Home Market Will Amazon’s entry into Australia lead to a price war?

Will Amazon’s entry into Australia lead to a price war?

New research by Telstra and Neto shows that 35% of Australians will shift their online purchases to Amazon once the e-commerce giant arrives in the country.

But on the bright side, 65% of consumers will remain loyal to their favourite brands/stores albeit that these may have to cut online and store prices to compete with Amazon.

Does Amazon’s entry mean a race to the bottom on price and are Australian retailers under siege as Microsoft suggests in its whitepaper ?

Ryan Murtagh, ‎chief executive, ‎Neto E-Commerce Solutions, said, “Efficient and nimble back-end infrastructure always translates into a better customer experience and more sustainable profits. Amazon doesn’t need local warehousing, inventory, and customer support to sell to Australians. They’re investing in these because they recognise the value of having local back-end infrastructure that can provide fast, flexible fulfilment to customers, further improving a value proposition that’s already proven immensely successful the world over.”

“Australian retailers should invest in building up back-end capabilities that directly influence what they can offer customers if they want to gain a competitive edge, rather than giving in to price pressures and undermining their future profitability,” he added.

Logistics options and inventory visibility stood out as influences on consumer experience, with the survey finding that 50% of Australian online shoppers expect to be able to return products via both physical stores or courier and postal services. These also feel retailers should be able to check stock availability across all channels while in-store – with 75% saying it significantly enhances their experience of the brand.

“Brands can no longer expect to stand out by offering e-commerce capabilities: our research found that 52% of consumers now expect every retailer to offer their own online store. The real points of differentiation now come from how effectively they can manage inventory, logistics, and support services like fulfilment, delivery, after-care and returns across numerous channels, and the extent to which they can use these services to give consumers the choice and convenience that they’re after,” said Murtagh.

“Smart Australian retailers will be avoiding the hyperbole about price-wars and focusing on building out their cross-channel capabilities to support customers wherever they want to shop and receive their products, including Amazon itself. At Neto, we’re already preparing to launch our Amazon plugin that will add the marketplace to the range of payment, accounting, and last-mile services with which our platform is fully integrated, helping our customers manage cross-channel complexity with minimal fuss,” he concluded.

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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!