Amazon Australia Starting to Flex Its Muscle

It’s been just over 2 years since Amazon Australia opened its doors to high expectations from sellers, but actually not too much fanfare from Amazon themselves. 

Amazon knew it would take some time for the platform to start to deliver on it’s potential. 

When I talk with Amazon, they often refer to the ‘Flywheel effect’. That is you push hard at the start, but once you get the wheel turning it has momentum to power forward at a faster yet easier rate. 

For Amazon their 3 Flywheel levers are;

1. Selection
2. Price
3. Convenience

Let’s quickly look at these 3 in turn.

1. Selection

Amazon has worked really hard to build the selection for consumers on the platform. There is now north of 125 million SKU’s available. This includes Global Store which ships from the USA Amazon.com store. 

They want local Australian and New Zealand brands that consumers are familiar with to be on the platform. This meant they went hard at getting brands to wholesale to Amazon directly or through distributors. Approximately 80% (and decreasing) of the SKU’s being sold were by Amazon Retail v’s Third Party Sellers. In the USA its 40% Amazon Retail and 60% 3rd Party. 

A stat from Marketpulse had the third party seller count in Australia at 24,227. There’s still room for more sellers and this year I expect to see that number grow considerably. 

So, the selection has improved and along with it the algorithm to present more relevant search results for the consumer. This will only get better and better each day. 

1. Price

Because Amazon retail went all in on getting brands they would have purchased hundreds of millions dollars of inventory. Selling themselves, they control price, so they have been bringing prices down to move inventory. 

As a third Party seller you control price, and many third party sellers are doing well to maintain margins...because that’s a good idea. 

So Amazon will not yet be considered the bargain site, but it will be getting better. 

1. Convenience

Amazon Australia has changed the game with the Prime membership and 2 or 3 day delivery. It’s called the ‘Amazon effect’ in the distribution game. Australia is a big country, so they are getting creative as per a new approach I mention below. 

Consumers will continue to find Amazon convenient, but more importantly, trustworthy for its delivery promise. 

Amazon is winning this battle. 

All this leads to more eyeballs on the website. 

The Fastest Growing Marketplace and Quickly Catching Ebay. 

Ebay is the #1 marketplace in Australia, but if I were in their shoes I’d be concerned.

Check out these stats from Similar web.

Amazon

August 2018 - 11 million monthly visits

March 2019 - 13.95 million monthly visits

May 2019 - 18.42 million monthly visits

December 2019 - 28.80 million monthly visits. 

That is what happens when the Flywheel starts to take effect. 

It gets more interesting when you compare this growth to Ebay and Catch

Ebay

August 2018 - 68 million visits per month (source - Ebay)

December 2019 - 68.2 million

Catch

July 2019 - Approx 7 million visits per month

December 2019 - 8.3 million visits per month

Ebay is a mature marketplace with most Australians looking there every month, so you would expect minimal growth. But the ecommerce pie is getting bigger and Amazon is eating most of it. 

52%+ of consumers head to a marketplace to begin their ecommerce buying journey. 

Maybe consumers are bouncing around more to get a good deal. But either way you can not deny the growth stats from Amazon Australia

We will know around April what their revenue will be for the 2019 calendar year. It may well have a ‘B’ in it, up from $295 mill last year. 

It’s time to start taking Amazon Australia seriously. If you’ve been on the sidelines watching, now is the time to get on the playing field. 

Uber Eats meets Amazon

In January 2020 Amazon Australia launched Amazon Flex. As part of their push to improve the convenience aspect of the flywheel (read - delivery speed), you can now deliver Amazon Parcels in your spare time. 

Amazon is targeting Uber/Ola Drivers and others wanting to do this. Pick a ‘Block’ of time and place and get to work - Do it your way. Drive your car, listen to your tunes and get paid.”

This is only available in Melbourne and Sydney. 

If you start finding it harder to catch Uber rides it will be because your Amazon parcel is being delivered by an Uber driver making some extra money on the side. 

The point here is Amazon is investing Billions of dollars in innovation. They are the biggest in the world at $22.6 billion in 2018. The next closest was Google/alphabet with $16.2 billion. For the record Ebay invested $334 million. 

Amazon Australia is getting a huge amount of investment and they leverage off the global innovations. 

The picture is starting to become very clear. 

If you’re a brand looking to grow, be where consumers are buying. Being on Amazon Australia is increasingly a must make move for now and the long-term. 

To discuss how to best approach Amazon Australia for your brand, let's connect and have a chat.