There’s been a lot of hype and more than a few news articles about Amazon Australia's launch. Numerous rumoured launch dates came and went. Item pricing displayed on the site at launch didn't attract much enthusiasm from potential buyers; or from the "Twittersphere" who were quick to share their opinions.
It may take some time before the true impact by Amazon's arrival is felt by Australian businesses. The big retail and eCommerce players like JB HiFi and Harvey Norman haven't seemed that phased so far. And while there’s debate about the impact to the big retailers, many other small businesses, especially those in the wholesale distribution space, should be thinking about the changes Amazon may bring with it - for better or for worse.
Small businesses embracing Amazon
For many small businesses with an online presence through existing eCommerce channels such as eBay and Facebook, Amazon presents a new opportunity to sell more product through another, major channel. There’s some great potential to expand reach to buyers and boost sales even further. Adopting Amazon as an additional sales channel is something many Australian small businesses have already started planning for.
Of course, increased opportunity for sales growth also translates to a greater need for warehouse and inventory management efficiency. Experiencing stock-outs and incorrect inventory levels can be excruciating for any organisation that’s having strong sales success. If you’re using spreadsheets to track inventory, it could be the right time to fast-track inventory management software for your business.
Companies looking to use Amazon’s fulfilment centres may have less complex inventory requirements but will still need to track inventory being sent to Amazon, along with imported or exported stock. Good inventory management is key for small businesses to remain competitive – whether or not they’re selling through Amazon.
"Adopting Amazon as an additional sales channel is something many Australian small businesses have already started planning for."
Small businesses worried about Amazon
Not every small business wants to expand their channels. Some companies are hesitating to push business through Amazon for several reasons such as:
To leverage the Amazon marketplace, sellers must pay fees for using the service. These fees add to the total costs of goods sold (COGS) and can affect the margin made on sales. That means having to sell more product to make the same total profit. However, with the right small business management software, additional costs can be offset by a reduction in operating costs and increased efficiency.
Using a 3rd party platform
There’s no escaping it – Amazon is a platform you don’t own or control. While some companies appreciate the ease of using a 3rd party eCommerce platform, others want to put their efforts into building and maintaining their own online presence.
While Amazon offers significant opportunity to be found as a seller on its marketplace, that’s no substitute for inbound marketing strategies including SEO, SEM, and content, to continually attract new leads and customers into your own CRM platform.
Keeping tight control
When you’re importing, exporting and distributing products, having tight control over your operational processes can help you sleep at night. Losing that control, on the other hand, can keep you awake. Some small businesses will see the use of Amazon fulfilment centres to hold their stock as a lack of that control. Amazon looks to recognise these worries though, providing the option for sellers to ship directly to customers.
Whether you’re looking to use Amazon’s fulfilment centres or handle shipping directly, it’s important to have inventory management software that gives you constant visibility and control over your stock.
Small business owners know how important maintaining good customer relationships is. Word of mouth is still a big factor for SMBs in acquiring new customers. This means customer advocacy is paramount, as is nurturing strong relationships with customers. Maintaining a more personalised experience can therefore be hard to give up. While Amazon offers its own returns and customer services, many SMBs may see this as a less personalised approach.
Many SMBs have seen success in delivering an excellent customer experience by using a CRM (Customer Relationship Management) system. The cross-department transparency and live updates on customer interactions a cloud solution provides can be invaluable. And regardless of whether sales reps are in the office, in front of clients or out on the road, a cloud solution gives them the mobility of managing your CRM on desktop, laptop or mobile device.
Branding and identity
Your company’s brand and its public identity are what make it memorable. And attracting new customers becomes much easier when leads and prospects remember your brand. In exchange for the ease of doing business through the Amazon marketplace, you’ll inevitably sacrifice some branding.
Amazon offers consumers a wide range of products and suppliers while providing a high level of consumer confidence. Their own branding, therefore, remains prominent across the site and product pages. This leaves little room for individual sellers’ brands to be remembered. If you’ve ever bought a product from Amazon in the US or other countries, you’ll likely remember that you bought it from Amazon – not the individual seller.
As an individual business wanting to promote the brand and build memorability and customer loyalty through that branding, selling through Amazon can present its challenges.
"There’s no escaping it – Amazon is a platform you don’t own or control. While some companies appreciate the ease of using a 3rd party eCommerce platform, others want to put their efforts into building and maintaining their own online presence."
Getting an edge
While some businesses are worried about Amazon kicking off in Australia, it does offer a unique opportunity. Companies are forced to sit up, take notice, review how they’re doing business today, and think strategically about the improvements needed to remain competitive.
JB Hi-Fi’s group CEO, Richard Murray, talked to International Business Times about Amazon Australia, sharing his views on remaining competitive, “If we continue to keep on the money, on price and we have the lowest cost of doing business — that is really powerful.”
This perspective highlights the importance of a company’s cost of doing business. Those with lower operating costs will have an increased profit margin to work with. That, in turn, provides flexibility to run discounted promotions when needed or keep sell-prices consistently more competitive.
Inventory management reporting
Real-time inventory management reporting is one, smart tactic for maintaining live visibility on inventory, buy prices, sell prices, margin, stock turn and more. The trends and bottlenecks it helps to identify can be powerful for knowing what needs to be addressed and when.
Inventory management software also reveals a clear picture of actual profitability down to a per-product level. That’s crucial information when making decisions about which products to continue or discontinue stocking.
Business management software
Business management software is available to companies from Australian small businesses and growing companies, right through to enterprises, which includes inventory management and all other core business functions. Commonly referred to as ERP (Enterprise Resource Planning) software, many small businesses have already taken it up and are seeing significant efficiency gains and increased profit margins.
Cloud ERP software
Cloud ERP software has made ERP business management software accessible to small and growing businesses by offering a low cost-of-entry compared to traditional business management solutions. Rapid cloud deployment options also help businesses get up and running quickly.
"While some businesses are worried about Amazon kicking off in Australia, it does offer a unique opportunity. Companies are forced to sit up, take notice, review how they’re doing business today, and think strategically about the improvements needed to remain competitive."
Keeping Your Eggs in Multiple Baskets
There have been a lot of success stories from Amazon in other countries, some of which used Amazon as an additional sales channel, while maintaining their own online or retail presence. This can be a clever way to ensure individual branding and visibility remain a priority.
Particularly for companies supplying their own branded products, the off-marketplace activity can reinforce memorability as user search for specific branded products on Amazon. The multi-channel approach can then help drive further sales through the Amazon marketplace.
For more tips on further diversifying sales channels, see NetSuite’s video explainer on How to Deliver an Omni-Channel Sales Experience.
Staying one step ahead
Whether you’re a wholesale distributor or retailer, Amazon’s arrival is almost certainly going to have an impact on your industry and the way you do business - whether that's now or further down the track.
Amazon Australia's launch gained a lot of attention. And let's face it - that's a lot of free PR. How will this affect other, smaller companies all trying to get their own slice of the public-eye pie?
How many companies will jump on board and embrace the Amazon Marketplace? How many will stay wary of it and how many will utilise it as an additional sales channel? Only time will tell. Whichever category your business falls into, make sure you’re staying one step ahead by knowing how to increase your business efficiency, improve inventory management, and remain competitive in an ever-crowded space.
Looking to grow your small business, faster? Get in touch on 1800 528 783 for a quick, initial chat or get your free Small Business Growth Playbook to learn more.