Amazon is dramatically expanding its retail marketing strategy in Australia by challenging another massive retailer, Bunnings, by opening an online store focusing on the lucrative outdoor living market, including barbeques, poolside furnishings and gardening tools and supplies.
Bunnings brings experience to the duel, having already vanquished Masters Home Improvement in 2016 after a spirited five-year challenge for the multi-billion dollar home handyman, building materials and leisure furniture market in Australia.
This time the competition will be more sophisticated with Amazon saying they will use drones to deliver some goods bought online.
Amazon says its new drones will deliver packages to customers in 30 minutes or less.
Bunnings will retain its click-and-collect strategy that has served it so well but says it is looking at future delivery options.
Amazon opens its online store this week which it says expands the company’s rollout of products available to Australians to 125 million.
Having gained a foothold, Amazon is now looking for new opportunities and has focused attention on the gardening and outdoor living market – a sector dominated by Bunnings with as much as 20 percent of gardening supplies and hardware sales.
Bunnings provided 57 per cent of its parent company, Perth-based Wesfarmers, in the past financial year, providing, before interest and tax, $1.63 billion – an increase of 8.1 per cent.
Delivery by drones will be a significant weapon in the battle between the two retailing monoliths with Bunnings at a sizeable disadvantage because of the size of the products they sell like outdoor tables and chairs, barbeques, beach umbrellas and building materials
Amazon says shipping bulkier products will not be a problem, offering free delivery directly to Prime US customers in a guaranteed two days, but some transport costs may be involved for other purchasers.
In a prepared statement, Bunnings says it welcomes Amazon’s competition but is confident Bunnings in-store experience and expertise will be major factors.
“Having our team of experts in-store means we are also able to offer great service to run alongside our online transactions,” it said. “We typically find that many of our online customers like to head into a store to pick their items up.
Meanwhile, Trent Rigby, senior strategist at Retail Oasis, has been quoted as saying he believes Amazon’s launch is well-timed and a potential real challenge for Bunnings and other outdoor retailers.
“With the scale and speed that Amazon operates at, they’re a big threat in whatever category they choose to go into,” he said.
“Not only will they compete on price, but the direct delivery option is more appealing and convenient than click and collect.”
The dividing lines seem to be already drawn.
Bunnings’ is expected to remain a dominant force in key areas like selling to tradesmen, builders and people doing extensive building or renovating.
Amazon’s online purchases seem more in line with DYI doing weekend work.
A survey of 1,000 Australians conducted by Pureprofile for Amazon showed the majority of potential shoppers would purchase garden and outdoor goods online, with Millennials showing more interest than other generations.