Published on 24/11/2017 by Any Business.Com.Au

Why Amazon's arrival could be good for your business

An Australian based entrepreneur believes online based businesses and sellers should be excited by the arrival of Amazon in Australia, having already seen success for her business after using the online giant's US and Canada sites to peddle her wares.

Sydney merchant GetBacktoBasix makes and sells lunchboxes, insulated bags for diabetic medications and other personal healthcare products. Founder Noelle Sadinsky has attributed the growth of her business to the listings on the two overseas Amazon sites and has encouraged others to use the enormous retail goliath to their advantage.

Infrastructure

Amazon now has a fulfillment centre operational in eastern Melbourne, with more sites expected in the future for faster delivery to all corners of Australia.

"The infrastructure that they will soon have in place in Australia will hugely assist in the timely and efficient distribution of product – at scale," Sadinsky said. "This is a game-changer for independent sellers."

Private label

Sadinsky said that Australian merchants should be "looking into" private-label products, if they're not already doing so.

"Amazon has been successful in promoting private labels and giving them scope to fight against the big players, building a credible brand identity," she said.

"Australians by nature love to support an underdog. If retailers embrace supporting locally based up-and-coming brands, it will foster recognition and loyalty from Aussie customers."

Confidence to shop online

Even without Amazon in the picture, the online shopping industry has performed strongly over the past five years, with its continued popularity expected to boost industry revenue by 14.9% in 2016-17, to total $18.0 billion.

Online sales growth has been supported by rising consumer confidence in online shopping, the large variety of good-value items available and further growth in internet use across the population.

Online sales profit

Industry profit margins have increased slightly over the past five years, and are expected to account for 4.0% of revenue in 2016-17.

Online stores typically attract lower profit margins than traditional retailers due to fierce internal and external competition, and the potential costs incurred through mistakes in website design and functionality.

Furthermore, many online retailers attract consumer demand by selling products at a substantial discount compared with bricks-and-mortar stores, which keeps profitability low.

Despite this trend, falling purchase costs have given some support to profit margins over the period. Industry players are increasingly sourcing products from low-cost manufacturers overseas, lowering final costs for imported consumer goods.

Multichannel retailing

Online shopping can only be undertaken through devices connected to the internet, which means that digital technology is an essential aspect of the industry.

The rapidly increasing use of smartphones and tablets for online sales has prompted many industry firms to develop mobile-optimised websites and applications. This allows retailers to sell products to consumers anywhere and at any time, enhancing the convenience of online shopping.

Industry Report Specialist IBISWorld estimates that almost 20% of all online orders globally are made via a mobile device. M-commerce enables retailers to connect and interact with customers on many levels, including through social media, messaging and marketplace platforms.

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AnyBusiness.com.au

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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