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What could the arrival of Amazon mean for small businesses?

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On April 20, the giant retail wave of Amazon turned to face Australia. One of the largest retailers in the world, Amazon will be setting up shop on our shores in the near future, and the business is currently looking at warehouse space for its 93,000 square metre fulfilment centre, according to a Smart Company report from April 20.

"We are optimistic that by focusing on the things we believe customers value most - low prices, vast selection, and fast delivery - over time we'll earn the business of Australian customers," Amazon said in a statement.

Small businesses could be quivering in their figurative boots, but they don't need to be. The introduction of Amazon means another huge, online retailer to compete with, but smaller retailers won't be disadvantaged - so long as they invest in technology to speed up production, for example.

So, small businesses are being forced to invest in technology and streamline processes that allow them to access a wider customer base. In order to do this, they'll need working capital, and Cashflow Finance can help.

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What could the introduction of Amazon mean for Australian businesses?

The company announced it would create thousands of jobs for people living in Australia, and add millions to the national economy. In 2016, Amazon founder Jeff Bezos announced global revenue of $181 billion. It's clearly a successful business, and the venture into the Australian market means a number of things.

First, the Amazon Marketplace can help small businesses reach a wider audience around the country. Second, businesses that refuse to work with Amazon could fall by the wayside as better technology and more efficient warehouses dominate the retail space in Australia.

"It's a win-win for smaller retailers who might already have an online presence through eBay or Facebook."

"Aussie retailers have known it's been coming for a while, so I don't think the world is going to end tomorrow," said Associate Professor at Queensland University of Technology Business School Gary Mortimer to Smart Company.

Some retailers may already have made some preparations for the arrival of the retail giant. "It's a win-win for smaller retailers who might already have an online presence through eBay or Facebook, now they'll be able to sell their wares via Amazon. It's just another channel, which is a great thing for both shoppers and small businesses."

Of course, it's another competitor in the retail landscape, which already comprises 78,614 businesses, according to IBISWorld. It's a $165 billion industry, so what could an Amazonian presence mean for retail in Australia overall? Hopefully a major boost to the economy.

What businesses could be most 'at risk' because of Amazon's arrival?

Certain sectors won't be affected nearly as much as others when Amazon finally opens its doors in Australia. Those that choose to work with the retailer are likely to boost their business because of wider exposure. Those that do not could easily be swamped.

"Retailers in consumer electronics and toys will be more exposed to Amazon, where other retailers such as supermarkets or other groceries won't be," continued Mr Mortimer.

However, just because Amazon has an enormous range of products, it doesn't mean that smaller retailers will lose all of their customers.

"Studies have shown when consumers are provided with more choice they get overwhelmed with the volume of decisions needing to be made."

"We all get hooked up with a focus on choice," said Mr Mortimer.

"Studies have shown when consumers are provided with more choice they get overwhelmed with the volume of decisions needing to be made. Some shoppers will enjoy that choice, but others will just keep doing what they're doing now."

A separate article from Smart Company, published on March 22, suggests that business owners, no matter how established, will always have to persist when roadblocks pop up. The arrival of Amazon could be one of those roadblocks, and adapting to the change is likely the only option. That adaptation might come in the form of investment in robotics, or it might mean developing your online platform. Change is not something you can afford to be afraid of in the business world.

How could this affect start-ups?

Start-ups are often seen as the most vulnerable businesses in the market. They don't have an established customer base, they could be relying on grants or external funding to get off the ground, and they're only really finding their feet in the business world. For those reasons, they are potentially the most at-risk when Amazon touches down in Australia.

Start-ups are the most vulnerable businesses - but if they stick to their guns, they can succeed.
Start-ups are the most vulnerable businesses - but if they stick to their guns, they can succeed.

No matter what you want from your start-up, make sure you stick to the dreams you have for it. That's the advice of The Social Outfit CEO Jackie Ruddock. The Social Outfit is an ethical fashion social enterprise that aims to help migrants and refugees in Sydney find work.

"Everyone involved makes compromises to get a start-up off the ground - the hours and effort are long. But we also know there are some lines we won't cross."

If you don't want to partner with Amazon, you don't have to. You might have to invest in technology or frameworks that are going to help you stay competitive in a crowded retail environment, but if you do it for the love of your business, you won't regret the decision.

For help finding the working capital you need to make these investment decisions before Amazon comes to Australia, get in touch with Cashflow Finance today.