You can’t stop progress. The world seems to be shrinking with American, British and Chinese brands opening new offices in Australia. The latest rumour is that Amazon will be opening some large Australia warehouses in 2018. Will Amazon succeed down under?
What is likely to change with Amazon in Australia? How can Aussie dropship business owners take advantage of Amazon’s presence? Will both retailers and e-tailers need to conduct business in a different, more efficient way? Will Amazon drop shipping be good for my business?
Hopefully, Australian consumers can benefit from lower prices, more variety and faster delivery. Since drop shipping has become very popular in Amazon’s home turf – America – does it make sense for Australian business owners to drop ship? How can your business profit from the Amazon Effect?
Amazon is Amazing
The World Wide Web is like the supersonic airplane: it makes the world smaller. With your smart phone, you can talk with someone on the other side of the globe. Amazon has leveraged this to provide a boatload of merchandise to a world of consumers. Simply put, “Amazon is Amazing.”
In the early days of the Internet, an enterprising man, named Jeff Bezos foresaw the growing possibilities of an e-Commerce revolution. In 1995, he started the American-based Amazon to give people a wide variety of merchandise online. Originally, books were the primary item, but it has quickly expanded to apparel, beauty, electronics, toys, you name it.
“The most important single thing is to focus obsessively on the customer. Our goal is to be earth’s most customer-centric company.” = Amazon CEO Jeff Bezos.
In fact, you can even look up the latest Amazon best sellers online. For October 2017, Hatchimals, Play-Doh, Super Mario Odyssey and Crocs clogs were very popular. Amazon makes online sales more transparent.
Amazon Keeps Innovating
Starting out of Jeff Bezos’ garage, Amazon used the Internet to offer a wider range of merchandise to anyone with a computer. Eventually, its headquarters were established in Seattle, Washington,
United States. Rather than trust in gimmicks, Amazon continued to lower its prices, offer more variety and faster shipping times. Innovation was key to its success.
“We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and they’re the reason we’re successful: Put the customer first. Invent. And be patient.” = Bezos
The brand has very strict goals and has used small team sizes to achieve said goals. The concept has been described as “Two Pizza Teams.” Make your units so small that two pizzas can feed all of the employees during a late night shift. Some Amazon workers slept in their cars after their double shifts.
But, the brand was successful. They kept overhead low with only as many employees as needed. With success comes profitability. At one point in 2017, Jeff Bezos was the world’s wealthiest man.
“Communication is a sign of dysfunction. It means people aren’t working together in a close, organic way. We should be trying to figure out a way for teams to communicate less with each others, not more.” = Bezos.
Amazon CEO Jeff Bezos was very strict, honest and blunt. At times, his platitudes seemed a bit counter-intuitive. Basically, the goal has been to deeply instill the goals, mindset and mission into the hearts and minds of the employees. They intuitively knew what needed to be done and did it well.
Amazon employees could use “primal screams” to release tension during the stressful holiday season. The customer was most important. A little stress was part of doing business.
Amazon Is Global Internet Standard
For some reason, Amazon has never acted like a small start-up. Perhaps, it is because of the numerous products available, along with its large Amazon warehouses employing thousands of workers. Amazon seems to have always had a solid, long-term, big picture vision.
“Every new thing creates two new questions and two new opportunities.” = Bezos
Unlike other Internet brands, Amazon did not become lazy or depend on gimmicks to grow. It continued to become leaner and meaner. Its inventions have allowed it to grow faster than other brands.
It all started with books. In 2004, it tried something called “Block View” – years before Google developed “Street View.” Its Kindle allows for you to read books on an electronic device. Its Amazon Go is attempting to allow for checkout-less grocery shopping. Innovation pays.
Amazon has stood the test of time. Other online brands have fallen by the wayside, but Amazon continues to impress and lead the World Wide Web with its commitment to excellence. It knows what the people want and it delivers in spades.
