Australia’s e-commerce industry is standing at the precipice of a monumental shift, as new data predicts Amazon is on track to dethrone Ebay as the country’s top online shopping website.
The American e-commerce giant, which launched in Australia just seven years ago, has been rapidly out-muscling competitors with faster delivery times and local growth in its loyalty scheme, Amazon Prime, Jarden analyst Ben Gilbert said in research published on Friday.
Traffic to Amazon’s website has grown more than 20 per cent in the past year, while key rivals Ebay, Ozbargain and Gumtree have seen hardly any growth or even negative growth in the same period.
If these trends persist Amazon will overtake Ebay as the No.1 retail website in Australia, measured by online visitors, Mr Gilbert said.
“Amazon is not to be underestimated,” he said.
“The local site continues to materially outperform the broader market, aided by increased capacity and a move to next-day delivery in Sydney [and] Melbourne.”
Amazon the ‘biggest mover’
When Amazon launched in Australia back in 2017, it was much anticipated for its reputation as a so-called “category killer” in the US.
But the business got off to a slow start Down Under, particularly after taxation reforms prompted it to scale back its local offering.
However, the business has slowly expanded its local range and opened a raft of distribution centres, allowing it to offer next day delivery to customers in Sydney and Melbourne.
This, coupled with Amazon Prime – which makes delivery free for an annual fee – is driving its meteoric rise up the e-commerce rankings.
“Amazon has been the biggest mover this year, lifting share by more than 40 per cent since December to July,” Mr Gilbert said.
“Amazon.com.au [is set to] overtake eBay as the No.1 retail site in Australia in the next 12 months, based on the current run-rate.”
University of Tasmania senior lecturer and retail expert Louise Grimmer said Amazon is winning favour among Australian customers with a user-friendly website and a growing product range.
“Customers find it easy to navigate their way through the platform – Ebay is not up to scratch in this area,” Dr Grimmer said.
“Arguably the Ebay platform is quite confusing, it appears a little ‘dated’ and I think it is quite overwhelming for many users.”
Amazon overcomes ‘tyranny of distance’
Queensland University of Technology Professor Gary Mortimer said that Amazon has taken a “cautious and strategic” approach to its launch in the Australian market, slowly adding new categories over several years.
“[This] meant they did not hold inventory of unwanted goods, until the category was sufficiently developed with a wide and deep range of offers,” he said.
“Prime membership was [also] an immediate winner, as it delivered access to free deliveries, video, music, ebooks and gaming as well as exclusive deals.”
Mr Mortimer said Amazon has also won customers by investing in its delivery speeds, overcoming what he called Australia’s “tyranny of distance” in the process.
“The ability to order today and receive the next day is a strong point of differentiation and competitive advantage.”
