‘Act now’ to counter Amazon invasion

Published on the 12/07/2017 | Written by Jonathan Cotton

amazon shopping model

Report confirms what retailers already know…

Retailers are taking a good hard look at their customer-facing processes as the e-com giant readies up to plant its flag in Australian soil later this year. The imminent arrival of Amazon is expected to have profound effects on retailers as the monolith brings vast selection and best-in-show user experience – not to mention flexible shipping options – to these shores. And a local provider of e-com solutions said there is no time to waste to step up and compete.

A new survey of 270 SMEs and enterprise retailers plus another 1300 consumers (conducted by Temando) looked at how shipping issues affect the retail experience.

The results of the survey – State of Shipping in Commerce – aren’t particularly surprising showing ‘the continued gap between retailer capability and consumer expectation’ when it comes to shipping and fulfillment (last year’s PayPal Insights Report makes a similar point).

The survey reveals that, for the consumer, shipping is a highly salient element of the buying experience, with 65 percent of consumers having abandoned carts at some point due to the high cost of shipping.

Similarly, 59 percent of customers say that a negative shipping experience is enough to put them off from shopping with that retailer again.

And these expectations around the purchase experience is something online retailers admit they’re having problems meeting. According to the survey, in-demand shipping options that cater to convenience, such as “specified time slot” and “weekend or after-hours”, are currently offered by less than a quarter of retailers.

Some 51 percent of retailers surveyed said technology platform compatibility is an issue, with 58 percent finding integrating carrier services into their systems a key challenge. And 47 percent of retailers have challenges with shipping and fulfillment automation, yet only 29 percent are planning to invest in these issues in the next 12 months.

“Shipping is truly the last frontier for commerce,” writes Temando CEO Carl Hartmann in the report, “and retailers who master the use of technology to optimise the process are giving themselves the best chance to not only survive, but thrive in these trying times.”

And while Temando’s report neatly aligns with the company’s offering, the point holds: In 2017, streamlining the customer experience/purchase process is crucial to e-com viability.

With Australians spending $22.23 billion in online retail over the 2016-17 period, it’s our (very lucrative game to lose).

But it’s not just B2C retailers that would do well to get their front-end systems organised. Amazon also poses a real threat to B2C sellers – a threat many might not fully comprehend.

“Many – if not most – B2B organisations are not quite as advanced in their e-com solutions as retailers,” said Frank Gilbert, MD of ecommerce provider Solutionists, “simply because they never needed to be”.

“But the convenience of the buying methodology [that Amazon employs] applies just as much to those buying for their business as it does to the consumer. There’s a real need for these businesses to protect their customer relationships. The fact is, as a B2B, you need to have a system that is at least as good as Amazon otherwise people will simply take the easiest option. It’s a huge risk.”

Gilbert said that as B2B businesses become aware of just what kind of a threat Amazon poses, panic is beginning to set in.

“Amazon’s range is huge, their delivery service is nearly as fast as buying from a local company, so they’re a very dangerous adversary. You can’t leave anything on the table. You’ve got to make sure that your processes are just as slick as Amazon’s and that there is no barrier to ordering.”

And the time to act?

“As fast as you possibly can,” he said.

“The level of customer-focus you need now is being set by Amazon. It’s not the same standard as it was five or ten years ago. What you did ten years ago, which was adequate then, is nowhere near good enough now. It’s not Amazon, per se. It’s just that Amazon epitomises a successful e-com operation. That’s now the standard and you either beat it or you die.”

The last half of 2017 will be a trying one for online retailers. Amazon is very good at what it does – with vast options, low prices and great service – and whether retailers like it or not, for the Australian consumer, the Amazon model will soon be the new standard.

Click this link to download the full Australian version of Temando’s State of Shipping in Commerce.


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