Amazon Financial Statistics
Amazon is a global brand recognized everywhere. Amazon is Forbes #3 most innovative company and #6 most recognized brand. Are these two criteria separate or part of the reason for the company’s success?
Amazon had a market capitalization of $427 billion as of May 2017. It has 341,400 employees generating sales of about $136 billion annually. According to Forbes, Amazon is #24 in sales and #4 in market value for its Global 2000 businesses.
The US Census Bureau noted that Amazon accounted for 5% of total retail sales in the United States. MKM Partners analyst Rob Sanderson said that Amazon is “eating the retail world.” For 2015, Cyber Monday (when people are encouraged to purchase items online), Amazon accounted for 36.1% of all US transactions. Amazon is the e-tailing “King of the Hill.”
Profit from Amazon Effect
Amazon did not invent the Internet; it has simply become one of the most successful brands in leveraging the World Wide Web. The brand understands what its online customers want and it delivers. Now, there is an emerging phenomenon, called the Amazon Effect.
Traditionally, shoppers have gotten into their Subaru, driven down to the local mall and looked at the merchandise on the shelf. They made their purchase in person and would walk out with their products in hand. This all took a great deal of time, energy and petrol.
With the Amazon Effect, consumers are not limited by their transportation or location. They don’t even need to be in the same territory or time zone as the store. The online process is faster and gives you access to more variety. While some call this the Amazon Effect, it is actually just the effect of having a large e-tailer providing you with a wide range of products.
“A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.” = Bezos
Consumers can go online, view an extensive product display and order what they want from Amazon. Some of the merchandise is supplied by Amazon and some is supplied by third-party vendors.
You don’t need to jump in your Subaru and drive cross town, you don’t need to walk through miles of malls and you don’t need to waste a dollar on petrol. Just buy it online at Amazon. Then, go out your front door and find a box with the word Amazon on its side and you are good to go.
That is the Amazon Effect.
Some might compare this to the “mail order” revolution. Bright Life Australia is one of the companies, which allows you to find a range of items in its catalog. With the Internet, you have more selection and shipping is even faster.
The Amazon Effect is receiving goods from anywhere in the world, during any season and within 24 hours. Grocery stores have already used something like this, but called it global trade. You can get all types of food in your Australian grocery store, no matter the season. The primary differentiation will be price and quality.
Basically, North America (the United States, Canada and Mexico) is the primary market for Amazon. Its next three largest markets are Germany, England and Japan. Amazon international sales were $33.5 billion and these represented 38% of its total sales in 2015.
But, Amazon wants to continue to expand its international reach. Rumours abound that Amazon will expand to Australia in 2018. What does Australia have to offer?
Is the 2018 Amazon Launch in Australia on Schedule?
Australia is an English-speaking country, just like America. It is home to 24 million consumers. There are many shared cultural musical, movie and entertainment trends between the two countries. Therefore, Amazon hopes for synergy.
In March 2017, the official launch of Amazon in Australia was announced. The company is still working out the details, but it is eyeing warehouse space in Melbourne already. In August 2017, Amazon announced that it would open its first large Australian warehouse – the 24,000 square metre warehouse in Dandenong South, Melbourne.
There are already 1,000 Amazon employees in Australia as of 2017. The company is still working out whether courier service or third party delivery will be used. Former Wesfarmers CEO Richard Goyder stated: “We’re not worried about Amazon or anyone else.” Should Australia e-tailers be worried?
“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” = Bezos
Booktopia, Dick Smith and Kogan are a few of the top Australia online retailers, who might need to rethink their plans on how to compete with Amazon. Traditional retailers, such as Wesfarmers and Woolworths might also see stiff competition from the global brand.
Amazon Drop Shipping
Some of the products at Amazon are actually sold by third-party merchants. this is called Amazon drop shipping. The global brand will facilitate the sale and help resolve any problems, acting as a middle man. This is one of the reasons why Amazon is so essential to worldwide e-commerce. It can leverage its decades of expertise.
