07 Dec WHY IT’S IMPORTANT TO MANAGE EXPECTATIONS
It’s finally here. After months of feverish speculation, Amazon has landed.
The giant US online retailer, which started off selling books by mail back in the mid-1990s but now sells everything from washing powder to patio furniture, has opened its first Australian super-warehouse, in Melbourne.
But when its digital doors were flung open to Australian consumers earlier this week, the response was, well, underwhelming. There were plenty of complaints on social and traditional media about higher than expected prices, slower than expected delivery timelines, and “more of the same”.
Or as The Australian headline writer put it, “Amazon launch falls flat”.
In fact, Amazon behaved on its first day much as it has behaved in the past when it opens a new branch outside the US: by heavily reducing prices on some goods (dishwashing liquid, anyone?), and offering free delivery but only after you spend a set amount – and only standard, rather than next day, delivery.
So, what went wrong?
This appears to be a classic case of Amazon failing to manage expectations, especially with media.
Over the past year, since the Bezos behemoth first hinted at its Australian expansion, media outlets have been in a feeding frenzy about how the retailer would impact the $300 billion local retail market and in particular, established brick-and-mortar retailers such as Myer, David Jones, Harvey Norman and JB Hi Fi. These are, after all, challenging times for all retailers.
At last count, there were no fewer than 1,500 mentions of Amazon in The Australian Financial Review – and that’s in the past 90 days alone.
Analysts jumped on board, too, predicting at one stage that Amazon could easily – and quickly – capture a huge chunk of the Christmas consumer spend.
In June, for instance, global investment bank Morgan Stanley downgraded a series of ASX-listed Australian retailers after completing what was described as a “deep analysis” on the coming impact of Amazon. It estimated that Amazon would generate $12 billion of sales by 2026.
There has been so much coverage of Amazon’s plans, the US retailer did not need to advertise widely, which is exactly want you want when you are launching a new service or product: lots of “free” coverage.
This is all very well, especially when you are big and powerful, but in these days when every consumer has an opinion and is not shy about using Twitter or FaceBook to vent, you have got to be careful about what you promise. Or worse, what others promise on your behalf.
Don’t get me wrong: it’s difficult to put the brakes on a runaway train. But it’s important to manage expectations, and Amazon could have done this easily, at least over the past few weeks.
Not surprisingly, Amazon has gone of the defensive, arguing that despite the disappointing headlines, its launch in Australia was “the most successful in the company’s history”, with “tens of thousands” of customers placing orders across all of its 23 categories.
When it comes to media – and consumers – it’s a fine line between hype and falling flat.