Amazon: Threat or Opportunity for Australian Businesses?

Transcription

1 Amazon: Threat or Opportunity for Australian Businesses?

2 Your Hosts Steve Nuttall Head of CX Research Fifth Quadrant Matt Hampshire Digital Sales Director Oxygen, A DXC Technology Company

3 Today s Agenda What Is Amazon? What Drive s Amazon Growth? How Do Amazon s Marketplaces Work? What Are Amazon s Australian Launch Plans? What Are The Implications Of Amazon For Australian Businesses?

4 What Is Amazon? What Drive s Amazon Growth? How Do Amazon s Marketplaces Work? What Are Amazon s Australian Launch Plans? What Are The Implications Of Amazon For Australian Businesses?

5 Key facts and figures about Amazon Amazon is the world s BIGGEST online ecommerce marketplace 2012 $61 Billion 2016 $138 Billion 95 million product searches monthly 80 million members globally 310 million active customer accounts globally The Third Pillar - Over 2 million 3 rd Party Marketplace Sellers that make up almost ½ of all sales. USA DE UK FR ES IT CA IN JP CN MX AU

6 Compared with other leading global retailers, Amazon s revenue has jumped significantly in the last two years Wesfarmers Limited Woolworths Limited Amazon.com Inc. Tesco PLC Schwarz Unternehmenstreuhand KG The Kroger Co. Costco Wholesale Corporation Wal-Mart Stores Inc , , , , , , Revenue (US$M) 2014 Revenue (US$M)

7 But is Amazon a retailer? The Amazon group includes retail, media, logistics, hardware, software, data analytics, and cloud services businesses They search.

8 Amazon may be fairly new to digital advertising, but Amazon Media Group (AMG) generated $1.2 US billion in digital advertising revenue in 2016 according to Emarketer. Google, by contrast, generated more than $79 billion in ad revenue in 2016 and Facebook reported $27 billion.

9 Amazon is continuously innovating

10 What Is Amazon? What Drive s Amazon Growth? How Do Amazon s Marketplaces Work? What Are Amazon s Australian Launch Plans? What Are The Implications Of Amazon For Australian Businesses?

11 Amazon has been customer obsessed from the get go Obsess Over Customers From the beginning, our focus has been on offering our customers compelling value. We realized that the Web was, and still is, the World Wide Wait. Therefore, we set out to offer customers something they simply could not get any other way We brought them much more selection than was possible in a physical store, and presented it in a useful, easy-tosearch, and easy-to-browse format in a store open 365 days a year, 24 hours a day. Source: First Annual Report 1998 It is estimated a third of all product searches globally begin on Amazon There are an estimated 380 million products on Amazon Amazon customers are extremely purchase focused Amazon s customers keep their credit cards on file. Amazon s #1 priority is, The Customer.

12 Why do customers shop with Amazon? Convenience Trust Value Choice Personalisation

13 Data and AI powers the Amazon engine vendor central! Businesses Consumers Offers, coupons, deals, product suggestions & recommendations

14 The Prime service is Amazon s growth engine Customers pay approx. $100 USD per year to join Amazon Prime Membership. It entitles them to Free 2 Day Shipping on all orders over $35 (but only orders which are Fulfilled by Amazon). Also Included: Prime Video Prime Music Prime TV Audible Prime Now Games Prime Photo Storage And more There are estimated to be 80 Million Prime Members Worldwide

15 What Is Amazon? What Drive s Amazon Growth? How Do Amazon s Marketplaces Work? What Are Amazon s Australian Launch Plans? What Are The Implications Of Amazon For Australian Businesses?

16 Amazon s markets bring buyers and sellers together including a dedicated B2B market Buyers Markets Sellers Regular Amazon itself Consumers Wholesalers/ Manufacturers Retailers Businesses Private Labellers

17 Amazon Business is exclusive to vetted business buyers Amazon Business

18 Amazon's focus for B2B spans from commodity to specialty items

19 Today s featured categories on Amazon Business

20 Fulfilled By Amazon (FBA) is the logistics arm of the business

21 Buying Batteries Search Demo

22 Alexa Buy Batteries

23 The Importance of the Buy Box

24 What Is Amazon? What Drive s Amazon Growth? How Do Amazon s Marketplaces Work? What Are Amazon s Australian Launch Plans? What Are The Implications Of Amazon For Australian Businesses?

