Amazon Australia: Business Research, Challenges & Opportunities

This case study analyzes Amazon's entry into the Australian e-commerce market, highlighting the challenges and opportunities the company faces. It discusses the impact of governmental regulations, customer perceptions, and competition from established domestic retailers. The report also explores potential strategies for Amazon to improve its market share, including enhancing Amazon Prime services, focusing on product quality, and engaging in local community development. Ultimately, the study provides recommendations for Amazon to overcome obstacles and achieve sustainable growth and profitability in the Australian market, suggesting improvements in delivery options, product quality, and brand image to better resonate with Australian consumers. Desklib provides this and other solved assignments to aid students in their studies.

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Business Research
A Case Study of Amazon in Australia

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Table of Contents
1. Introduction........................................................................................................................2
2. Project Objective.................................................................................................................2
3. Project Scope......................................................................................................................2
4. Literature Review................................................................................................................3
5. Conclusion...........................................................................................................................7
6. References..........................................................................................................................8
7. Appendix...........................................................................................................................10

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1. Introduction
Due to the popularity of the internet, the market for e-commerce websites is rapidly
growing. People prefer to shop online since it saves their time, and they did not have to visit
the stores physically. Online retailers are also able to offer a wider and diverse range of
products for its customers that enable them to choose the ones which they like and find
new ones which fulfil their needs. With the introduction of one day and the same day
delivery features, the market for online shopping is gaining popularity, especially in urban
areas. Amazon has become the industry leader in the e-commerce industry, and it gained a
lead across the globe by offering a wide range of products and effective services. Amazon
has launched its services in Australia in December 2017 which resulted in increasing the
market share of Amazon in the e-commerce industry (Nicholson, 2017). Australia is a major
market for Amazon; however, the enterprise faces a number of issues while offering its
products due to the governmental regulations and perception of customers regarding
Amazon’s services. In this report, the case study of Amazon in Australia will be evaluated to
understand the challenges faced by the company in Australia. This report will also analyse
the key factors which create new business opportunities for Amazon in Australia. Various
recommendations will be given to Amazon as well which can assist the company in
expanding its operations in Australia.
2. Project Objective
The primary objective of this report is to evaluate the operations of Amazon in Australia
along with the challenges faced by the enterprise relating to the legal framework and social
factors. The secondary objective of this report is to analyse the business opportunities for
Amazon in Australia and providing recommendations for the company to expand its
operations.
3. Project Scope
The scope of this report is wide which include evaluation of various studies conducted on
Amazon and Australian markets to understand the key factors which influence the business
of Amazon. This report will review various articles to understand the opportunities and
challenges face by Amazon in Australia.

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4. Literature Review
Amazon is an American based organisations which operations in online shopping and cloud
computing industry. The company was founded in 1994, and currently, it is the largest
internet retailer across the globe in terms of market capitalisation and revenue. Amazon
becomes the second technology company which hits the market capitalisation of $1 trillion,
after Apple Incorporation. Even after being one of the biggest e-commerce giants, the
corporation has not launched its services in Australia until December 2017. As per Cutler
(2015), the company also offers a wide range of internet-based services to its customers
which are bundled into a package which is offered by the company as ‘Amazon Prime
Membership’. The online services include streaming of music, video, movies, TV series and
books along with shopping facilities as one day or same day delivery of products. In
Australia, Harvey Norman is the biggest competitor of Amazon which also offers online
shopping facilities for people across Australia. With the launch of Amazon in Australia, the
competition in the e-commerce industry rises, and many corporations such as Myer and
Woolworths started launching and improving their online shopping services to compete
with Amazon. As per Zhang, Cui, and Wang (2014), Amazon has reported a slower pace in
the Australian markets than compared to its other popular markets including the United
States, United Kingdom, and India since its launch. There are various reasons due to which it
has become difficult for Amazon to sustain its growth in the Australian markets while
expanding its customer base.
Maple (2017) provided that the Australian online retailing industry is a large market since in
2015 financial year Australian spent over $22.23 billion on online shopping. It is a
developing market in Australia with lots of potentials since it amounts to just 7.3 percent of
what Australian spent on bricks and mortar shops. One of the major challenges for Amazon
is that most people in Australia prefer to shop from their domestic online retailers due to
which only 20 percent of wealth is spent on international corporations such as Amazon.
Hughes and As compared to the UK and US market, the online industry in Australia is still
expanding and growing which provides opportunities to Amazon in order to expand its
market share in the country. As compared to other competitors, the market share of
Amazon is less; therefore, most small businesses have to wait for sales to come. As per

