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Kiwi retailers take on the giants

  • Opinion
  • November 22, 2018
  • Antony Ede
Kiwi retailers take on the giants

New Zealand sits at the nexus of the world’s two great technology superpowers, the USA and China. Ebay and Amazon are already battling it out with competing subscription offers in the Australian market. As these titans from the USA increasingly come up against China’s Alibaba, New Zealand retailers could well be the ones caught in the crossfire.

To put it in perspective, Amazon is worth more than 1,300 times more than one of New Zealand’s largest retailers, The Warehouse Group. This scale gives Amazon not just huge capital resources but also significant data resources. It is these data resources in particular that Amazon has historically been able to leverage for huge advantage.

Malcolm Gladwell in his book David and Goliath gives us some hope for the coming battle when he says: “Giants are not what we think they are. The same qualities that appear to give them strength are often the sources of great weakness.” But what does this hope look like in a practical sense?

Trying to beat Amazon or any of the other global ecommerce players at their own game is unlikely to yield success. There are however some solutions that New Zealand retailers can use to battle against these giants. 

Leverage the offline customer experience.

It’s unlikely that Amazon or the other ecommerce players will open a bricks and mortar operation here in New Zealand any time soon. Therefore, a sustainable point of difference will be the physical presence of New Zealand retailers. The physical store is an obvious sales channel, but in addition to this it also presents an opportunity to link to your online offering. Customers want the range of an ecommerce offering but they also want to experience the product in the physical world. Apple for example is great at leveraging the strengths of these channels. Their retail stores are designed to draw people in and get them to experience the products, converting customers in-store is a secondary concern – they can always buy online later. This strong omnichannel experience is hard to compete with using an online only model.

Local partnerships.

Local relationships will be important, particularly as global players do not have the networks, relationships and history here in New Zealand that local brands do. Partnerships will also be more difficult for the ecommerce giants, as any potential partners here won’t have the necessary scale to get the required attention for senior players in global organisations. New Zealand Post’s Shipmate trial where users could get unlimited deliveries across a range of brands is a great example of local partnerships. It’s clear that fulfilment will be a key front for the impending battle, so these types of partnerships are particularly valuable.

Use of broader data sources.

Amazon has grown rapidly, largely thanks to its ability to collect and use data on its own customers. Keen analysis of internal Amazon customer data is behind most if not all of their game changing innovations such as product recommendations, Amazon Prime and one-click ordering. Where these retailers (and most others) are not yet strong is in analysis of external data. That is, data which is not generated and managed directly by the organisation. Depending on the organisation this could be data such as weather data, competitor performance data, social media and customer reviews data. Focusing on capability and tools which leverage the wealth of external data sources now available will be a key point of difference and allow the identification of opportunities which fall into a blind spot for the e-commerce giants. Paydar, for example, leverages a variety of data sources to deliver key insights and customer understanding to New Zealand retailers.

The global ecommerce giants will be battling it out here, it’s a matter of when and not if. Now is our time to heed Gladwell’s advice, survey our enemies for vulnerabilities and take a pre-emptive strike. Competing on the terms of scale and use of internal data will not be enough – something different, something more, will be required.

 Antony Ede, director at Paydar

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