Amazon is coming to Australia
It was my pleasure to be a guest of Sundo on his morning radio program, South Australia’s 5MU. Sundo’s Big Breakfast was a first for me, LIVE radio. We enjoyed talking about Amazon’s impending arrival to Australia and the disruption that may cause.
Sundo: Let's talk about Amazon. It's due. What's it going to mean for people like K-Mart, Harvey Norman, The Good Guys and a lot of other people who try to flog things.
We've got Paul on the line. He's with us right now from Melbourne.
You are a strategist, entrepreneurial strategist. That's a good line isn't it?
Paul: Sounds like a great name doesn't it Sundo?
Sundo: Yes and for a Carlton supporter you've done very well.
Paul: I need something to go my way this year.
Sundo: Is that right, now ... Good win.
Let's talk about the impending arrival of Amazon. Is it going to be an enormous change to the way we shop?
Paul: Yeah well I certainly think from the perspective that everyone's moving online and the number of people shopping online is increasing something like 15 percent last year to 21 billion. So a lot of people are shifting that way. They (Amazon) own that space in other countries and they're coming in with local fulfilment in very big, big, big warehouses so yeah, I think it's going to make quite a splash.
Sundo: Okay, now I want to go and do some shopping. Now we've got Costco here. You've got Costco interstate. Now it's pretty small really when in terms of Amazon isn't it?
Paul: Yeah well, I think about when ALDI entered Australia and they came in on a price platform, low prices and it took them quite a number of years to reach the 10 odd percent they have in the market now and you compare that to something like Netflix, which has come in at far more online and has exposed themselves to something five point eight million Australian's eyeballs already. Yeah I think things are going to be quicker.
Sundo: Yeah okay now you're talking about an enormous building or some sort of warehousing that Amazon is going to have. Does this mean one in each state or just one nationally?
Paul: Well they're going to start with one, I hear their shopping around for one about 93,000 square metres, which is I think six or seven Adelaide Ovals.
Sundo: Is that right?
Paul: So very large fulfilment centre. They already sell about a billion dollars in Australia with a thousand employees here. But that'll change.
Sundo: That's at the moment and they're looking at obviously getting a lot bigger. But that's to the detriment of people like K-Mart and Harvey Norman and The Good Guys unless they can come up with something that's comparable.
Paul: Yeah well certainly, they're coming in with their great selection and rapid delivery. So in a country like Spain where they entered five years ago, they've now got 175 million products-
Sundo: Good heavens.
Paul: And they've got a service called Prime Now which has one hour delivery. So that's just a feeling of how quickly they can start to change things.
Sundo: Now, it's going to be a massive change of the way we do things as a consumer. How long will it take us to embrace this technology. I mean not everybody is online obviously. A lot of people still aren't computer literate.
Paul: Yeah I think it's just a growing trend isn't it? It's one of those things that is accelerating. No doubt it's growing much faster than the general retail spend everywhere and so it's still a small percentage of the overall population that are doing it in significant ways but it's just growing more rapidly so it will start small and increase.
Sundo: Now you've got a new book out called Xcelerate and you are an entrepreneurial strategist and an author obviously.
The people come to you and say, "What are we going to do?" I mean this book of yours explains to people innovation and disruption, all of those things and changing your framework of advertising and just about everything in the way you want to flog your goods, they come and ask you or do you sit down with them and have a bit of a chat about it?
Paul: Yeah well I wrote that book and I tend to be quite vocal. Trying to grab corporate Australia by the scruff of the neck and say, "Hey, things are changing. We better, what do we move first and proactively?"
Sundo: Mm-hmm (affirmative).
Paul: So I'm certainly feel sometimes I'm yelling from the rooftop about the sky's falling and you see something like Channel 10 yesterday and Telstra's 1400 jobs and you think well, maybe it is starting to happen more rapidly.
But certainly it's an opportunity for some as well. There's a lot of small businesses that can sell through the Amazon Marketplace and so if you're a bit more out of the way you don't have as much traffic, you've got a non-perishable good, you can tap into Amazon's reach. Especially when they get here and perhaps even increase yourself so for the small guys, some small guys, it could be quite good. The big guys it's a problem.
Sundo: You're suggesting that, see if I've got a small company, I can use ... Say I want to buy some new ... Something I did buy from Amazon overseas was some ear muffs for my radio, well radio, the one you put them in the earphones. They were the only ones I could get and I sent away and got them. I mean Amazon don't make them, they would warehouse them and on sell them for anyone else wouldn't they?
Paul: Yeah, they get a significant amount of their revenue, somthing like 40 or 50 percent of their total revenue which is a hundred and thirty billion dollars from third party sales so people who put their products up, some of them ship direct to the purchaser and some of them their inventory by Amazon. But there's free opportunity to potentially for some people with all that non-perishable, you know a fashion garment or an electronic thing. Not fresh food.
Sundo: Well that's interesting. What about e-Bay? Is it going to effect e-Bay?
Paul: Yeah well, we're all certainly used to buying things on e-Bay now so I think we've trained a little bit in that and we moved to e-Bay for price. I think what we'll see with Amazon is speed.
Sundo: Yeah interesting times.
Paul: Very focused on speed.
Sundo: So before can hang up and get out of computer it could be at your front door literally couldn't it?
Paul: Yes, it certainly a lot of the start up businesses I see now are taking on major retailers are delivering very quickly. Next day.
Sundo: Alright. Good to talk to you Paul. I hope Carlton keep winning but not against Geelong and your book is called Xcelerate.
Paul: It is, Xcelerate with an X. Yep that's the one.
Sundo: And you are a good bloke to talk to for this time of morning. It's an interesting concept and we're going to be hearing a lot more about it.
By the way, Channel 10 is called Channel 3 here at the moment, things are pretty tough.
Paul: It is tough. It is tough, very tough out there. It's been changing for a while.
Sundo: Thank you mate.
Paul: Good on you Sundo, thanks for having me.