As a growing number of Australian small businesses speak up about their disappointment with Amazon’s local offering, an Amazon executive has admitted it will take time for businesses in Australia to trust the platform and “being misunderstood is something we do often”.
At the AWS innovation summit in Sydney, Amazon international consumer senior vice-president Russ Grandinett said building trust among Australians will not happen overnight.
“Amazon is regarded as one of the most trusted companies in a number of countries in which we operate – it will take us a while to earn that trust in Australia and we’re really looking forward to it,” Grandinetti said, according to Fairfax.
Meanwhile, Amazon Austraila country manager Rocco Brauinger admitted at the same event that “there’s still a long way to go” for the retail giant in Australia.
“We’re really working hard to bring a lot of innovation here, expanding the selection and making the customer experience for Australian shoppers much better,” he said, according to Inside Retail.
Retail consultant John Bastistich tells SmartCompany Amazon Australia went for quantity over quality when it first launched in December. Because of this, as well as pricing competition with already existing retailers, Aussie shoppers were disappointed with the products Amazon Australia had on offer.
“Amazon chose to go wide in terms of categories but actually has very low depth in the quality of brands in those categories. This disappointed many Australians in their experiences,” Bastistich says.
“Many Australians who went on Amazon in December saw the prices weren’t better than incumbent retailers. So Amazon will get it right but its a long play.”
In response to claims of being “misunderstood” by the Australian market, Bastistich says winning the trust of Australian consumers and businesses is part of Amazon’s long-term strategy to establish itself in the local retail sector. He believes when Amazon launches Prime in Australia — which Grandinetti hinted at during his presentation — business on the platform will pick up.
“They’ve got some work to do to regain trust and I think they’ll use Prime for prices of somewhere between an expected $12 – $15 a month,” Bastistich says.
“Australia is a market where they’ve said ‘take a position, grow it organically, don’t make any irrational investments, let’s build slowly’.”
If Amazon truly wants to solidify itself in Australia, Bastistich says the retailer will need to offer three main benefits: depth of range across the categories it competes in; competitiveness of price points; and fast, flexible delivery.
“They don’t want to be beaten and they have a series of algorithms and bots scouring the web ensuring they are competitive,” he says.
Even though many of these current factors could be resolved with the launch of Prime, the delivery service could still have barriers, particularly when offering delivery time guarantees in rural areas.
“The biggest barrier will be Australia Post’s ability to guarantee two-day delivery in the major cities, or importantly can they do it regional cities and country Australia,” Bastistich says.
“Australian consumers have been poorly served over the last few years by slow costly delivery, or when you’re not home, which usually adds cost to the supply chain.”
SMEs struggle to sell on Amazon Australia
On Monday, SmartCompany spoke to one small business owner, Michael Coates, who has yet to sell one item on Amazon’s Australian platform, despite little competition and strong sales on eBay. He described the platform as “just all fizz and no substance” and lamented the lack of support offered by Amazon to small business sellers.
Coates has since received a phone call from Amazon to discuss his business performance on the platform and says he plans to continue listing his products for at least another six months, given the time and money he has spent setting up his account.
But Coates is not alone; since SmartCompany published the article about his business, multiple business owners have similarly expressed their disappointment with Amazon’s offering.
One business owner said he was having trouble selling his pet food products online because no pet food categories are currently available on Amazon’s Australian platform.
“It’s a total disaster. Some categories not available for Australia, but some USA sellers advertise in Australia because they have access to them. Amazon makes sure they will deduct some money [at the] end of the month for nothing,” they said.
Another commenter said they were charged “nearly double” the listing fees Coates was paying for his business, Trike Bike.
In the end, Batistich says its all about the waiting game.
“Many SMEs that went in early will be disappointed but Amazon will say to work for the long game,” he says.
“There are not enough sales yet but I’d be waiting for Prime’s launch and then they’ll really get serious about products.”