25 Amazon Australia Launch Plan We are optimistic that by focusing on the things we believe customers value most low prices, vast selection, and fast delivery over time we ll earn the business of Australian customers th November, Amazon Suppliers Summit, Sydney Products direct out of its Australian warehouse and via third-party sellers. Amazon is launching into an established e- commerce market place. See Monday s Announcement plan ABC or SMH

26 Amazon Has Asked Australian Sellers To Be Ready To Receive Orders From 2pm Today

27 What Is Amazon? What Drive s Amazon Growth? How Do Amazon s Marketplaces Work? What Are Amazon s Australian Launch Plans? What Are The Implications Of Amazon For Australian Businesses?

28 Are Australian Businesses And Consumers Ready For Amazon?

29 Almost all retailers are aware of Amazon entering the Australian market in 2018, a significant uplift since 6 months ago and the vast majority of consumers are also aware. Awareness Of Amazon Entering Australia in % 89% 78% Jan-17 Businesses Jul-17 Consumers Base: All respondents Jul 2017 (n=506), Jan 2017 (n=505) / Are you aware that Amazon plans to enter the Australian market in 2018?

30 Over half of retailers that are aware of Amazon entering Australia perceive it as a threat, with only a small proportion recognising Amazon as an opportunity to increase sales. Effect Of Amazon On Retail Businesses (Jan 2017) Amongst Those Aware Threat 47% 52% Opportunity 13% 13% No impact 40% 35% Aware Jan 2017 Aware Jul 2017 Base: Respondents aware of amazon s entry Jul 2017 (n=452), Jan 2017 (n=354) / What effect do you think Amazon s entry will have on your business?

31 44% of retailers still don t have a strategy in place to be able to compete with Amazon. Have Strategy In Place To Compete with Amazon Amongst Retailers That Are Aware 25% amongst retailers who perceive Amazon as a threat (vs only 14% in Jan 2017) Yes, 22% 50% amongst retailers who perceive Amazon as a threat (vs 51% in Jan 2017) No, but we are working on a strategy, 33% No, 44% 25% amongst retailers who perceive Amazon as a threat (vs only 35% in Jan 2017) Base: Retailers who are aware of Amazon s entry, Jul 2017 (n=452) Retailers who are aware of Amazon s entry and believe it is a threat, Jan 2017 (n=132) A3. Do you have a strategy in place to be able to effectively compete with Amazon?

32 Improvements in customer experience, pricing and product range are key initiatives to compete with Amazon. What Business Will Need To Do To Be Able To Effectively Compete With Amazon Amongst Retailers Who Find Amazon s Entry To Australia A Threat Optimise the Customer Experience 71% Improve product pricing, quality and range 65% Enhance delivery options and supply chain systems 40% Base: Retailers who find Amazon s entry a threat, Jul 2017 (n=255) / - What do you think your business will need to do to be able to effectively compete with Amazon?

33 Amazon branded products are likely to be very popular, with two thirds of shoppers comfortable buying the brand. Comfortable Buying Amazon Branded Products Uncomfortable 27% Comfortable 73% Base: All respondents Jul 2017 (n=1531) minimum sample n=223 / D3 Would you be comfortable buying Amazon branded products?

34 Do not assume that Amazon Australia will be a guaranteed success Sales (US$ bn) Canada United Kingdon France United States

35 Amazon eats brands

36 Being easy to do business with Understanding what your customers want/need. Relevance and context Speed Consistency across channels Real people Source

37 What makes or breaks a customer experience? The digital era means engaging with consumers like never before, capitalising on moments of opportunity to ensure better outcomes where interactions happen in an instant, decisions are made now, and insight is needed in real time. 91% Australian consumers expect a response within 24 hrs 34% Over half surveyed expect a response that demonstrates a clear understanding of their history Consumers are annoyed with lengthy customer support calls if personal data & history has been sourced but forgotten To create a great relationship there needs to be strong understanding of needs, wants and desired outcomes.

