The average suburban shopping strip could well become a multi-billion-dollar battleground as Amazon’s appeal entices shoppers to drop rather than shop local. And it’s not just the prices that make things hard for local retailers.
Along with a huge range of products at its disposal and an aggressive pricing model, Amazon is also promising to shake up our expectations of how purchased items are delivered to our doorsteps.
While the speed and convenience on offer from Amazon poses a risk for retailers, it’s also a boon for local technology-focused delivery platforms. Sydney-based on-demand crowdsourced delivery firm Go People is one outfit that’s looking for the silver lining of the Amazon cloud, with founder and CEO Wayne Wang saying that smaller retailers will have to lift their game when it comes to delivery and logistics.
“Delivery is a big part of Amazon’s secret sauce,” he told The Australian.
According to Mr Wang, 50 per cent of Australian consumers say same-day delivery is important to them when choosing where to shop, with younger shopper especially attracted to the Amazon model.
Shops that offer three-hour delivery services were now preferred by one in five Australian shoppers, with almost a third willing to pay for the convenience, he added, citing research commissioned by Go People. “While consumers love local shops and there is a deep engagement there, what the retailers lack is Amazon’s technology smarts,” Mr Wang said.
Go People can fill one of the technology gaps through its proprietary routing and grouping algorithms to get deliveries from A to B quicker. The process is tracked using GPS technology and Mr Wang stressed that small retailers shouldn’t have to break the bank to equip themselves appropriately.
“We don’t want to increase costs for the business,” he said.
Customers book their deliveries and pay via the Go People platform or smartphone app. Interested couriers bid for a job and the platform picks the most suitable “runner” to make the delivery.
Brisbane City Blooms, a Go People customer, is one of thousands of small retailers scattered around Australia that are keeping a close eye on Amazon.
Business manager Nel Gowdy said retailers would have to be prepared for the seismic shift in customer expectations that Amazon would usher in.
“As a florist, our customers already have very high expectations and given the nature of our business fast, efficient delivery is critical, but that doesn’t mean we are safe,” Ms Gowdy told The Australian. “Amazon is incredible with its logistics, Amazon Prime USA sells flowers as well so I have looked at the sort of customer expectations they are setting there.
“Having Go People has given us a some confidence but we are still keeping a very close eye.”
For small retailers selling non-perishable goods, the delivery imperative is likely to be even more crucial. “Businesses will have to either completely rethink their delivery structures, otherwise the impact on small business will be profound,” Ms Gowdy said. “They can get anything you want to your door within three hours and that’s really powerful.”
The one asset that smaller retailers have is a level of direct customer engagement that can potentially provide a modicum of protection. Amazon’s data-driven approach may seem omniscient, but there is still something to be said for the face-to-face interaction and sentimental attachment we have with our local shops.
However, Ms Gowdy warned that local shops should not rely on sentiment, and instead focus on their marketing, the quality of the product because they would not have the capacity to absorb prolonged losses.
“Amazon’s brand power does make me a little nervous, because there will be that curiosity factor,” she said. “Customers are already demanding when it comes to service and Amazon is going to accelerate that even more, so there’s not a lot of space for us to make any mistakes with service.”