Less lobbying, more leveraging: how Australian retailers can beat the Amazon octopus

According to a prepared seen by The Sydney Morning Herald ahead of a local conference, the head of the Australian Competition and Consumer Commission, Rod Sims, will disclose that “some … incumbents have called on the ACCC to act against Amazon’s business model.”

However, Sims will warn retailers he won’t protect them from Amazon if the e-commerce giant undercuts them on price.  He will describe Amazon’s impending entry as good for consumers – even if it damages some incumbent businesses.  

Loss leader declared a-ok

“If you open a store in a new town and you set a common price point, you are going to lose money initially if you don’t have scale,” he will say.  “Eventually if you get your business plan right you will make money at that price point; even if it damages incumbent firms and puts some out of business – this is in no way illegal.”

Australians love to support an underdog – in this case, and not without irony, their country’s large and established retailers.  But then, those retailers have had many years of runway to prepare for Amazon’s local market entry.

Some – notably Kogan – embraced the online future early, and are now well placed to compete with the Amazon octopus.

Less complaining, more competing

Australia’s other traditional retailers are best advised to stop seeking government protection, and start exploiting their wealth of competitive assets in the retail war about to erupt on their doorstep.

As I blogged previously, they can leverage their existing store networks to provide a far superior customer experience than any pure online retailer. Opportunities include “click and collect” systems, where shoppers choose goods online and then pick them up in-store, and using consumer showrooming behaviour to advantage.

Additionally, clever data-driven inventory management can enable them to use their full store networks as distributed fulfillment centers, beating even Amazon’s (increasingly unreliable) delivery speeds.

 

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