38 How is this relevant to B2B 80% B2B users want a B2C experience B2B CX leaders have higher margins CX Transitions Deliver: 10-20% Reduction in service costs 10-15% Increase in revenue Increased employee satisfaction Source IBM, McKinsey

39 But B2B is not the same as B2C The buying process can be complex and long Pricing complexity Products can be complex Multiple geographies Multiple buyers are involved Where does your sales organisation fit?

40 The keys to success Data & Content Share insights with your partners Innovate product Deliver the long tail Product innovation Customer experience strategy/design Across channels Persona driven It doesn t finish with the sale Leverage your team

41 Case Study: Chemicals company SAP PIM implementation CLIENT PROFILE A leading global provider of chemicals for agriculture, mining, life sciences, building and construction. With more than 1,000 employees globally, Australia s market leader in water treatment and chemical distribution.! Objectives Our Joint Solution Results Single repository for product data (including associated documentation) which is accessible to all business users and customers 360 view of product content from all systems in one place Customer Self Service to securely login, browse product catalogue and download documentation Provide customers, account managers and customer service teams with Consistent Data across all touchpoints Create Multiple Catalogues to classify and categorise products in different ways. Promote new products faster, thanks to coordinated content creation and approval processes Designed a comprehensive Product Information Management (PIM) solution based on Hybris Commerce Utilises new Hybris V6.4 Product Management cockpit integrated into Backoffice Architected a solution that integrated directly to SAP ERP for product data modelling and synchronisation Supports product managers, marketing and sales teams with integrated workflows and approvals Integrated document management for product images and safety documentation Integrated B2B storefront plus order history for customer self service Cost savings by replacing legacy Lotus Notes PIM system and delivering real time integration to SAP ERP Improved customer service through ability for customers to serve themselves for product information, documentation downloads and order history Numerous usability features that shorten the time to modify existing products, introduce new products and communicate information to multiple stakeholders

42 Case Study CPG (Beverages) SAP Hybris End to End Implementation CLIENT PROFILE Manufacturer, marketer and distributor of a range of fruit juices, fruit drinks, energy drinks, waters and soft drinks, many of which are household names throughout New Zealand and Australia.! Objectives Our Joint Solution Results Provide online ordering for clients in Australia and New Zealand via desktop and mobile Grow market share with SME Optimise sales team interactions with clients Lower call-centre & customer service costs Understand customer segments in order to optimise marketing SAP Hybris commerce platform with regional instances Integrated to SAP Hybris Cloud for Customer for seamless customer service SAP Hybris Marketing to segment and target customers First orders just 14 weeks after project kickoff New customers on-boarding simply due to online capability Sales team able to focus on high-value clients

43 SAP Hybris Solutions SAP Hybris Commerce Cloud SAP Hybris Commerce helps customers engage and understand their customers across every part of the commerce experience, from content creation to merchandising to fulfilment. With SAP Hybris Commerce customers can meet expectations and deliver great customer experiences. SAP Hybris Marketing Cloud SAP Hybris Marketing enables marketers to deliver contextual, relevant marketing to target audiences by providing instant insights into marketing data. It provides a unified view of known and unknown customers through data integration and data quality capabilities. SAP Hybris Sales Cloud SAP Hybris Sales Cloud has seen a 16% higher closing rates, 17% higher pipeline value, and 10% higher target KPIs. SAP Hybris Service Cloud SAP Hybris Service Cloud helps creates seamless service experiences and supports customers throughout the entire buying journey. SAP Hybris Revenue Cloud Consumer product companies are reinventing their business models to include subscriptions to meet new demands and increase bottom line performances. SAP Hybris Revenue creates flexible and tailored options to meet the growing appetite for subscription services.

44 For more information contact: Matt Hampshire & Steve Nuttall