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Retailers Urged To Lift E-Commerce Spend To Fight Amazon

Analysts have warned local retailers to lift their e-commerce, data analytics and supply chain expenditure, in a bid to keep pace with Amazon Australia over coming months.

As per afrUBS claims over 45% of incremental retail sales growth in 2018 was derived from e-commerce, with online sales further offsetting weak store performance.

Reflected in the earnings report of several Aussie retailers (e.g. Wesfarmers), digitisation expenditure has affected overall margins.

According to NAB’s ‘Online Retail Sales’ report, 60% of Aussie retailers aim to increase their online operations in the next 24 months.

Half of NAB’s retail respondents state they won’t be expanding their store operations in the next year, whilst most remain confident in their physical presence.

As previously reported, Wesfarmers is set to build its own data analytics centre, in a bid to better analyse store information, and wield customer data.

In recent times, Woolworths has invested $130 million in a new data and digital centre, coupled with a $350 million automated distribution centre.

Speaking to afrUBS retail analyst, Ben Gilbert, advises Aussie retailers to continue supply chain automation and data analysis expenditure, to keep pace with Amazon Australia as online shopping accelerates.

Gilbert claims Aussie retailers have room to improve, versus the performance of rival overseas websites.

He cautions against under-investing, adding retailers shouldn’t be spending less money than they are currently.

Commentators agree ‘last-mile delivery’ will be difficult in Australia, citing low population density and distance.

Analysts urge local retailers to continue improving their supply chain models, asserting Amazon’s key sales events (e.g. Prime Day and holiday sales) will continue to get better each year.

As previously reported, Amazon has pledged to increase delivery time frames and price competition over the coming 24 months.

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