Opinion

They’re here: Before it’s even launched, Amazon is already at the front of Australian shoppers’ minds

They haven't even started a full local service yet, but the brand values of e-commerce giant Amazon are already deeply entrenched in the Australian market, argues strategist Wayde Bull

Australian businesses need to stop obsessing about the pending arrival of Amazon.

That’s not to say the fear is unwarranted, however it is somewhat misguided. A quote from the seminal 1980s film Poltergeist comes to mind when you’re talking Amazon: they’re here.

Yes, we’ve been able to purchase from Amazon’s Kindle store for several years and the Amazon Prime video streaming service launched here six months ago. But more importantly, the brand name and its powerful reputation for value are already solidly established in the minds of Australian shoppers.

For the last decade, we have been conducting a piece of research that gauges how the Australian public feels about brands in the local marketplace based on four key equity drivers: visibility, value, virtue and vitality. For the first time in 10 years of running the Brand Alpha study, we included Amazon.

While Amazon only confirmed in April it was looking to secure warehouse space Down Under, it’s fair to say the brand is already well and truly here signalled by its debut on the Brand Alpha ranking at number five.

We may be yet to enjoy the spoils of Amazon’s signature subscription service, Prime, that entitles users to free delivery on millions of products as well as access to films, TV series, music, books and more but we’ve already got an understanding of the products the business offers and we’ve made a judgement that Amazon is seriously good value.

The Brand Alpha study found that, so far, one in three Australians have bought products or services from Amazon but even for people that haven’t yet used the brand, its stand out quality is value. In fact, it is the strongest retail brand we have ever measured on value putting it in the same league as value leaders such as IKEA, Hyundai and Aldi.

This finding should ring alarm bells for retail and entertainment brands alike.

As part of the Brand Alpha study, we asked 803 Aussie consumers if they’d be interested in subscribing to an Amazon Prime-style service. We pitched them the offering at a price point of $150 per year. One in four expressed a definite or probable interest in subscribing, with young metro males the most likely to immediately take up the offer.

The challenge for local retailers in shaping their competitive response to Amazon Prime will be the multi-faceted nature of the subscription service’s appeal. Two-thirds of those likely to subscribe are motivated by the offer of free or fixed price shipping, a further two-thirds are motivated by the offer of fresh TV, movie and music content, while half are attracted to the idea of deep merchandise discounts with close to half interested in the offer of generous cloud storage services.

Amazon’s capacity to offer value of such a deep and interlinked nature suggests the need for local retailers to find a foothold on factors other than value alone.

Foxtel’s recent relaunch of its streaming offering Foxtel Now is perhaps indication businesses are becoming aware Amazon is far from an immature proposition launching into the Australian market.

When it physically arrives, Amazon will set up shop with a formidable brand already established, an advantage money can’t buy. But to say the brand is coming would be folly. There’s absolutely no denying that Amazon is already here.

Wayde Bull is the founder and planning director at branding agency Principals.

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