Beware the sleeping giant that is Amazon

When Amazon announced they were coming to Australia, a number of retailers thought it would be the end of bricks and mortar stores and everyone would be buying online. Well that certainly hasn’t been the case, online sales have slowly ticked up to 10% and Amazon hasn’t had anywhere near the impact we all thought – yet!

However, worldwide sales at Amazon continue to grow at an alarming rate, revenue growth was up 23% on the previous year. In the US, Amazon accounts for 40% of everything bought online and that share has been growing every year. It’s year to date revenue, (until March 31), was a staggering US$296 billion, making it by far the most rapidly growing large company in the world.

Slow growth in Australia, could be all about to change! Amazon is renowned for being a strategic long term player, CEO, Jeff Bezos, stated they are prepared to invest in a five to seven year time horizon, so they are patient and also very stubborn. The recent announcement that Amazon is opening a second warehouse in Sydney, this one is colossal – four levels and the size of 27 football fields means they are getting very serious about stock holding and therefore allowing for faster and more consistent deliveries.

Over the past few months, more and more customers have experienced purchasing online, which has played right into the hands of Amazon and other online retailers such as Kogan. The most recent online data showed online sales rising 60% in April versus April last year. With recent expansions into other categories such as gardening and alcohol, Amazon pose an even bigger threat to all retailers, including established players such as Bunnings and Dan Murphy’s.

Physical retailers have to be even more focussed on their one big point of difference – the in store experience or run the risk of losing even more customers to the online space. Because the scary part is, Amazon isn’t built out yet, they continue to reinvest heavily to grow and that’s certainly happening here in Australia.

Roger Simpson – CEO, The Retail Solution and Author of “The Ultimate Retail Sales Experience” With over 35 years’ industry experience, Roger Simpson is recognized as Australia’s #1 Authority on customer ROI in the retail industry and as a global expert on staff coaching, customer service, and selling skills.