Despite hype and speculation, many Australian businesses – particularly SMEs – appear indifferent and unprepared for Amazon’s arrival. Complacency could spell business doom, warns Kris Barton.

The arrival of Amazon on our shores has been the topic of speculation for years now – long before the US giant confirmed its intentions in April.

Heightened (and at times hysterical) commentary on the game-changing impact this will generate in the Australian marketplace hasn’t had the anticipated rallying effect. Many local operators – particularly those in the services sector – appear indifferent to Amazon, indicating in ReachLocal’s ‘SME Online Marketing Survey’ of Australian and New Zealand SMEs that the new entrant poses no direct threat to their businesses.

 

More than a retailer

Some see Amazon as a retail player, but the reality is a little more intimidating. The company has extended disruptive tentacles across a range of disparate sectors: publishing, logistics, search, payments, content creation and cloud storage – well beyond retail and fresh food.

Amazon Home Services in the US offers everything from one-off household tasks – furniture assembly, for instance – through to repeat services including cleaning, car maintenance and IT support. We’ll eventually see this breadth of facility here, along with further diversification.

In times of disruption, traditional models are tested, new business practices emerge and the knock-on effect is a shift in consumer behaviour. It happens quickly and it’s largely irreversible. To illustrate: ten years ago, purchasing via mobile wasn’t even on the radar. Today, mCommerce accounts for around
12% of total eCommerce and is forecast to exceed 45% by 2020.

 

No going back

As consumers, once we master a new environment – provided there is benefit such as increased convenience, favourable pricing or improved speed of service – we’ll stick with it. Once Amazon is entrenched as the ‘go to’ supplier in the minds of consumers, it will become increasingly difficult to pull
them back, particularly as the product offering broadens. It’s essential for businesses to have a full arsenal of digital marketing tools ready and to tap into that change, rather than battle against it.

 

Current versus future

In July 2017, the survey aimed to establish what (if any) adjustments in marketing strategy and tools were being considered for the upcoming year, particularly given Amazon’s arrival.

Among the notable takeaways: SMEs are operating on lean budgets with limited internal resources. They lack adequate time to consider and implement marketing activities and over half (52%) admit a knowledge deficiency regarding available channels, technologies and tools.

• One in three surveyed spends less than $2000 per month on marketing and one in five less than $500,
• 40% of businesses allocate less than two hours per week to marketing tasks,
• 48% intend to increase marketing spend in the coming year,
• 42% will make no change, and
• 10% will lessen investment.

 

In terms of how they will invest, 60% of surveyed businesses said they will increase social media spend, 42% will allocate more to SEO and 38% into search engine advertising (SEA).

Currently, 56% of respondents use social media (mostly Facebook) for promotion, 56% employ SEO strategies and 50% run SEA campaigns.

Respondents were asked to identify which delivered the greatest number of new business leads. SEA came out on top (40%), followed closely by SEO (38%), with social media third (25%).

Surprisingly, 77% respondents advised they won’t be altering marketing strategies to counter Amazon’s entry.

 

Emerging trends

Search and social make sense for SMEs, as they deliver an affordable, measurable and effective channel for new leads. Most businesses have a website and understand that customers are researching solutions and alternatives online – increasingly via mobile devices – and are looking for ways to tap in to that audience in a manner that delivers solid results.

Solid is one thing, but static is another.

It’s important to appreciate the difference, as the digital marketing landscape constantly reinvents itself. Take SEO – a continually moving target due to ongoing ranking algorithm modifications, the rise of social media and a shift from desktop to mobile-based search.

The SEO playing field is changing again, thanks to an uptick in voice search. Exponential improvements in voice recognition, coupled with an influx of dedicated software assistants has seen voice queries surge in the last couple of years. In fact, it is ComScore estimates that by 2020, 50% of all searches will be voice.

The move from desktop to mobile has also delivered location-based marketing, improving targeting capabilities based on an audience’s proximity to a specific location, such as the company’s premises (or a competitor’s), an event or a related location.

These changes are happening already – with or without a new player – but there’s no doubt we’ll be looking at a different landscape once Amazon  arrives. Smart business owners are already utilising advanced tracking technology to determine where their sales leads are coming from. Having access to this information delivers a clear understanding of the current situation and allows them to tailor strategies to better meet competitive threats.

The choice for local businesses now is to ‘wait and see what happens’ or to get ahead of the game. In my view, complacency is always a risky strategy.

 

Kris Barton is chief product officer at ReachLocal.