Traditional marketing of Merino wool is under review as the US online giant Amazon’s entrance into the Australian retail market challenges the reliance on bricks-and-mortar retailers.
The Amazon Australia website has been a bookstore for the $500 billion US parent company for many years, but this is about to change with recent multi-million dollar investment in industrial land in Sydney and Melbourne expected to be distribution centres.
Its southern hemisphere move is also expected to result in further expansion of Amazon’s private
fashion labels, which has recently seen the release of several new sportswear brands including Goodsport, Rebel Canyon, and Peak Velocity, set to challenge the biggest names in activewear, including Nike, Lululemon and Adidas.
This move has also challenged Australian Wool Innovation’s approach to marketing.
“There are a couple of challenges we have in marketing with the emergence of the phenomenon called Amazon, an online retailer that is having an impact on the Northern Hemisphere at the moment,” Australian Wool Innovation chief executive Stuart McCullough said during the company's annual general meeting in Sydney recently.
“Retailers with big footprints in Manhattan, (New York) are decimated, predominately because of Amazon.
“The worry with Amazon is that it is not out of its tracksuit and it is certainly not even here yet.”
Amazon currently owns 19 fashion brands, with reports of several more trademarks suggest upcoming launches.
While AWI attempts to remain calm amid the hysteria experienced by Australian retailers and brands, the industry group’s marketing arm, Woolmark, is skeptical of joining Amazon’s heavy push into the fashion space.
“We are actively engaging with Amazon. They are a very aggressive retailer and they’re coming here,” Mr McCullough said.
“They are not only wanting to grow to be the biggest company in the world but they want to do their own private label business as well.
“They don’t want to pitch at one level of the market, they want to pitch at a very high level, the mid level and very low level - they want to go at all levels.”
AWI is forced to re-evaluate its marketing strategy and its primary focus on the luxury-end of the market.
But if successful, the move could be significant for Australian woolgrowers with Amazon the biggest seller of clothes online in the US, with reports apparel sales totalled $16.3 billion last year.
“What this means for us is our typical strategy to roll out in store and on garments, don’t necessarily work anymore because it is sold online – we can see evidence of that with the sale of our swing tags,” Mr McCullough said.
“We need to think of new strategies and accept that Amazon are here, and other eCommerce brands will come along.
“One way we do that is through out social media, websites and databases. Database members have grown from 40,000 to 120,000 database references both here, with woolgrowers, and abroad, which is a powerful tool to have.”