The competitive advantage Australian retailers have over Amazon

Joel Milligan

Joel is a performance manager at Columbus Agency, which is part of the Dentsu Aegis Network in Sydney. He specialises in e-commerce and retail clients and has experience across some of the largest retail brands in Australia. Working closely with performance partners, Joel is on the forefront of the latest technology and trends which has proven to drive results for retailers.


With all of the hype around Amazon, many online retailers have been trying to understand how they can compete with the American retail giant. 

While there has been much talk and speculation Amazon will be arriving in the next fortnight, there is still little known about what Amazon is going to be rolling out locally.  

There are undeniable aspects of Amazon that Australian retailers won’t be able to easily compete with quickly. However, there are areas in which many local retailers already have the upper hand. 

1. Customer data

Everyone in the retail space has heard the story that Amazon continually enters a new market and operates at a loss to beat its competitors. While this is true to an extent, Amazon views a customer’s lifetime value as opposed to a single purchase.

While most retailers measure ROI based on one given sale, Amazon has changed to view its customer from a long-term perspective. Amazon may have lost money on a customer’s first purchase, but now this customer has overcome the first major hurdle for a new retailer – actually making their first purchase. From this point forward, Amazon is able to continue driving the best experience for this customer with the data they gather, which in turn creates a loyal customer, driving long-term ROI. 

In commentary so far, we have seemingly forgotten Australian retailers already have this customer data. They don’t need to undercut profits just to capture this customer. Instead, retailers should be looking at what they can do to retain their customer during this time of increased competition.

Retailers should now be putting together plans for tailoring the customer experience to a single customer and leveraging their CRM database to ensure they are still capturing their existing customers during this initial burst of Amazon competition. While there is an aspect of on-site personalisation, retailers should also be focused on re-engaging with this customer throughout their shopping journey. If we already know someone is a loyal customer and they are in the market to purchase, a retailer should be doing everything they can to bring them back to the website.

2. Google Shopping

Google Shopping allows users to search for products on online shopping websites and compare prices between suppliers. While not in every market, it has been confirmed Amazon will be partnering with Google Shopping in Australia.

While this means an increase in competition across Google Shopping, other countries have also seen a general uplift in user volume. As Amazon has a great amount of experience in Google Shopping across the globe, it is imperative advertisers bring their product feed up to best practice in order to maintain competitive advantage. 

Across many categories, advertisers will need to ensure they list the GTIN (global trade item number) of products in the feed. As Google will be placing all products with the same GTIN into the same ad unit, if a retailer does not have this in their feed they will be largely left out of Google’s comparison shopping. 

3. Bricks and mortar stores

With Amazon being a purely online player in the Australian market, traditional retailers with an online presence will still have an advantage over Amazon. Like most retailers, Amazon will be able to offer quick and low-cost shipping to customers. However, customers are still looking for in-store services such as click and collect so they can try before they buy.

Google has recently focused more on local inventory for retailers, which will be the main area that Amazon cannot currently compete with. The first step a retailer needs to take to compete with Amazon within Google Shopping is creating a local inventory feed. This feed will list all locations of the retailer and what products are available in any given store. This information will improve the search results for customers, giving retailers with local inventory a competitive advantage. 

Amazon will find it difficult to compete in Google’s voice search arena as they have no physical locations. With the release of Google Home and its voice-search capabilities, local inventory will be the favoured choice within voice search results. If a user asks “Where can I buy men’s white running shoes?” the retailer with a local inventory feed will be the most likely result of the voice search.

There’s no doubt that Amazon’s arrival will alter the current Australian shopping landscape. However, if Australian retailers adapt quickly to the changes in the marketplace and leverage their competitive advantage, they will not only see their performance remain consistent but also experience an increase in customers during the expected online shopping boom of Amazon.

Tags: amazon, omni-channel retailing, marketing strategy, brand strategy

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