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Australia, You Can’t have an Amazon

An interesting question appeared on my Twitter timeline yesterday – why can’t Australia have an Amazon? The speculation was about our lack of a superfast NBN broadband network and low population. But that’s worth fleshing out further.

It’s important to understand that behemoths like Amazon are born in a time and place (an environnment). They generally have others who tried similar ventures (primed the market) and failed. They almost never come out of nothing to become large successful corporations, as much as we romanticise the idea of disruption.

You need to look closely at what Amazon does and how it does this well.

No, Amazon doesn’t sell products. Amazon is an organization that sits in between sellers and buyers. Amazon is an incredibly large, sophisticated and well-placed distribution system. When you buy a book from Amazon, a robotic system more often than not retrieves the item from immense warehouse space and ships it off to you. Fast. Affordably. Internationally.

Just like supermarket chains (Woolworths and Coles) don’t sell food. They sell shelf space. McDonalds don’t sell hamburgers, they sell real-estate (franchises). Google isn’t a search engine; Google makes money from advertising. Often, what we see a company as doing isn’t what they are doing for business.

So let’s look at Amazon. It was born in a specific place, time and set of circumstances. It grew on the back of existing market pressures early in the rise of popular e-commerce. There were factors like timing, investment, luck, vision and innovation. They were also well placed in the United States to get the necessary critical mass (suppliers/buyers and local shipping).

Flip this one onto its head for a few minutes. Say you wanted to start an Amazon (or, more correctly, an Amazon competitor) right now in Australia – what would be your problem?

There is low population in Australia. The majority of suppliers and customers for a Euro-US market would be on the other side of the World. This adds the cost of international shipping. Amazon already corner the market, they own that niche, so it would be almost impossible to steal even a small number of Amazon customers simply because Amazon is so large and powerful in that market that you’d be hard-pushed to find a foothold.

An Australian entering the market as an Amazon competitor would be minus that multi-billion dollar infrastucture, their experience, pre-existing customer and marketing relationships and, to be clear, Amazon would either crush the challenger or buy them out as standard business process.

It’s like saying that you want to start a Microsoft… or an Apple. They had their time. We can only really look at this environment along with our strengths, weaknesses, opportunities and threats to ascertain where we might disrupt the current business models. But that’s not easy. If Amazons were easy to prime, follow through and succeed at then we’d be in the business of printing money.

Sure, we certainly need the NBN infrastructure that our Federal Government has stymied. Yes, we are a small number of people in the South Asian locale. I’d suggest that what we have to do is ask an entirely other question than “Why can’t Australia have an Amazon?”

And that’s the rub… as a PhD once told me about picking a topic for a thesis… the question is always the hardest part. It sounds kind of vague, I know… but we need to figure out what that question is and go from there.

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About the Author

Steven Clark Steven Clark - the stand up guy on this site

My name is Steven Clark and I live in the Derwent Valley in Southern Tasmania. I have an MBA (Specialisation) and a Bachelor of Computing from the University of Tasmania. I'm a mazer & a yeast farmer (making beer, fruit wine and mead as by-products of continuous improvement in my farming practices). I'm a photographer, although my film cameras are currently silent. I do not tolerate idiots. I do not tolerate bigotry. I do not tolerate excuses. Let's be clear, if you sit with my enemies you my are my enemy for life.

Blogger. Thinker. Brewer. Drinker. Life partner to the amazing and incredible Megan.

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