If you are a New Zealand retailer winter is coming* and it might be coming as early as today.
There is a high probability that I’m wrong about this, but before you get a chance to finish reading this, Amazon Australia would have launched. Why today, well because today is Black Friday** one of the biggest online shopping days of the calendar. I know that there has been a heap of other predictions on the launch date and all of them have been wrong so it is equally likely that I will be wrong on this one, but it really doesn’t matter. The fact is Amazon is coming and you need to be prepared.
The latest stats show that online shopping accounts for about 7.4% of total retail, which is slightly behind the global figure of 8.7%. But the scary thing for me is it is estimated that 45% of all online retail in NZ is from overseas merchants. And I can safely predict this is only going to accelerate with the likes of Amazon entering the arena.
Here is an example of just how disruptive companies like Amazon can be. Their personal digital assistant, Alexa, can automate your home, and also order and have items delivered to you from Amazon. But there is a rub, Amazon has programed Alexa, (or the new fancy way of saying it Alexa’s algorithm) to recommend Amazon basics where they have items in a category, ask Alexa to order batteries and she will order you Amazon basic batteries, no Energiser, no Duracell options just Amazon basics. House brands are already 14.5% of total grocery spend, and growing at 2 ½ the rate of branded grocery products, what now for branded FMCG goods, I’ll leave that for another day.
Amazon Echo Commercial Parody (NSFW – a couple of swear words at the end)
I have been speaking to a few retailers over the past few weeks and there is about a 50:50 split between those that are truly worried and those that have buried their head in the sand. Those in the latter typically peak about the advantages they have because they are closer to the customer and Amazon has to ship from Australia. This sounds good in theory but here is why they are dead wrong. My wife has kindly done a significant piece of hands-on research to give me some figures for this part. So let’s look at some current customer experiences and delivery times:
- Order from Apple and it is shipped from Sydney and delivered the next day
- Order from The Iconic and it is shipped from Australia and has next day delivery to NZ
- Myer now ships to NZ
- Boarderfree has opened up a whole range of International stores to the NZ consumer
Compare that with some local examples that are closer to the customer and should have an advantage:
- Order from Rebel Sport and it will be couriered from your local store within 3-5 days
- Order from Farmers and it will take 3 to 5 days
- Kathmandu has delivery times of between 2 and 7 days!
- Order from the warehouse and you have a 3 to 5-day wait
What do you think that Amazon Prime delivery times will be from Australia?
Now it is good to see that a number of NZ companies are working on getting their act together, they just need to accelerate the implementation:
- NZ Post have an unlimited delivery service, where you, as the consumer, pay a subscription fee and get unlimited free deliveries from participating merchants. They have trialed this service with The Warehouse.
- The Warehouse also need to get another fist pump as buried in their investor pack on page 57, they are going to test 2 hour deliveries, now that is world leading
- Countdown has a subscription service where you can get three months unlimited deliveries for $69 dollars. We have been using the service and it is fantastic, we get two or three deliveries a week, with many of them the same day that we order.
- Mighty Ape are prepared to play with the big boys, they have overnight, same day and evening express
What is the point of all this? Being the best in NZ isn’t good enough now, we are competing with the best in the world. They are on our doorstep, are you ready?
*I know I have used this quote before but 1) the edit has been updated 2) the show gets away with using it 100’s of times and 3) and if you watch Game of Thrones you will know that winter is already here, Amazon may be here today
**Black Friday is an informal name for the day following Thanksgiving Day in the United States (the fourth Thursday of November), which has been regarded as the beginning of the country’s Christmas shopping season