What impact will Amazon Australia have on local manufacturers?

By Matt Hampshire on

There has been no shortage of discussion about the potential impact of Amazon’s Australian launch on the local retail industry.

Amazon isn’t just an online retailer though. The myriad Amazon business include media/advertising, logistics, streaming TV, data analytics and cloud services. Amazon Prime subscription service ties all these other offerings together into a compelling package for consumers, making it incredibly difficult to extract customers from Amazon’s web.

One Amazon component that should be of major concern to Australian manufacturers and distributors is Amazon Business. Launched in the US in 2015, and by 2016 Amazon Business was already a US$1Bn business with 800,000 participating companies.

Don't overlook Amazon Business

As the name suggests, Amazon Business offers products and services for businesses, delivering in 48 hours. Categories include everything from nuts and bolts, medical equipment, hot water heaters, and aluminium window frames, to cleaning chemicals, livestock feed, hospitality equipment, and office supplies. Participating businesses can apply internal purchasing policies and as with Prime, pay a subscription to participate

For manufacturers and distributers, like retail, participating in Amazon marketplaces is attractive on face value – a new sales channel and new customers introduced to your products and services. However, any company that participates must also consider the significant threat to their business that Amazon represents.

Amazon kills brands!

Amazon is a Venus Fly Trap. Yes, they will bring you some new customers, but there’s nothing to stop your existing customers being poached too. Especially if they are easier to do business with than you are.

Amazon kills brands. If Amazon decides there is money to be made in the product category you make or sell, then they will make and sell it themselves. They are already doing so in categories as diverse as batteries, active sportswear and furniture.

How to compete in an Amazon market?

The elements of a strong defence against Amazon are data, content, product knowledge, your people and your partners. These elements combine to create a great customer experience

A recent survey of consumers by SAP Hybris shows that 91% of Australian consumers expect a response to their query in 24 hours, and more than half of consumers expect that response to demonstrate a clear understanding of their history. On top of that, 34% of consumers say they get annoyed with lengthy customer support calls if their personal data and history has been lost or forgotten.

Further research by IBM showed that 80% of B2B customers now expect a B2C buying experience. (The same research also revealed that customer experience leaders in B2B have significantly higher margins due to 20% reductions in service costs and 15% increases in revenue.)

Data & content for the win

Amazon is incredibly committed to using data to learn as much as they can about their customers and data should play a key part in your defense strategy. Data will help you understand what your customer wants, and it will help you build better, contextual customer experiences. It will help make you easy to do business with.

Combine data with content. Great content will help you strengthen emotional bonds with your customers. At the same time, your brand messaging and behaviour needs to be consistent across every channel, whether on mobile, web, your call centre or in stores.

Leverage your people

Crucially, your depth of experience and know-how about your product is something Amazon doesn’t have in their one-size-fits all marketplace.

Be that your sales teams, your shop floor staff or your call centre employees. Real people delivering relevant and contextualised service will be what sets your business apart.

Be prepared to work with your supply chain partners. After all, you have a common enemy. Share your data to drive product innovation, improve logistics, and to offer the longtail of products to customers

The key to success for B2B will be leveraging all of these elements to deliver a service that goes beyond what Amazon can deliver.

Want more?

As the Sales Director at Oxygen Digital, I help customers create digital customer-facing solutions that build customer loyalty, drive revenue and reduce costs. If you would like to have a discussion about how Oxygen & SAP Hybris can make you easy to do business with, please contact me below.