Analysis of Market Strategies of Amazon Australia

This report analyzes the market strategies implemented by Amazon to acquire the Australian market. It discusses the core approaches to market acquisition, strategies implemented by Amazon, success stories, issues in retail sector and recommendations for moving forward.

Running head: ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
Analysis of Market Strategies of Amazon Australia
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1ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
Executive Summary
The purpose of this discussion is to iterate an analysis of the market strategies adapted by
Amazon to acquire the Australian market. In order to achieve this purpose different market
strategies are discussed and among those few are highlighted which are relevant for Amazon
Australia. An assessment of those strategies revealed that they could be implemented under
consideration of the socio economic situation of Australia. Few recommendations are
suggested to overcome the situational crisis. The discussion concludes with the
summarization of the strategies implemented and Amazon’s success in achieving its goal to
expand business in Australia.

2ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
Table of Contents
Introduction................................................................................................................................3
Background to the Company......................................................................................................4
Market Analysis: The Nature of Amazon Australia’s Marketing Strategies since it began......4
The Core Approaches to Market Acquisition on which Amazon Australia had Modelled its
Strategies................................................................................................................................4
Strategies Implemented by Amazon to expand over Australia..............................................5
Amazon Australia: Success Stories........................................................................................6
Issues in Retail Sector posing Potential Challenges to Amazon Australia in Implementing
the Strategic Marketing Options............................................................................................7
Recommendations for Moving Forward................................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10
Appendix..................................................................................................................................12

3ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
Introduction
An organisation formulates market strategies with an aim to attain the following three
objectives: diagnosing the strengths and weaknesses of the existing market strategies; using
the evaluation to ascertain suitable strategies for future and keeping a check on how far the
strategic modifications were able to produce a positive influence on the organisation (Grant
2016).
The current annual rate of growth of the e-commerce industry is 6%, exhibiting a huge
potential for growth in this sector (Business Insider Australia 2018). In order to utilise it for
profit making objectives, it is important for online retail companies to keep their market
policies, execution-designs and plans up to date and coherent with the changes in the business
environment. Amazon is considered to be the pioneer, and currently, one of the world’s
largest provider in e-commerce division in terms of product choice, speed and price. So far,
through intensive growth strategies it has been able to dominate the market. As per the latest
annual report, Amazon has overshadowed its competitors like Alibaba, eBay and JD.comand
with a revenue of $135.99 billion (Ibisworld.com.au. 2018). Over the next five years, it is
predicted that Amazon would reach an incremental growth amounting to $2 billion in the
online grocery alone (The Guardian 2018). The market research analysis of online retail
industries in Australia has shown that the demographic range between 18 years to 34 years
accounts for 40% of the total yearly international expenditure (BBC News 2018). As per
Nielson report, by the end of 2017, the total number of Australian adults who visited Amazon
site was around 4.6 million and the trend is anticipated to rise by the end of 2018 ( Business
Insider Australia 2018).

4ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
The following report analyses the different market strategies, defined and
implemented by Amazon, has helped it to acquire the leading position in Australia’s e-
commerce industry.
Background to the Company
Amazon, the e-commerce giant, was founded in 1994 by Jeff Bezos who is the current
CEO of the company (Ibisworld.com.au 2018). The company had initially started as an online
bookstore but now it sells a wide variety of products ranging from video Games, home-
improvement products, apparels, shoes, accessories, electronics, toys, jewellery, toys, sports
and outdoor products along with a few Amazon exclusive products like Kindle e-readers,
internet casting devices such Fire-stick and virtual assistant- Amazon Alexa. Right after
Apple, Alphabet and Microsoft, it is considered to be the fourth, most outreaching,
multinational traders in the world (The Guardian 2018).
Amazon had penetrated the Australian market in December, 2017 (HuffPost Australia
2018). It has officially inaugurated their 24,000 square metre centre in Melbourne’s
Dandenong South, the head office being in Sydney (ABC News 2018). Rocco Braeuniger has
been appointed as the Country Manager in charge of the head office (BBC News 2018). In
the Pellicano’s M2 Industry Park, the flagship Fulfilment Centre would be established,
providing locational convenience being connected to the South Gippsland Highway, Monash
Highway and Eastlink (The Guardian 2018). The fulfilment centre boasts of rounding up
more than 250000 products with additional products in line (CNBC 2018). To elevate the
economic gig, the company has set up Amazon Marketplace in Australia which enables the
third party retailers to enlist their product on the website at their own price setting.

5ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
Market Analysis: The Nature of Amazon Australia’s Marketing Strategies
since it began
The Core Approaches to Market Acquisition on which Amazon Australia had
Modelled its Strategies
To generate leads and make sure that their message is being heard and accepted by the
customers, Amazon made use of unique methods to develop their content (Zott and Amit
2013). Such niche content powered by the existing brand value fuelled considerable traffic to
their website
Apart from improving the website content, Amazon concentrated on service delivery
through features like personalised email marketing and subscription services. This helped in
keeping their existing and potential customers engaged and updated on every new offer,
discounts, flash sales and also policies of the company (Grant 2016).
Being an online retailer, Amazon lends its primary focus on the availability, variety,
exclusivity and on time delivery of the products. Therefore, in its attempt of developing the
above aspects so as to spread its impact across the Australian Market, it had introduced
specific searchable product features and licensing exclusivity of various deals
(Amazon.com.au. 2018).
This is one of the main corporate strategies applied by an organisation when it want to
create a position in a market in which it has not operated before. To fulfil this need Amazon
has introduced the Amazon Exclusive products such as internet casting device, virtual
assistant and e-book reader along with its Prime schemes facilitating delivery like the 1-day
delivery to the Australian customers to build and strengthen their long term association with
the company.

6ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
Strategies Implemented by Amazon to expand over Australia
Paid Advertising is the type of marketing, Amazon Australia made use of Print and
Television Media to reach out to its customers.
The Company made use of Internet marketing strategies like pay per click, cloud
marketing to gather customers via internet.
Word of Mouth strategy depended on how the services by Amazon was received by
its customers. With smart displays and variety of options, Amazon strived to create a positive
impression in the mind of its first-time customers who can go on to promote the company to
other potential buyers (Baker 2014). It is traditionally considered to be one of the most
important strategies.
When a company such as Amazon has to maintain its brand reputation while
expansion in a new region, it has to indulge in meeting high volumes of target. The company
facilitates it by mobilising its target customers through huge discounts, promotional products
and shopping coupons. Thus, through Transactional Marketing, Amazon Australia motivated
and encouraged the customers to be a part of its legacy (McQuarrie 2015).
Through this strategy Amazon Australia tries to build relationship with new
customers and strengthen relationship with its existing customer base (Baker 2014).
Amazon Australia: Success Stories
The Amazon Fulfilment Centre that was set up at Dandenong South focussed on
recruiting the best and the brightest talents to maintain the rate of growth at a continuous
pace. The company believed that it was a necessary measure to secure its position in the
Australian Market. It is through this Fulfilment Centre that customer’s orders were accepted
in Australia. The Fulfilment By Amazon or the FBA Services ensured that customers could
readily access the Prime-Eligible products (Services.amazon.com. 2018). This newly

7ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
launched service strived to provide unparalleled benefits to its enrolled member-customers
like fast shipping, delivery within two days and entertainment prospects.
Many successful small Australian business firms celebrated its first ever Amazon
Prime Day by participating in numerous deals. A prominent example included Checkered
Choice which made available to its customers a number of deals across kitchenware products
(HuffPost Australia 2018). The Prime member-customers had access to the widest range of
selected merchandise with the assured benefits free delivery of both local and international
items. The day also marked the launch of Amazon Prime Video that brought in Original
Series and popular movies; Amazon Kindle that gave access to more than 1000 e-books with
Prime reading benefits and Twitch Prime that catered to the gamers (D’Souza and Jansen
2015).
Various entrepreneurs took advantage of Amazon’s emergence in Australia by
launching their products and services through it. One such outstanding example is that of
KoalaSafe by Steve Pack (BBC News 2018). It was an application that enabled parents to
monitor their children’s internet usage. It consisted of interesting features such as the
‘Homework Mode’ that induced children to focus on relevant school work and averted
distraction of social media. This app was launched successfully by Amazon in 2015 and even
helped it get huge global response. The entrepreneur, Steve Pack for letting him reach to his
potent customers via affordable means offered by Amazon.
Issues in Retail Sector posing Potential Challenges to Amazon Australia in
Implementing the Strategic Marketing Options
The current Australian economy is faced with a situation whereby retail industries are
shifting from their traditional physical stores to online retailing. Current economic reports
have revealed that growth in online retail sales are faster than those in brick and mortar. This

8ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
paradigm shift occurred with changes in consumer preference being directed more to suit
their lifestyle conveniences. However, the retail industry as a whole has been found to
underperform with sales figure accounting for less than 15 per cent of total retail spending
(McQuarrie 2015). This has occurred owing to several reasons like Increased Orientation of
Consumer Preference towards Experiences, Extreme Competition among various Brands
causing Margin Compression, Federal hindrance leading to Unprofitable Consumer
Prioritisation and Inflation limiting the Spending Capacity of Consumers. These aspects have
been elaborated in the below paragraphs:
The consumer base of retail has declined by 4.4 per cent of consumers from 2016 to
2017 (iTnews. 2018). This was partially caused by the late arrival of winter season.
Clothing brands, especially those in the children’s section such as Payless Shoes,
Pumpkin Patch and Rhodes & Becket have recently collapsed owing to rising cost and
stifling competition from the international market (Eiu.com. 2018). In order to withstand this
high competition, online retailers have to indulge in year-round discounting in the face of
rising cost of products which creates an added pressure on the gross margin.
In their attempt to revive the figures of sales conversion rates amidst tough
competition and also deliver as per the consumer’s expectations, the online retailers are
collaborating with more anonymous brands (Proctor 2014). However, in the light of a
stagnant Federal Budget which is not aiding to stimulate spending, consumers are more
inclined towards household savings instead of going experimental with their purchase.
With inflation, the rate of wage growth reduced considerably which further raised the
housing and utility costs, leaving less amount of disposable income with the consumers (Zott
and Amit 2013).

9ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
Recommendations for Moving Forward and Forecast of Relevant Future
Industry Factors
Through implementation of efficient market strategies that are aligned with the
commercial circumstances in 2018 Amazon can stay afloat successfully in the Australian
market. Some of these strategies include adequate management of supply chain. By
strengthening the supply chain through competent strategic management of the resources, it is
quite possible for Online Retail giants like Amazon to considerably overcome the economic
crisis posing challenges to its business development in Australia.
The second market strategy involves undertaking monumental and path-breaking
product launches that serves to attract a huge crowd. In 2018, there are numerous online retail
that are in competition with Amazon, a few of these organisations being of the same scale.
Therefore, only a unique product that suffices the needfulness of this generation at a cheaper
cost, good quality assurance and saves time would be able to generate the much needed
acceptance and reliance of the people on this organisation and would thus help it to stay
afloat in the long run (Business Insider Australia 2018)..
It is the dynamism of consumer demand and preferences, affecting their buying
behaviour, that Amazon has to keep under consideration while undertaking these monumental
launches and evolving with time (ABC News 2018). Another aspect that helps in keeping an
organisation in market for a longer period includes strategic evolution in branding and
promotion. Amazon could keep the authentic essence of its structure intact by introducing
those faces for branding that its potential customers can relate with, like regular citizens in
their daily course of life. The biggest way in which a consumer’s willingness towards
purchasing a product gets affected is when he or she is able to identify with it. Amazon might
reflect on such approaches to expand competently in the Australian Market.

10ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
In the past, the economically middle class strata of the society mostly bought to
suffice their necessity but with the advent of online retail like Amazon, the buying power of
potential customers have considerably increased owing to factors like business subscription,
same day delivery, one-tap purchase and auto-renewal of those subscriptions. Now,
consumers are more inclined towards shopping for products other than those which simply
account for streamlined routine purchases (Amazon.com.au 2018).
A future can only be secured when strategies implemented at present are modified to
suit the need of future. In lieu of this fact, Amazon has initiate a number of strategic
evolutions to secure its prospect in the Australian Market. These include strengthening social
media marketing approaches, deliver customised products to customers, increased reliance on
robots, launching products that has value for money, enhancing mobile e-commerce and
aligning with overall technological up-gradation in the online retail industry (Amazon.com.au
2018).
Conclusion
In concluding the above analytical report it can be stated that market strategies are the
pillars on which both short-term and long-term sales goals of a company depend. In order to
frame such effective strategies it is necessary that the company undertakes a thorough
evaluation of market dynamics influencing the macro and micro aspects of the business,
demographics of the potential consumers and the competitive environment in which the
organisation operates. The plan of action is required to have a niche content accompanied by
advanced technical facets such that consumers are able to develop a clear understand with its
nature of service delivery. Only by adapting to these scopes can an organisation comprehend
the possible threats and opportunities in the market and take necessary strategies to achieve
its goals. Internet retailing Giant, Amazon has taken these exact steps for penetrating and

11ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
expanding its influence across Australia. After close assessment of the market structure, it
had designed strategies based on the knowledge acquired on the following aspects:
Which brand was currently contributing to top line sales and which company its closest
competitor?
Which brand was adding highest value to profit margin?
Which segment of product or services was incorporating high velocity in sales growth?
However, the success of these strategies are dependent on only the finite details there are
impacts of socio economic and political factors that have the potential to cause disruption in
the continuity of sales growth. Therefore it is recommended that online retail industries like
Amazon needs broader alternatives that can optimise the situational crisis as and when they
arise. By such optimisation in its operation with the help of new and innovative business
ideas, the company would be able to rapidly achieve its goal of a sustainable market in
Australia.

12ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
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13ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
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14ANALYSIS OF MARKET STRATEGIES OF AMAZON AUSTRALIA
the Guardian. 2018. Australian retailers resilient as they face down 'Amazon effect'. [online]
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Appendix
Figure: Figure showing Market Strategy Flowchart
Source: http://www.easy-marketing-strategies.com/marketing-strategy-process.html