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Triscari (2018), Amazon is still finding its way in Australia, and the executives of the
company are trying their best to establish their root in the country. Beukes (2012) provided
that Amazon’s business strategy focuses on keeping a wide category of products, but the
company did not maintain a high level of quality in those categories.
Most Australians prefer to purchase high-quality products while shopping, for example, they
prefer services of Woolworths since the company is known for providing high-quality
products to its customers in both offline and online stores. According to Panagiotelis, Smith,
and Danaher (2014), due to the lack of an effective quality-based strategy, it has become
difficult for Amazon to sustain its growth in the market. In the beginning, the company did
not launch its prime services in Australia which disappointed a large number of customers
who prefer to shop for their domestic service providers since their delivery time is must less.
Now, Amazon has launched its prime services in Australia, but they have not gained
significant success because it still lacks one day or same day delivery options. Moreover, the
online streaming services of Amazon are also facing competition from already established
services including Netflix and Stan. Xu, Gao, and Hammond (2017) provided that Amazon is
not able to sustain the same level of success in Australia which it has maintained in other
markets worldwide. Another key issue faced by Amazon is the strict legal framework which
the Australian government has imposed on multinational enterprises which they establish
their operations in Australia.
Due to the recent changes made by the Australian government in the Goods and Services
Tax (GST), Amazon has provided that it will no longer ship its international products to
Australian customers. The products which Australian are able to purchase from the Amazon
US store will be banned after this announcement which will result in adversely affecting the
overall business strategy of Amazon in Australia. As per Zhou (2018), Amazon has openly
criticised this strategy of being unfair towards international corporations which offers their
products and services in Australian markets. Customers are disappointed by the launch of
Amazon price services in the industry since the company did not provide any good deals for
its Australian customers. The company has also reported a loss in its first month of trading in
Australia. In the first month, Amazon reported a loss of $12,193,613 from its operations in
Australia and after the income tax benefit of $3,268,886 the corporation still reported a loss
of $8,924,727 (Carey, 2018). The social image of Amazon in Australia is not positive as

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compared to its global image which also resulted in adversely affecting the profitability of
the enterprise from its operations in Australia. These factors resulted in creating various
challenges for Amazon while managing its operations in Australia.
However, there are many opportunities exist in the Australia market as well which can be
exploited by Amazon to expand its market share. Firstly, Australia is a developing country,
and the living standard of Australia is relatively high due to which it is a potential market for
Amazon to expand its market share. As per Brewer (2017), the company can increase its
customers in Australia by offering high-quality products along with shipping international
brands which are situated in the United States. The corporation can leverage its resources to
address the challenges faced by the company in Australia to increase its profitability in the
market. For example, the company uses robots, artificial intelligence and other technologies
to manage large warehouses and sort through a wide range of products (Wingfield, 2017).
Currently, the corporation has established a warehouse in Melbourne to manage its
operations and offer services in Australia.
The company should establish more warehouses in other major cities in Australia to
increase its market share and reach a wider audience. According to Heng et al. (2018), one
of the key features of Amazon is its prime membership services; currently, the company
only offers limited features to its customers. By establishing more warehouses in Australia,
the corporation will be able to offer services such as one day or same day product delivery
which will assist the company in addressing the demands of its customers in Australia.
Furthermore, the company can improve its overall brand image in Australia by engaging in
local community development facilities to create a positive image in the domestic markets
of Australia. Upadhyay, Pathak, and Singh (2017) provided that since most people prefer to
purchase products from offline stores in Australia, efficient services and high-quality
products will result in increasing the market share of Amazon in Australia.
There are various recommendations which can assist Amazon in tackling the key issues it
faces in Australian market and exploit the opportunities to expand its market share along
with overall profitability. Firstly, the enterprise should improve its Amazon prime services in
order to ensure that customers are able to receive one day and same day delivery option
which will encourage them to choose online shopping rather than offline options. The

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customers in Australia give preference to high-quality products, thus, Amazon should focus
on improving the quality of products offered by the company rather than widening the
category of products. The enterprise should engage in local community development
initiatives and other campaigns in order to create a positive brand image. It will also assist
the organisation in reaching a wider audience by capturing the domestic market. By
complying with these suggestions, Amazon will be able to increase its profitability in
Australia and sustain its future growth in the market.

