The digital boss of one of the world’s biggest advertising groups GroupM has warned that online e-commerce giant Amazon will pose a major threat to Australia’s online retailers when it eventually launches in Australia.
Speaking at an Interactive Advertising Bureau (IAB) event, this morning, Rob Norman told the audience that when it launched Amazon would not worry about profitability and instead focus on “squeezing” out other smaller online rivals.
“I have the sense that there are a bunch of businesses in Australia that are imperilling themselves by not embracing e-commerce the way they could,” Norman warned.
“I think when Amazon is in Australia itself, and I believe they are on the hunt for real estate, people will make the mistake of thinking ‘it will be hard for them to compete on economic grounds’, but that is predicated on the presumption that they care.
“Everything we have seen is that Amazon doesn’t care about that.”
Amazon is tipped to launch a full operation Australia imminently after last year appointing former Yahoo!7 CEO Stuart Sayers as CEO with Norman saying he understood they were look for real estate for a larger local office.
Norman speaking at this morning’s event
Yesterday Audible, the audio-book arm of Amazon, officially launched in Australia, giving away free content as an incentive for new members.
Norman made the comments in a wide ranging speech and noted how he had drawn out the Amazon strategy for retail executives at a recent conference.
“One of the observations I made to a retail conference was to ask ‘do you know what anacondas, and boa constrictors are?’ And the audience said ‘yes they are snakes’ and then I asked ‘what do they have in common?’ and they said ‘what they do is they curl themselves and squeeze it till it dies’.
“Then I asked ‘where do they all come from?’ And of course the answer was: ‘the amazon’ and that gives you a decent insight into how Amazon might think about that,” he quipped.
Norman also noted that Australia was one of the few parts of the world where there was not a correlation between the high levels of online advertising and the relatively laggard state of e-commerce.
“One of the observations one can’t help but make about Australia is that the e-commerce business is under developed compared to the rest of the world,” said Norman.
“You have one of the highest proportions of online advertising in the world and almost everywhere else in the world there is an almost exact correlation between the percentage of advertising that is online and percentage of GDP that is spent on ecommerce.”