Woolworths says it will step up its online offerings as Amazon launches in Australia amid fears the nation’s retail industry is set for a massive shake-up because of the arrival of the online behemoth.
At the Woolworth’s annual general meeting in Melbourne, chairman Gordon Cairns told investors the supermarket chain was ready to battle Amazon and would make shopping more convenient and tailored for customers by ramping up deliveries and click and collect services.
“We want to be obsessive about our customers, their needs and how we serve them better,” he said.
“If we do not, we will lose out to those who do, like Amazon.”
A new survey by market research firm Nielsen, found Amazon United States was the second most popular website for online shoppers in Australia last month, behind Woolworths.
A total of 6.7 million Australians used Woolworth’s website in October, compared to 4.6 million people who accessed the Amazon US website, and 3.7 million who used the Coles website.
Amazon told local sellers on Amazon Marketplace to be ready to take sales in a test run on its Australian website on Thursday afternoon.
The move prompted speculation that Amazon could launch on Friday in Australia, in time for the Black Friday online sales in the US.
Amazon has not revealed exactly when it will go fully live in Australia and a spokesperson for Amazon did not return the ABC’s calls.
Amazon allows small retailers to have ‘global distribution’
Online retailer KoalaSafe sells its router, which allows parents to control their children’s internet use, on Amazon in the US and the United Kingdom.
Adam Mills, co-founder of KoalaSafe, told the ABC that selling on Amazon had driven the expansion of the firm from a start up to a global retailer.
“When we launched in 2015 on Amazon US we saw our sales go up by 300 per cent in the first two months,” he said.
“We ship to 25 countries now and in large part that’s due to Amazon’s distribution network.
“It allows a small team to have global distribution.”
Mr Mills said being on Amazon had boosted KoalaSafe’s earnings.
“Over 300 million people are on the Amazon website daily … and the discoverability by these platforms [is] amazing for small retailers like us,” Mr Mills said.
Retailers warned to think of ‘long-term ramifications’
Mr Cairns took a swipe at retailers who are planning to sell on Amazon, warning that Amazon could cut prices and that may see other retailers decide not to stock their products.
“They can end up cutting their own throat. Before they step into the breach, they should perhaps consider what the long-term ramifications are,” Mr Cairns said.
But Mr Mills dismissed the comments from the Woolworths chairman as scaremongering.
“We pay Amazon 6 per cent [commission] and, in the US, we have retail partners and the margin that they take is much closer to 50 per cent, so if I had to pick one of them I’d pick online,” Mr Mills said.
He agreed prices would go down because of the arrival of Amazon.
“Australians have traditionally paid a penalty for being in Australia … so hopefully we’ll get price parity with the rest of the world,” Mr Mills said.
Amazon to have a ‘significant impact’ on Australian retail
Nielsen’s executive director of retail services, Megan Treston, said she expected Amazon to overhaul the Australian retail landscape.
“With the increased behaviour of purchasing goods online and in the lead up to Christmas we expect Amazon to have a significant impact to the Australian retail sector,” she said.
Investment bank UBS expects Amazon’s entry into Australia to double growth in online shopping and force bricks and mortar retailers to lower prices and improve service.
They surveyed more than 1,000 Australians on the arrival of Amazon and 42 per cent said they expected to spend more online when Amazon opens for business.
“In our view, Amazon ticks the boxes for a successful launch in Australia, albeit the impact will vary by sector,” UBS said.
“Our survey suggests electronics, apparel and cosmetics are most exposed.”
But it is not all bad for traditional retailers, according to UBS.
“We expect retailers with lower exposure, attractive valuation and a differentiated offering to be best placed to limit the impact,” the UBS analysts said.
UBS said online shopping makes up about 8 per cent of retail sales in Australia at the moment, but online sales have grown by 70 per cent over the past year.