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5. Conclusion
In conclusion, Amazon has launched its services in Australia; however, it is not receiving an
expected positive response from Australian customers. Due to strict governmental policies,
the corporation is not able to offer its international products in Australia. Furthermore, it is
facing fierce competition from already established online services and offline stores which
have captured the Australia market. The social image of Amazon in Australia is negative as
well since the corporation focuses on offering a wider range of products rather than offering
high-quality products to its customers. There are various opportunities for Amazon in
Australia as well since there are not large players operating in the market which has similar
resources as compared to Amazon. By offering the same day or one-day delivery options to
its customers, Amazon will be able to give tough competition to offline stores which lead the
Australian markets. Various recommendations are given to Amazon in order to address
these issues and exploit opportunities. The company should establish more warehouses in
Australia in order to reach a wider audience an offer the same day or one-day delivery
options to its customers. The corporation should also engage in community development
campaign and initiative to positively influence its brand image and connect with domestic
customers in Australia. Based on compliance with these facilities, the company will be able
to sustain its future growth and increase its profitability.

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6. References
Bennett, T. (2018) Six Months On And Australia Is Waiting For Amazon To Hit The
Accelerator. [Online] Available at: https://which-50.com/cover-story-six-months-on-and-
australia-is-waiting-for-amazon-to-hit-the-accelerator/ [Accessed 14/09/2018].
Brewer, C. (2017) Put e-commerce on your map. MHD Supply Chain Solutions, 47(6), p.10.
Carey, A. (2018) Documents reveal Amazon’s stunning loss during first month of trading in
Australia. [Online] Available at:
https://www.news.com.au/finance/business/retail/documents-reveal-amazons-stunning-
loss-during-first-month-of-trading-in-australia/news-story/
bf5b1181f61191f4e4f480d409c97893 [Accessed 14/09/2018].
Cutler, N.E. (2015) Millennials and Finance: The" Amazon Generation". Journal of Financial
Service Professionals, 69(6).
Heng, Y., Gao, Z., Jiang, Y. and Chen, X. (2018) Exploring hidden factors behind online food
shopping from Amazon reviews: A topic mining approach. Journal of Retailing and Consumer
Services, 42, pp.161-168.
Hughes, S. and Beukes, C. (2012) Growth and implications of social e-commerce and group
buying daily deal sites: The case of Groupon and LivingSocial. The International Business &
Economics Research Journal (Online), 11(8), p.921.
Maple, T. (2017) Amazon is entering Australia’s e
-commerce market. [Online] Available at:
https://www.digitalcommerce360.com/2017/04/20/amazon-entering-australias-e-
commerce-market/ [Accessed 14/09/2018].
Nicholson, J. (2017) Retail giant Amazon finally launches in Australia. [Online] Available at:
https://www.news.com.au/finance/business/retail/amazon-australia-finally-launches-after-
months-of-anticipation/news-story/d6092b8bcdb60b7b9daf9145023a4a23 [Accessed
14/09/2018].

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Panagiotelis, A., Smith, M.S. and Danaher, P.J. (2014) From Amazon to Apple: Modeling
online retail sales, purchase incidence, and visit behavior. Journal of Business & Economic
Statistics, 32(1), pp.14-29.
Statista. (2017) Annual B2C e-commerce sales growth in Australia from 2012 to 2017.
[Online] Available at: https://www.statista.com/statistics/261345/b2c-e-commerce-sales-
growth-in-australia/ [Accessed 14/09/2018].
Triscari, C. (2018) Amazon executives claim to be “misunderstood” by Australians, as small
businesses wait for sales to come. [Online] Available at:
https://www.smartcompany.com.au/industries/retail/amazon-australia-misunderstood-by-
australian-market/ [Accessed 14/09/2018].
Upadhyay, A., Pathak, A. and Singh, N. (2017) Evolution of online shopping: E-
commerce. Evolution, 3(6).
Wingfield, N. (2017) As Amazon Pushes Forward With Robots, Workers Find New Roles.
[Online] Available at: https://www.nytimes.com/2017/09/10/technology/amazon-robots-
workers.html [Accessed 14/09/2018].
Xu, J., Gao, X. and Hammond, J. (2017) E-tailing in Australia: A preliminary analysis of David
Jones. International Technology Management Review, 6(4), p.149.
Zhang, X., Cui, L. and Wang, Y. (2014) Commtrust: Computing multi-dimensional trust by
mining e-commerce feedback comments. IEEE transactions on knowledge and data
engineering, 26(7), pp.1631-1643.
Zhou, N. (2018) Amazon to block Australians from using US store after new GST rules.
[Online] Available at: https://www.theguardian.com/australia-news/2018/may/31/amazon-
to-block-australians-from-using-us-store-after-new-gst-rules [Accessed 14/09/2018].

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7. Appendix
Figure 1: Sales growth in Australian e-commerce market
(Source: Statista, 2017)