- eBay is still the dominant player in Australian e-commerce, but Amazon is “nipping at its heels” according to market analyst Anastasia Lloyd-Wallis.
- Amazon has achieved 7% market penetration for its Prime product in just 12 months, but 50% of Australian consumers are still not sure they can trust the American retail giant. .
- eBay Australian managing director Tim MacKinnon told Business Insider Australia that partnering with Aussie retailers, instead of seeking to disrupt their business models, is the secret to success down under.
If Amazon wants a blueprint for building a track record in the Australian market it need look no further than eBay.
An e-commerce OG, eBay was founded in the height of Silicon Valley’s mid-nineties dotcom bubble and in 2019 will celebrate its 20th year down under.
“It’s a bloody long time in tech,” eBay Australia managing director Tim MacKinnon told Business Insider Australia — in vernacular that proves just how culturally-integrated the company has become.
Market analyst Anastasia Lloyd-Wallis of consulting firm Retail Doctor told Business Insider Australia her research suggests it is a matter of when, not if, Amazon will overtake eBay.
“eBay still dominates Australia’s e-commerce market … but Amazon is nipping at its heels,” Lloyd-Wallis said.
“Amazon’s rollout in Australia is on track. It really is ticking all the boxes.”
Lloyd-Wallis points to Retail Doctor research indicating that Amazon Prime — a product the analyst says the e-commerce giant will centre its Australian operations around — has reached a 7% market penetration in just one year since launching in June 2018.
Amazon’s Prime Day promotion in Australia was more successful than other rollouts including the UK, Lloyd-Wallis said, adding she is confident that “Amazon will be taking market share from eBay”.
But the relatively new market entrant does have a lot of catching up to do yet, especially when it comes to earning consumer trust.
“eBay is still seen as the trusted retailer in the minds of consumers,” Lloyd-Wallis said.
“They can guarantee they are going to get the product [and] they can guarantee they will get it in the time specified.”
Meanwhile, Amazon still lags heavily on this all-important trust factor.
According to Retail Doctor’s research conducted in April 2019, a full 50% of Australians still say they either don’t trust Amazon or are unsure.
Which makes eBay’s Tim MacKinnon well-placed — at least for now — to offer some advice.
Asked what Amazon needs to do to ensure a smooth ride into the Australian market, MacKinnon declined to comment on the retail giant directly.
“I would never want to give advice to particular people about how they can do their job better,” he said, before proceeding to offer a “general comment”.
“To build trust with consumers you have to drive a level of familiarity … you have to deliver on your promises,” he said.
“If you want to be successful in this market you have to partner, not come in and seek to disrupt and destroy the Australian retail landscape.”
For its part, Amazon maintains that partnering with Australian business — and not disrupting it — is exactly what it’s doing.
While it declined to answer Business Insider Australia’s specific questions, an Amazon spokesperson said the company is satisfied with its Australian rollout so far.
“Amazon succeeds when sellers succeed,” the spokesperson said.
“Sellers delight our customers every day with vast selection, convenient delivery, and great prices.
“In fact, globally, products from sellers make up more than half of units sold in our stores. We invest heavily to help sellers accelerate their businesses, and work hard to make our store a great place for brands.
“Our focus is on continuing to grow our offering for Australian customers and investing in our local business, creating jobs and economic opportunity for thousands of small businesses across the country.”
And Amazon may not be too inclined to take advice from eBay anyway.
Though the company can boast two decades in Australia and high trust levels, at least according to Retail Doctor, it has also struggled with poor profit results in recent years and a lingering
perception that it is a seller of used goods.
MacKinnon told Business Insider Australia that this is a false perception, with 90% of the products listed on its marketplace being new. But he also admitted it was a reality that the perception persists, though adding this is starting to change slowly.
“Brand heritage is incredibly powerful,” he said. “15 years ago we were probably in the consumer’s mind more of a flea market or auction house.
“In the last five years we have become a Westfield — a Westfield that has a Coles in it.
“That’s the journey we’re on.”
So much for Amazon to look forward to.