Australia’s retail sector has been facing immense competition due to the challenging business conditions prevailing in the region. Earlier at the time of August 2018, the talks were going around the Australian retail industry that Amazon’s entry into the market through its prime delivery service would be a serious threat to other established retail players in the region.
However, there has only been one respite from this to the local players that the launch of the giant has somewhat been subdued. A recent data crunch conducted by a leading investment bank has suggested that the e-commerce giant is facing stiff competition from the local established players such as the likes of JB Hi-Fi and Rebel (owned by Super Retail Group) on price, limited range of product and offerings and heavy dependence on the third-party shipping from the U.S.
Amazon is also facing issues such as the lack of fulfilment centres and the strong market share of existing competitors. So, the products, for which the delivery to the customer is made through the local sourcing are in any case cheaper or competitive in terms of pricing with the existing retailers. However, due to the fact that very less or nominal range of items are being shipped locally, hence the company has not been able to put up its products on the shelves with lucrative and competitive pricing.
Apart from this, the delivery time taken is also a critical factor. Evaluating the value and satisfaction that a customer derives from timely or early delivery of a consignment is critical in the current business environment. According to the study, the majority of the goods that Amazon delivers are still shipped from the US, thus taking a substantial period of around 13 days to deliver. Compared to this, the local retail players pose a desirable option for the customers as they offer quick delivery times and few with the lead time of just an hour.
The company has not been able to gain the market share in the region as it was pretty evident from the inhibition that the local sellers have regarding the practices of the company. The sellers fear that by selling their products through the Amazon platform, the company will gain access to the sales data of their products. From this, it would easily extract the products gaining traction and categorise the top sellers, assess customer likes and dislikes and then come out with its own label version of that product with much competitive pricing.
However, the position for this giant is not all that bleak if we remain a bit farsighted as the price point at which the company is providing its prime services, i.e. at $59 annually is one of the best and cheapest of any market globally. Also, as the number of sellers increases and gets registered as approved vendors with the company, its sales network will get strengthened, and it will be able to leverage its operating cost efficiently.
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