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Great time for Aussie shoppers

Amazon may have a harder time here than internationally, as we’ve got trickier logistics to deal with. Picture: Leon Neal/Getty Images
Amazon may have a harder time here than internationally, as we’ve got trickier logistics to deal with. Picture: Leon Neal/Getty Images

JB Hi Fi is doing three-hour delivery now. If you live in Melbourne, Sydney, Canberra, Brisbane, Perth or Adelaide they promise to deliver in a few hours if you order by 2pm.

This is new. They get a courier to bring you the thing you wanted. Simple huh? And it's about time. Aussies have been getting a watered-down version of good retail service for too long.

The business community loves to talk about "world's best practice". But world's best practice doesn't often come to Australia. Oh no. Not until it is forced upon us.

Aussie retailers have been able to get fat serving us overpriced goods in the ways that suited them. Of course they didn't want to change.

Then online shopping and the internet changed the retail world. The fat retailers got skinny as we lost some of our enthusiasm for shopping. You might have expected that would inspire dramatic reinvention but as we know, it mostly didn't.

STATUS QUO

Coles and Woolworths; Harvey Norman and JB Hi Fi; Myer and David Jones. They were all alike: They haven't had to worry too much.

Until the foreign competition arrived. Aldi is the first and biggest of the foreign raiders. Its effect has been enormous.

Coles and Woolworths are now slashing retail prices so much it has the Reserve Bank worried they're making inflation too low.

Without the German supermarket's demonstration of how to manage supply chains (efficient), range (smaller), home brands (more of them but nicer) and supplier relations (it pays to be kind), Coles and Woolies might still be chugging along as they ever were. And we'd be none the wiser.

Our moribund retail sector needed the kind of kick up the bum you only get when foreign competition shows up, and starts showing you up.

There are exceptions. Local brand Bunnings brought big box hardware retail to Australia. It is no surprise that it has been outrageously popular and probably Australia's most successful retailer in the last decade. Innovation doesn't have to be so tricky. Just copy what works overseas.

Aldi have shaken up the groceries market, but until now, other retailers have been lazy. Picture: David Swift / AAP
Aldi have shaken up the groceries market, but until now, other retailers have been lazy. Picture: David Swift / AAP

IT'S A JUNGLE OUT THERE

Now the world's fastest growing retailer is coming. Amazon has done a soft launch in Australia this week and will presumably expand, aiming to own every dollar we spend.

JB Hi-Fi has been shocked into action, just in the nick of time. And in fact, even slow-pokes like Myer have been working on their online game, increasing their online sales to $48.4 million in the past three months. Not bad (although that's less than a thousandth what Amazon makes.)

Amazon grows like a tiny start-up, even though it has as much revenue as most of Australia's retailers put together. Normally a business can grow fast or be big. Nobody has really done both like this before.

Ahead of the Amazon mothership landing, the retail sector has launched a new program to link young start-ups doing clever things with Australia's retail giants.

"The pending arrival of Amazon has been a great mobiliser for new ways of thinking and doing," says Paul Greenberg from the National Online Retailers Association. "As an industry, we recognise that we need to do a better job of understanding and improving the customer experience."

But can Aussie retailers innovate fast enough to stay ahead of the Amazon wave? It is going to be a wild ride.

 

Amazon will force lazy Australian retailers to step up their game.
Amazon will force lazy Australian retailers to step up their game.

 

 

TOUGH DAYS BEHIND THE LANYARD

Competition is good for the consumer, mostly. It can be a different story for staff.

Amazon is not famous for being a pleasant place to work. In the USA they thrash their employees with intense demands and expectations that Australians might find unacceptable. So what happens at all the businesses trying to compete with Amazon? Do they start driving their staff hard too?

The risk is that alongside low prices, the new competition also instils practices that make workers worse off.

There's a job here for the government, and it's making sure the kind of dodgy work practices that happened at 7-Eleven and elsewhere don't creep any further into our economy. We want the best of the rest of the world, not to import all its bad points too. Australia has some good workplace laws. The trick is enforcing them.

 

 

Australian Amazon staff are likely to be working under better conditions than those in other countries, and that might mean Amazon will have to charge more for their delivery. Picture: Chris J Ratcliffe / AFP
Australian Amazon staff are likely to be working under better conditions than those in other countries, and that might mean Amazon will have to charge more for their delivery. Picture: Chris J Ratcliffe / AFP

ONE LONELY WAREHOUSE

Of course, Amazon's success in Australia is not guaranteed. Australia is a different operating environment to places where Amazon is established, with fewer people, far fewer people per square kilometre, and higher wages. The cheap logistics it can provide in the USA will be harder here.

Amazon has just one warehouse, in the outer suburbs of Melbourne. That will make delivery nimble throughout Victoria, but for NSW, Queensland, the NT, WA, SA and Tasmania, things might be a touch slower. Retailers with their base in those states might have enough time to keep ahead of Amazon.

The risk is that as they innovate, Amazon learns from them. It goes both ways. It is going to be a hellish time to be a retail employee or investor in Australia. But a great time to be a consumer.

Amazon’s huge warehouse in the Melbourne suburb of Dandenong might serve Victorians quickly, but those in other states will have to wait longer. Picture: Robert Cianflone/Getty Images
Amazon’s huge warehouse in the Melbourne suburb of Dandenong might serve Victorians quickly, but those in other states will have to wait longer. Picture: Robert Cianflone/Getty Images

Topics:  business consumers shopping


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