For months rumblings of Amazon’s imminent arrival in Australia has been ruffling the feathers of major and minor retailers alike. This e-commerce behemoth looks set to change the playing field of retail in Australia, and not only has it unnerved potential competitors, its strategy has some very prudent lessons for business in general.
Here are five key takeaways for business in an Amazonian world…
Know your market
Amazon didn’t start its meteoric rise as a grocery retailer, electronics supplier or internet marketplace of trending items. It began as a humble online bookstore in 1994 after entrepreneur Jeff Bezos flagged the niche as an untapped marketplace in a dot.com world.
At the time he noted his business was created to fend off the regrets he had about not participating in the internet boom sooner. Amazon soon expanded into DVDs, video, audio and music streaming before moving into electronics, software, video games, toys, clothing, Cloud services and more. It is currently the largest internet company in terms of revenue in the world.
The lesson? Know your market…find the gap…and be nimble in your approach to expansion.
Know your customer
Amazon not only knows its customer, it is relentless in its pursuit of information concerning its clientele. Earlier this year PwC’s John Riccio told the ABC “Amazon knows how each of its customers behaves”, with an obsessive focus on customer data, unmatched by any company in Australia, if not the world.
Not every business has that level of data at their fingertips, but every business does have the ability to reach out and imagine, understand and envisage their customers’ needs.
The lesson? Seek information about your customers, their needs and wants via customer surveys, feedback and research.
Planning is key
Long before Amazon reluctantly and succinctly confirmed they were seeking premises and staff in Australia, the company was carefully planning out its approach. Before even opening a warehouse they had an estimated $1 billion reach into Australia courtesy of internet commerce, while their strategy in other countries is renowned.
The Sydney Morning Herald explains: “”Amazon launched in Spain about five years ago, investing about $A700 million, including a head office, fulfillment centers and a tech hub for research. It now has 1000 employees and will be hiring another 600 this year. Customers in Spain have access to 175 million products and the Prime Now service which offers delivery within one hour.”
The lesson? Plan carefully, assessing strengths, opportunities, weaknesses and threats, and throughout the evolution of your business, reassess your goals and business plan.
Know your weakness
Arguably it’s the lack of preparation and foresight by Australian retailers that is perhaps the greatest lesson of all. An article in the Huffington Post concerning the arrival of Amazon in Australia showed many businesses were unfazed, unprepared and even unaware.
“In fact, almost half of the 505 Australian retailers surveyed in new research from Commonwealth Bank were unfazed about the giant online goods distributor’s arrival down under,” the article stated. “Almost a third were unaware they were coming at all and, of those who did know, only 14 percent currently have a business plan in place to be able to compete with Amazon.”
The result was a 3.5% drop in Woolworths share price on the back of news Amazon had also purchased 400 US-based Whole Foods shopfronts.
The lesson? Know your competitors and be vigilant in your assessment of threats and trends on the horizon.
Be ready to innovate
Finally, Amazon is renowned as one of the most innovative companies in the world. They are currently trialling a checkout free supermarket called Amazon Go, have successfully rolled out grocery and electronics delivery services, and are applying the use of robotics and drones.
National Manager of Retail at Commonwealth Bank Australia (CBA), Jerry Macey, told The Huffington Post the key for Australian retailers looking to survive in a business environment that includes companies like Amazon is to innovate their business procedures to find new ways to provide for their customers.
“We don’t quite know what [Amazon are] going to land with yet. That is why we’re suggesting that an innovative culture is probably the way to combat something that you can’t see yet,” he said. “The best way of coping is being agile, being ready, being well planned.”
The lesson? Look to the future, assess incoming trends and be prepared to innovate your business model in the face of a brave new world.