For some brands it will put them on the map. They can instantly reach a global clientele. They can turn a great product idea into a successful business model.
“If you do build a great experience, customers tell each other about that. Word-of-mouth is very powerful.” = Bezos
Amazon is an e-commerce industry juggernaut. Although, there are many product reviews online, the Amazon reviews are some of the most well-trusted. Manufacturing companies can get a great deal of exposure at Amazon.com.
Did you know that you can drop ship with Amazon? This opens numerous doors for small Australian businesses, who could use the powerful Amazon brand name recognition to expand their own product lines.
Amazon has its own fulfillment warehouses (Fulfillment by Amazon). You can allow others to figure out the logistics for warehousing, packing and shipping. Concentrate on your core competency. So, what are the advantages and disadvantages of dropshipping with Amazon?
- Easy to start
- Large audience
- Outsource marketing and SEO
- You are building the Amazon brand
- Pay commission between 10% and 15%
- Reveal company sales figures
- No customization
If you are new to e-Commerce, then Amazon can help you hit the ground running. If you know what you are doing, you can save money and build your own brand by doing-it-yourself (DIY). Isn’t that why you own a small business?
Drop Ship Yourself
Most small business owners have the skills, desire and passion to trust their own skills and make the profits themselves. Do you really want to work late nights and weekends, so a global American brand can increase their profits? Why shouldn’t you make the money?
If you have the skills and do the work, then you can drop ship yourself and cut out the middleman. That 10% to 15% commission would look nice added to your profit margin, wouldn’t it?
You can enjoy low overhead, carry a larger inventory and draft off of the Amazon brand name. Get the best of all worlds.
You know your Australian customer base. Customize as you like, by adding software, widgets, tools and add-ons to create the best looking, functioning website. Grow your brand.
Although, Amazon has certain advantages, it cannot offer the personal touch that you can. You can understand your customers more deeply and offer them faster service. You can call them by their first name, because you know them.
Further Related Reading: Comprehensive Dropshipping Guide
Opportunity is Knocking
When opportunity knocks, you want to take full advantage of it. You don’t want to become like those brick and mortar stores that ignored the Internet. They thought it was a passing fad.
How wrong they were. Now, they have vast amounts of unsold inventory, while they wonder where the customers have gone. Every business must upgrade its technology to match what is customers are using.
So, what will happen “if and when Amazon enters Australia?” First of all, consumers will have more choices. Specifically, they will be able to purchase more American products.
To be fair, wise business analysts have a “wait and see” mentality with respect to how Amazon will appear in Australia. Although, some consumers would want it to look exactly like it does in America, this is simply not possible for a number of reasons.
Amazon was one of the first big e-tailers in America, Australia already has plenty of e-tailers. Australians have their own tastes and preferences. Most Americans don’t eat vegemite, follow rugby closely or have any clue about how ornery those cute little kangaroos can be. Australia is an international market of expansion for Amazon.
Secondly, what do some experts believe will be the key focus of Amazon in Australia? You have to remember that CEO Jeff Bezos had to make an appeal to his shareholders to justify expansion into Australia. What innovations would Amazon offer that were not available from local e-tailers?
Some believe the answer is Amazon Go and Amazon Fresh.
What exactly is Amazon Go? Why are its functions not offered presently by Australian companies? How can Amazon leverage this technology to earn healthy profits?
What is Amazon Go?
The Amazon Go technology allows you to grab what you want from a grocery store and simply leave. Skip the checkout lines. You will be billed later.
This would be great for lunch time. Standing in line could take up your entire 15-minute break. In 2016, Amazon started rolling out its Amazon Go checkout-less grocery stores.
Amazon is billing this as its “Just Walk Out Technology.” It is based on computer vision, deep sensor algorithms and sensor fusion. Just like the sensors in driver-less cars or those lights that turn on automatically – your Amazon app will sense what you have purchased. It will keep track of your purchase in a virtual cart. Isn’t technology grand?
