Retail

The last mile: Why Australian shoppers won’t see same-day delivery from Amazon for years to come

Emma Koehn /

Amazon Australia launch

Source: AAP/Joe Castro

Despite assertions that Aussie retailers can face the Amazon beast head-on, when it comes to speedy delivery, they have a problem, says one retail expert.

“Eighty-five percent of Australians expect their online goods to be delivered in three days. Eighty-three percent expect retailers to have a same-day option. But when you look at the number of local retailers that can actually deliver that, only about thirty percent can actually give that to you,” says retail consultant John Batistich.

Those stats aren’t ideal as the nation remains poised for the launch of one of the most fiercely efficient logistics operators in the world. However, the idea that Amazon will emerge fully-fledged in Australia, with near-instant delivery options, is a myth, Batistich says.

“Amazon has a range of core competencies,” he explains.

“One is figuring out how to compress the time between order and receive, which is where ‘the last mile’ comes in.” 

The ‘last mile’ refers to how e-commerce businesses like Amazon “invest in nodes, delivery and service” to get things to consumers faster, focusing on that last piece of distance in which the delivery vehicle approaches a customer’s front door.

“To date, Australians have not been well served on this front,” Batistich says. But even though Amazon is king of last mile logistics, Australians shouldn’t expect the company to roll out a full investment in perfecting incredibly short delivery windows “in the near future”, he says.

Amazon are going to make a big play into last mile fulfilment, but this is not the case in the short term. Look even now — they are partnering with Australia Post. They will most likely offer an express and a regular delivery option when they launch — and that won’t be free.” 

Batistich expects Amazon’s flagship one-click shopping product Prime will not be available in Australia until around 2020, while same day delivery may not be up and running until about that point either.

Australia is a challenging landscape upon which to build a last mile logistics framework, he says, and in the meantime, Amazon will be focusing on the other key strengths of its brand as it slowly amps up operations.

“Amazon measure three or four critical factors, which also include the depth of their range and the composition of their price points, keeping in mind we should not expect them to go below the lowest point [already] in the market,” he says.

Consumers wanting access to the experience of Amazon shopping in the US, and the speed that goes with it, will have to wait years, Batistich believes.

This gives smaller players a bit more of a window to future proof their operations, with the company expected to roll out consumer electronics and fashion categories to compete with local brands over the next couple of years.

“Get lean”

“I think there are about eight or nine things local businesses can start doing, even now,” Batistich says, believing there is still time for companies to carve a niche for themselves in an Amazon era.

One is get lean. Eliminate any cost that the customer doesn’t value, because Amazon is very focused in that regard.” 

Then, it’s a matter of thinking about ways you can engage with the behaviours of your customers to provide them with the most personalised service possible.

“Personalise, and think about using machine learning to predict what customers will base their purchasing on. Add reviews and recommendations, or use algorithms to recommend things to them.”

While the world of bricks-and-mortar has been hit hard in recent years, Batistich says those with physical stores should not think it’s game over either.

If you’ve got stores, leverage them — use the store as a fulfilment option, or even partner with Amazon,” he says. 

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Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

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