Have you considered what will happen to local brands, your brand, when Amazon brand jungle launches in Australia?
If the changes in the USA are any indication Amazon will be a competitor here and will alter the retail landscape dramatically. I believe multinational brands will be the loses in this market change and small to medium producers will have the opportunity to be the winners.
When I talk to clients their reactions to the new comer vary from ‘very nervous, to the totally complacent or excitedly keen to know WHEN is Amazon launching here’. I hope you are in the third camp because this is an amazing opportunity for all brands. Amazon’s presence in Australia will be the base to sell their products in South East Asia and the Pacific, including New Zealand.
Before you get too excited, Amazon has not released a date for their arrival into Australia but they rumoured to launch in early 2018.
The benefits for the consumer to who shops on Amazon are considerable. This retail platform has a customer-focussed attitude as opposed to a profit focussed attitude – like Coles and Woolworths. There is no doubt the entry of this giant will cause traditional retailers to lift their game: with product ranges that actually address consumer needs (not just over processed multinational brands), a consumer oriented refund policy ‘no questions asked’ and optimised delivery networks. In addition and unlike other online retailers Amazon Prime offers fast delivery at a flat rate of $99USD per year. In some areas delivery is within 2 hours. All that AND Amazon offers the customer prices at less than traditional a retailer.
Whether or not you agree with the way Amazon operates it would be prudent to consider whether your brand is ready and able to utilise this sales channel.
No doubt having the capacity to supply large volumes will a key to your success. Likewise a product with an glowing brand image is important, but I learned there is a lot more to it than that. Trading on Amazon requires knowing the quirks of the system and mitigating the (many) risks so I asked Aaron Weaver (yeap he’s my brother, Amazon expert and owner of Brand Sprout) where brand owners can start…
Me: What impact do you see Amazon having here in Australia?
Aaron: Large brands and retailers, for example from Unilever branded products to Coles Supermarkets to Westfield Shopping Centres, will be up against some fierce competition once Amazon enters the Australian market. Smaller brands will also see more international competition from foreign brands, however savvy brand owners will get in early and Amazon could very well be their largest online sales channel, especially if they utilise FBA (Fulfillment By Amazon).
Me: Can you explain how FBA (Fulfillment By Amazon) works?
Aaron: FBA is a smart choice for manufacturers and producers. Essentially it provides pretty much everything required make a product driven brand run smoothly. FBA also allows brand owners to take orders straight from their own website and is fulfilled by Amazon. Which means you can manage inventory online from any device, any location and Amazon handles the product storage, pick ’n’ pack, shipping and returns with streamlined customer service. By utilising the FBA platform, products will rank higher on Amazon which makes it quicker for customers to find. Plus, the products will be eligible for Amazon Prime – fast delivery with no surprise shipping costs makes for happy customers.”
Me: What should producers be considering if they want to have an Amazon retail channel?
Aaron: There are a few keys to brand success stories on Amazon… First is determining the ‘right’ product to sell, competition and demand are driving forces, like any market. Light weight (under 2.5kg) and small boxed items of non perishable goods are ideal for this platform. Nevertheless, it’s wise check because there are many factors to Amazon success, size or weight may not be an issue – depends on the category. It’s also important that the product won’t break easily – think about your structural packaging. Also, impulse purchasing is popular on this platform so an alluring price point is going to help sales.
Me: Can you see any barriers for Amazon to enter the Australian market
Aaron: The vast distances between Australia’s smallish cities mean there may be some logistical teething problems. Other than that, Amazon are not launching with FBA, but are initially starting with FBM (Fulfillment By Merchant). This may be a barrier for some companies – particularly the larger one’s but not so much for small and medium businesses who already operate this business model via their own and 3rd party websites. FBA is the most common trading model for Amazon and we expect it to follow not long after the launch next year.
Me: What kind of problem might a producer face when trading on Amazon?
Aaron: There is a lot of bureaucracy when dealing with this beast. Basically, there is not a lot of assistance for the seller. That’s why it’s important to understand the in’s and out’s of trading here, which is where we can help. Also this is such a massive market that it’s easy to not be found by customers. Being found is crucial and this step will determine the level of success a product may have.
Me: So where do producers start?
Aaron: Getting on board early. Existing Amazon sellers internationally will be Australian producers main competition. We are offering an initial package which audits a products feasibility for success and determines a strategy that would be best for an individual product or upto 10 products in the same range. This includes conducting competitor research, assessing the best price point, breakdown the FBA fees relevant to your product, and a guide for selling potential. Our Product Audit & Strategy is $297 AUD.
If you feel the outcomes of our Product Audit and Strategy are positive you can either progress on your own or utilise one of our other services, such as:
– Account setup streamlining the category approval process.
– Amazon has its own internal ranking algorithm (separate to Google) and it requires some knowledge about getting it right – we highlight the most profitable keywords for your product.
– Using the keywords we write a product listing that will be recognised by the algorithm and be attractive to the consumer: two different things entirely.
– Ensuring your products have the best chance of being delivered without a hitch the shipment and labelling process needs to be done right and can be tricky.
– Amazon’s algorithm is largely based on sales and reviews. The initial product promotion, review capture and product push will either make or break your ongoing sales success. We guide clients through the part of the Amazon jungle.
– We can also assist you with mastering the Amazon PPC (pay per click) advertising platform to increase sales and brand ranking.
– Brand registery, so product will not be competing in the buy box. This is not the same as registering your brand with IP Australia, it’s Amazon lingo for getting a Global Catalog Identifier (GCID) connected to your product.
In addition, we also offer an all inclusive Amazon account management service where we run your entire account for our clients.
Its worth noting other Amazon business models: ‘Fresh’ and ‘Go’. Amazon Fresh is a same-day fresh food delivery service currently opperating in high dense populations: London, Berlin and Tokyo and in some US states. Amazon Go will be check out free grocery stores. Yes, automated shopping similar to the way our retailers are already heading but a little more high tech with sensors that will automatically check out produce via the consumers’ mobile phone. We will have to wait and see if these models are in the Amazon Australia mix.
Amazon’s motto, ‘your margin is our opportunity’ – sounds a little scary but quite simply Amazon will be a new platform for consumers to purchase from. Amazon is ideal for brands who have the right type of product, essentially it will take care of the logistics and leave time to concentrate on growing your business.
Finally, another consideration to be ready for the Amazon brand jungle, is your packaging design and does it emphasise it’s Australian origin? If you would like to be in the international market space then this will assist sales so be sure to really maximise origin, traceability, your brand story, Australian flavours and our clean green safe food image.