Afterwards, Amazon will bill your account. You get food now and pay for it later. Amazon sells merchandise and builds up its financial accounts based on your debt. It is kind of like a credit card. It is also eco-friendly because it is paperless – save trees with your Amazon grocery app.
Prices should be lower because there is no need for workers or checkout lines. The country that perfected “fast food,” now gives you “fast grocery shopping.” Amazon Go could be one of the primary offerings in Australia, along with Amazon Fresh, which is for grocery deliveries to home or office.
Leverage Aussie Small Business Advantages
Thirdly, Amazon will seek to dominate Australia based on its brand recognition and create its own loyal customer base. It will probably try to focus on upscale Australians who want to pay more for American convenience. Aussies also might like the exclusive merchandise not found elsewhere.
Fourthly, with new competition, there should be a battle for market share. Established Australia e-tailers might cut prices, while increasing discounts and sales to move merchandise. Does a customer care if he can get a brand new product or a similar old product for a lower price? That is business. He will shop where he can get the best prices and options.
Fifthly, Amazon has third party vendors selling on their website. You can drop ship with Amazon. Or, you could drop ship independently and still benefit from a relationship with Amazon. You could “draft” off their momentum and learn from their expertise.
You could do what professional cyclists do: draft behind the leader. Have you ever seen a long line of bikers very close together in a line? They are using the physical concept of the “slip stream” or “drafting” to conserve their energy and maximize their speed. You could do the same with Amazon. Remember, your one key advantage over Amazon: You are Australian.
You Know Australian Customer Character Traits
Many large multinational corporations have tried to cross borders: some have succeeded and others have failed. Some companies did not understand the local culture. They made foolish, comical mistakes, which a local business owner would never have made (i.e. the Chevy Nova in the local Spanish language meant “it doesn’t run.”)
You can’t predict whether Amazon will be successful or not. You can guess that their impact might revolutionize the way that Australian online business is conducted. You understand Aussie buying patterns, lingo and the culture. You know what works and what does not work.
So, take advantage of the Amazon Effect by using your own expertise in improving product offerings. Amazon understands its customer, but you understand Australians. You know what makes Aussies tick. Take advantage of this opportunity to grow your business.
Amazon Will Benefit Dropshippers & Dropship reliant Businesses
While the larger established retailers within Australia are somewhat fretting the extra competition that will arise from the arrival of Amazon, there are benefits to the internet giant’s entry, and these benefits stand to favour most the new online business entrepreneurs.
Amazon Still Needs to Be Profitable
If you analyze the prices of products sold through Amazon and compare them to the prices that are offered by other retailers and even the brand owners who decide the RRP of their products, you will find that Amazon really is not that cheap. Infact,most of the products are actually same as the Suggested RRP.
Australian retail is already super competitive and there is simply no room for Amazon to be any more competitive on Price.
If you are running a dropship supplier reliant online store, you are already at an advantage of not having massive overheads associated with traditional bricks and mortar stores.
For you to sell the goods at 15%-25% less than the RRP is absolutely no problem, for Amazon however, it would be an issue. This is how Australian dropship stores will be able to leverage the power of dropshipping to compete on price.
Awareness Outweighs Increased Competition
One of the phenomenons that Amazon’s entry into other countries has triggered is the massive increase of online shopping acceptance.
While online shopping is growing steadily anyway, Amazon tends to normalise the practice by levels where increased numbers of online shoppers far outweigh the extra competition presented by the entry of Amazon into international markets.
So if you’re thinking of setting up an online dropship store, this is the time to really get cracking and start growing your store.
International competition will come and go in all shapes, forms and sizes. All this does is sets new standards and normalises online shopping with people who might have otherwise not have jumped online to make their purchases.
Establish your dropship store along Amazon, use the Amazon to promote your products and your own own store online. The entry of Amazon is not a threat, it’s an opportunity, don’t miss it!
For every day that you’re putting off building your own online store and establishing trade relationships with dropship suppliers, someone else out there is pushing ahead and establishing theirs.