Amazon Australia set to take bigger bite of groceries with Subscribe & Save

Sue Mitchell
12 Dec 2018
AFR
Amazon is poised to take a bigger bite of Australia’s $3 billion online food and grocery market early next year by launching Subscribe & Save, a discounted subscription service for regularly bought goods such as pet food, toilet paper and washing powder.
Amazon Australia country manager Rocco Braeuniger says Subscribe & Save is one of Amazon’s most popular services overseas and the online behemoth is keen to introduce it in Australia as quickly as possible to augment its food and grocery range, which launched in October.
“It’s one of our most successful programs with our customers around the world,” Mr Braeuniger said on Wednesday after Amazon announced the winner of its inaugural Local Brand fashion award.
“Subscribe & Save is a program where you can subscribe to different products, especially in the consumer goods space like toilet paper, toothpaste or diapers, and you get a discount (typically 15 per cent) and we bring them all together on your [delivery] day,” he said.
“This is something we’re going to focus on to launch next year because we know customers around the world love it so much – it’s definitely on our top-priority list.”
Fast-moving consumer goods experts say subscription-based services such as Subscribe & Save threaten to undermine the “one-stop shop” model of the major supermarket chains by siphoning off volumes, especially in bulky goods such as nappies, pet food and soft drinks, and giving customers fewer reasons to shop in store.
As more goods are siphoned off, the one-stop shop becomes less important and consumers are more inclined to shop elsewhere, including independent food retailers, for meat, bread and vegetables, according to research by consultants A.T. Kearney.
Giants undercut
The imminent introduction of Subscribe & Save is likely to add to concern about Amazon’s impact on the local food and grocery market following the launch of Amazon Pantry in October.
Amazon.com.au now has more than 2500 food and grocery products on its site, ranging from packaged foods such as Carmans muesli, Kellogg’s corn flakes and Mount Franklin mineral water, to Finish dishwasher tablets, Omo laundry powder, Huggies nappies and baby wipes, and Colgate toothpaste.
The imminent introduction of Subscribe & Save is likely to add to concern about Amazon’s impact on the local food and grocery market following the launch of Amazon Pantry in October. AP
Amazon has been undercutting Woolworths and Coles on price by as much as 50 per cent on leading brands, prompting Woolworths to question whether the online retailer is benefiting from favourable terms including global pricing agreements with multinational consumer goods companies.
Mr Braeuniger declined to comment on Amazon’s pricing strategies and trading terms or whether it sourced cheaper stock through parallel import channels.
“We want to give customers great prices and a great delivery experience,” he said. “If some other company is [unhappy] that’s not our problem.”
“We want to earn the customer’s trust, the customer needs to know when he comes to Amazon he gets great value, a great delivery experience, fast delivery and a great price.”
Amazon also stepped up pressure on local retailers this week by launching same-day deliveries in selected postcodes in Sydney and Melbourne. Customers must order before 10.45am to receive their orders the same day and delivery costs $9.99 for Amazon Prime members and $12.99 for non-members.
“Going forward we want to have many more postcodes and we want to have the cut-off or the time you have to order to get it on the same day much later,” he said.
Amazon also added another popular feature, customer questions and answers (where customers who have brought products answer other customers’ queries) to its Australian site this week.
“It’s extremely powerful, almost if not more powerful than customer reviews,” he said.
Mr Braeuniger said he was pleased with Amazon’s performance in the first 12 months but there was much more to do, including adding new services and categories.
“Almost every week we roll something out – it’s just one year and we’re just getting started,” he said. “We want to give customers the same experience we have in other local [markets].”
Amazon.com.au now sells more than 100 million products, up from 20 million a year ago, including a global store offering 20 million top-selling products from the US. Its fashion offer includes 15 million clothing, footwear and accessories products from 1000 international and Australian brands.
The winner of Amazon’s Local Brand fashion award, by popular choice, was Wild Rhino, a Melbourne-based casual footwear brand.