Amazon is the second largest retailer of consumer electronics globally. Not only that but it is on the verge of becoming the largest apparel retailer in the US. It already holds a whopping 50% of the online retail market share and, plans to undercut local prices wherever it operates in the world by at least 30%.[1]
So what?
Well, Amazon has plans to roll-out its massive money making business in Australia this year and to provide same day delivery across is enormous product range with, potentially delivery in 1 – 2 hours for select locations and goods as it currently offers in the US right now. In fact on Christmas Eve Amazon offered shoppers guaranteed delivery in time for Christmas for all orders up to 9pm that night.
Amazon, as you may know, offers almost everything to their customers. They may have started out with books but now sell anything you can think of from books, to whitegoods and groceries to fresh foods. They promise their prices will be at least 30% lower than their competitors and, at least in Australia, their delivery services will be days, if not weeks ahead of many competing companies currently in the market.
What does it mean for the future?
The Australian online business which relies, in large part on the Australia Post Logistics machine is one of the slowest in the world and consequently, growth in market share is also slow. Who wants to wait a week, 10 days or more for an eagerly awaited impulse purchase to arrive?
Amazon Prime, its US subscription service offers free, 48 hour shipping on goods and it does so by setting up its own highly efficient supply chain with city and regional distribution centres and, more recently, a transport fleet that ensure products reach consumers on time, every time.
While there are varying reactions amongst Australian retail operators to the imminent arrival of Amazon, no one doubts that it will give all retailers currently servicing the market a run for their money and will certainly be changing logistics in Australia. Various quotes to various media outlets all agree that Amazon is planning to destroy the retail environment in Australia and, let’s face it, this wouldn’t be hard – at least that part of the environment that is online.
Consumers in Australia think nothing of waiting up to 10 frustrating days or more for an online purchase. Usually through Australia Post. Even when the store the purchase is coming from is literally less that two or three kilometres from the consumer’s home address purchased goods often journey out of State and back again before landing on the doorstep!
Australian companies must get smarter
There is no doubt that Australian companies must get smarter with their online offerings and delivery responsiveness. This may mean taking delivery away from Australia Post and putting it with more agile and responsive logistics companies. Alternatively, retail companies could consider doing what Amazon does so well and controlling their own supply chain by setting up in-house distribution and warehousing centres as well as transport fleets to reduce wait times and maintain competitiveness.
Whilst we know Amazon is coming, nothing much is changing in terms of responsiveness. There are a few online companies where consumers know they’ll receive their product within a 2 or 3 day window but, they’re few and far between. Over the next 12 months you should expect to see a radical shake-up in the sector with the smart companies looking to cut-down delivery times and improve efficiencies to keep costs low.
Now’s the time to get into logistics
This exciting, challenging and increasingly desperate market will be seeking growing numbers of suitably qualified leaders in logistics management. That is, individuals who understand the supply chain and can negotiate with and manage diverse supplier groups to provide an efficient and continuously improving network of logistics services that delivers products to consumers in much reduced time frames. If you’re considering a move to a career in logistics then 2017 is definitely the time to do it.
The online competition is hotting up and retailers will be seeking logistics solutions that offer shorter delivery windows with high quality customer service – a combination that needs logistics professionals in key roles throughout the entire supply chain.
If you enjoy problem-solving, innovating and thinking creatively and, if you’re up for the challenge that comes with intense competition then, now’s the time to get qualified and enter the market because tomorrow will bring success and attractive employment opportunities for talented logistics professionals!
[1] Business Insider Australia. Fund Manager: Amazon is coming to Australia and wants to ‘destroy’ local retailers. Nov. 3, 2016. http://www.businessinsider.com.au/fund-manager-amazon-is-coming-to-australia-and-wants-to-destroy-the-retail-industry-2016-11 Cited January 2017.
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