Can Amazon overcome the challenges of the Australian market?
Retail giant Amazon has finally rolled out its services to Australia in time for Christmas, offering a range of services which includes its popular one-day delivery. The launch has been met with a mixture of responses with some analysts uncertain whether Amazon will be able to adapt areas of the business to meet consumer expectations.
Despite the concerns, Amazon claimed that the launch has been the most successful so far, attracting tens of thousands of visitors to the website and taking on more first day orders than any previous launch.
Online shopping is struggling to make significant gains in the retail sector in Australia, currently equating to around 13% of total sales in the country. It is believed that poor access to high-speed broadband in parts of Australia is hindering the growth of the sector. Average internet speed in Australia has been ranked 50th in the world in a recent US survey, trailing countries such as Thailand and Taiwan.
Its largest infrastructure project, National Broadband Network, was introduced a couple of years ago to bolster internet access throughout the country, however political changes and cost overruns have been the cause of major delays.
Amazon is likely to face many other challenges in the future including delivery costs, which will be hiked by Australia’s massive geographical size and its dispersed population. Although Australia is almost as big as the US, it is home to a population of just 24 million people (compared to over 323 million in the US) with populated areas being far as 4,000km apart.
It is expected to impact on several areas of the business and limit services such as Amazon Prime, a subscription package which offers customers unlimited 2-day shipping, and has proven popular in other countries.
According to research, internet shopping in Australia is projected to have a total value of £17.9 billion by 2022, but there is uncertainty over how Amazon will perform and if the online company will play a leading role in this. With many local retailers now stepping up in response to challenge Amazon, it is difficult to say whether the ecommerce business will have the same impact as it has in the US and the UK.
Many Australians have already expressed their disappointment at the debut launch with some people claiming that the selection available on the website isn’t any different to what is already on the market. It is undeniable that Amazon has had a lot of success in major markets around the world but is Australia a step too far?