Walmart, Amazon, & the Big Fish, Small Pond Opportunity for Brands in Australia
Originally published in Little Black Book
Earlier this year, I traveled to Australia for Retail Global, the largest retail ecommerce conference in the country. The big news, of course, was that Amazon was finally launching in Oz.
In a sense, of course, it was already there. According to the Australia Post, consumers in the country were already buying more than $1B from Amazon worldwide. But paying overseas shipping rates is not the same as having Prime in your own market. That represents a seismic shift.
You might wonder why it has taken this long. After all, Australia is an affluent country that is comfortable with ecommerce (it accounts for seven percent of all sales there, compared to nine percent in the US). But until now, no major global ecommerce company has entered the market.
The reasons are likely scale and geography. If you’re a retailer looking to invest in a market, Australia has only 24 million people spread out across an entire continent. It’s much more logical to focus on California, which has more than twice the GDP in a small fraction of the land area.
Not surprisingly, many brands undervalue Amazon’s big move. They’re not bothering to make a splash there, even as the ecommerce giant takes their goods to the continent for the first time.
I’d argue this is a big mistake, mainly due to something I like to call “Walmart’s Big Fish, Small Pond Opportunity.” It works like this: Amazon.com has ten times the revenue of Walmart.com. As a result, most marketers think that investing in an optimized Amazon.com presence is a much better idea than optimizing on Walmart.com.
That’s not necessarily true. While you are investing in Amazon.com in a market like the United States, your competitors probably are too. You can buy media and optimize your presence to improve your visibility on the platform, but you’re not necessarily going to gain a big advantage. In fact, you may just be maintaining your share.
On Walmart.com, the opposite story prevails. Far fewer brands are investing there, even though it offers the same low prices, free 2-day shipping, easy returns, and so on. By optimizing your brand’s presence there, you get a clearer playing field and a first-mover advantage. Suddenly, you realize that the smaller platform isn’t so bad. After all, 1/10 of Amazon.com is still quite large.
The same logic prevails with Amazon Australia. You might look at a bigger market, like the greater New York area, and conclude that you should concentrate your efforts there. But again, that’s also what everyone else is doing. Even though Australia as a whole is a smaller market, it’s one where implementing a smart strategy in the absence of others could pay an outsized return.
Australia isn’t alone in this respect. There are many smaller middle-class markets around the world that are underserved by ecommerce and thus not properly invested in by brands. But bigger is not always better, and first-mover advantage is always huge. Investing in Amazon.com in Australia makes great sense for a lot of brands. It might not cause a game-changing impact in the bottom line immediately, but it could make for many happy customers and long-term customer value.
Will brands do so? I’m not sure. After all, I was the only person at Retail Global from a major Western agency, and I haven’t seen any indication that marketers here are taking the opportunity seriously. Which could be a big miss. Right now, Australia is an exciting place for ecommerce, and we should all be watching it closely.