As Amazon edges closer to launching its retail offering in Australia, the majority of local retailers don’t have a clear strategy to fend off competition from the Seattle-based ecommerce giant.

According to new research from CommBank most Australian retailers (78 per cent) don’t have a strategy in place to combat Amazon’s entry.

On the other hand consumers have their credit cards at the ready, with almost 70 per cent saying they are likely to purchase from the online platform.

The figures are contained in the new CommBank Retail Insights Report which is based on surveys of key decision makers from 506 small, medium and large Australian retail businesses and 1,500 Australian consumers.

“It seems Australian shoppers are ready for Amazon but many of our retailers are still at the drawing board,” said Jerry Macey, Commonwealth Bank National Manager, retail.

“Although Amazon’s arrival is reportedly weeks, not months, away, it will have a staged entry. So there is time to put plans in place, but that window is closing. There’s still one quarter of retailers concerned about Amazon who not only don’t have a plan, they aren’t working on one.”

The stats indicate Aussies already have a high degree of trust in the brand, 73 per cent of consumers are already comfortable buying Amazon branded-products and a third are likely to subscribe to Amazon Prime.

These data points are significant given the threat Amazon’s private label poses to traditional brands and the tendency for Prime members to spend significantly more than non-members, slowly moving dollars away from other retailers.

The report also breaks down generational attitudes to Amazon. It found the older a person is, the more likely they are to be aware of Amazon but the less likely they are to buy from Amazon.

CommBank Retail Insights Report
Source: CommBank Retail Insights Report

Retail response

According to CommBank, almost 90 per cent retailers are now aware of Amazon’s plans to enter the local market, up 27 per cent over the past six months. Of these, 52 per cent now perceive Amazon as a threat, up from 47 per cent in January.

The number of merchants who perceive Amazon as a threat and also have a plan to compete has only grown moderately, from 14 per cent to 25 per cent. A further 50 per cent of retailers are working on a strategy.

“With so many retailers planning for Amazon’s arrival, we are going to see merchants ramp up activity. Those excited about expanding their channels will be learning the ropes of Amazon Marketplace, and those concerned will be considering their overall strategy including products, categories, pricing and distribution. So even if you don’t think Amazon will impact your business directly, you need to be ready for an increase in competitor activity,” Macey said.

Macey argues retailers that want to get on the front foot should have a thorough understand of who their customer is.

“Savvy retailers will be looking to better understand their target market and provide a relevant experience for that group. For instance, younger generations want a more engaging experience in-store to prevent them drifting online,” Macey said.

As for the optimists, the proportion of retailers considering Amazon’s entry as an opportunity remained flat over the past six months at 13 per cent. There is likely to be some winners when Amazon.com opens its Victorian

There is likely to be some winners when Amazon.com opens its Victorian fulfilment centre. Amazon’s marketplace is likely to provide a boost for small to medium retailers who will be able to take advantage of its customer base and fulfillment capabilities. There is also the school of thought which argues Amazon’s entry will grow the overall size of the ecommerce market in Australia by bringing more shoppers online.

There is also the school of thought which argues Amazon’s entry will grow the overall size of the ecommerce market in Australia by bringing more shoppers online.

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