We hope you’re riding unicorn waves of growth. If not, we trust that you have all eyes and ears on the ground to ensure that your strategies are informed by customer insight and are being executed as planned across all channels. May the odds be ever in your favour.

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