Will Amazon disrupt tradition alcohol retail in Australia?

Reporting by Naomi Kaplan

With Amazon purchasing Whole Foods in the US, and the company’s impending arrival in Australia, there has been widespread speculation that the online monopoly could disrupt traditional alcohol retailing globally.

After Amazon acquired Whole Foods, which sells wine on-premise, the company promptly gained liquor licenses for the 330 stores throughout the US, allowing it to sell and supply the wine off premise faster and cheaper.

The purchase, as warned by US-based Medium Corporation, gives Amazon the opportunity for delivery stations across the US, making it a major competitor for traditional retail outlets.

“Amazon’s purchase of Whole Foods aggressively furthers its development into physical retail," the website notes.

“Convenience and low-pricing — enabled by efficiencies, economies of scale, ultra fast delivery, and personalized service: THIS is the new retailer paradigm and Amazon is taking us there, whether we want to go or not.” 

So what does this mean for Australia?

Amazon is coming to Australia very soon. With fast-paced delivery and cheaper prices, there's speculation the company will be able to trump physical alcohol outlets.

Managing director and head of consumer sector research at Citi, Craig Woolford said Australian retailers need to be better prepared.

"It's hard to say that retailers in Australia are really ready for Amazon," he told  the ABC.

"Amazon has disrupted a number of markets and in each case overseas we've seen retailer profitability and sales shift to Amazon."

Local alcohol delivery services already exist

We’ve already seen the fast home delivery of alcohol throughout Australia, which hasn’t appeared to disrupt traditional liquor retailing so far.

UberEATS delivers alcohol in Melbourne, while other services such as Jimmy Brings, Boozebud and QuickBottle are thriving.

The smaller delivery businesses don't perceive a big player like Amazon to be a threat, as the company has no chance of delivering as fast as they can.

Nathan Besser and David Berger, co-founders of Sydney's alcohol delivery service Jimmy Brings, say Amazon will lack the agility of their small and local business.

"Despite Amazon's might, I question whether they will be able to deliver in under 30 minutes,"  Berger told the Sydney Morning Herald.

"If a customer is wanting to consume alcohol and it's a spontaneous decision, they want it as quickly as possible, so we don't necessarily believe these big players will be able to organise themselves in such a way to deliver it with such lightning speed.”

Besser and Berger add that their company has experienced 10% month-on-month growth and has a turnover of more than $3 million.

On-premise interaction can't be underestimated

Medium Corporation speculates that a good way to compete with Amazon is to ensure that a customer's in-store experience is of phenomenal standards.

“With new competitors, new legislation and new technology quickly changing the game for liquor retail, making your customer experience the best it can be is more essential than ever”, the website said.

Giuseppe Minissale, National President of the Australian Liquor Stores Association and manager of Porter’s Liquor believes the success of his stores boils down to customer service.

“Talking directly to a customer and expressing a level of expertise and knowledge is critical," he told the July/August issue of drinks trade.

“It gives consumers confidence about the brand and a reason to come into our stores.”

Alcohol retailers still have time to raise the bar while Amazon recruits for hundreds of jobs in Australia in preparation for its impending – between late 2017 and 2018 – debut.