Making the most of unexpected windfalls

OPINION: At the end of last year I moved to self-employment, waving my last traditional ‘‘day job’’ farewell.

It’s a dreadful time to make such a move, as December and January are typically lean times for people selling their time. Fortunately, however, I got a bit of an unexpected late Christmas present, from Inland Revenue no less.

Turns out I’d been over-zealous paying GST earlier in the year and I scored a useful refund from the Crown’s revenue. A very timely Christmas present it was too.

I wasn’t the only one getting unexpected Christmas presents last year.

The country’s retailers got a massive one – namely the fact that global e-tailer Amazon did not launch its new Down Under venture in time to kneecap their normal Christmas spend-up. Spending through Paymark totalled $5.94 billion in December, up 2.7 per cent on the previous year; a great result for the local stores.

Despite some in the industry predicting that retailers were at imminent risk of the sky falling on their heads, the whole Amazon enterprise remains cloaked and battened down.

That’s not to say that Amazon is idle across the ditch. It established and built out a 90,000 sqm retail operational centre in Dandenong, just south of Melbourne, providing it with fulfilment ability in Melbourne, Sydney and Brisbane.

Amazon was also busy hiring hundreds of staff across a range of roles including IT, marketing, sales and HR; both for a traditional online operation but also for an Amazon Fresh (grocery) operation.

I also heard it toured Godzone looking at possible social cause projects it could align with – projects that might blunt any possible anti-Amazon sentiment.

Having managed to have one last Amazon-free Christmas, it’s interesting to see how different companies are responding to an Amazon-populated future.

Some, like JB Hi-Fi, appear to have decided to rip out margin themselves rather than having it forced on them, offering extra levels of discount on both sides of the Tasman. In Australia, JB has started offering same-day delivery in the country’s six largest cities.

Conscious of Amazon’s jawdropping delivery ability, JB has even started offering three-hour rush delivery in central suburbs.

Here in New Zealand, Trade Me has also taken proactive action. Last week, it announced sellers will get a rebate on their success fees if they offer free shipping.

This will motivate the 20,000 professional sellers to move to shipping-inclusive pricing, which makes for a more buyer-friendly experience.

This latest move by Trade Me follows other recent additions like allowing instalment payments with Afterpay, increased buyer protection (which matches Amazon’s buyer protection programme) and even a $9 temporary version of Amazon Prime (free delivery).

Earlier last year e-tailer Mighty Ape started harnessing the arrival of Amazon as motivation to increase the number of traditional retailers to also sell on its own channel. It has also made clear its own intention to be live as a thirdparty seller on Amazon Australia from day one.

That seems to be the smart money, in my book. From what I can see, the vast majority of retailers and e-tailers in New Zealand aren’t like JB, Trade Me or Mighty Ape. Their plan is really no plan, but rather to just muddle on and hope for the best.

If I was them, I’d already be in discussion with Amazon about the right product mix for me to be offering to Australian consumers.

Then I’d be thinking about automation around execution. How to download orders, get them to my warehouse for fulfilment and pass them on to my stunningly good delivery partner.

Ideally, it’d happen with as little human touch as possible, but with a very transparent window back to the customer.

Three weeks ago, Amazon passed Microsoft to be the thirdmost valuable listed company in the world with a valuation of US$702b (NZ$956b).

Buoying this number is the fact that it has managed to grow total revenue by at least 19 per cent each year for the past decade.

If you’re a retailer you’d be a mug not to try to tap into that growth. But remember, the modern world of commerce is polygamy, not monogamy. So you need to hedge your bets by having your product across a swathe of platforms, not just one or two.

While my late Christmas present from Inland Revenue was very welcome, I doubt it will happen again, so I need to make the most of the windfall.

It’s exactly the same for retailers – last year’s present won’t be repeated, so it’s time to hoof it.

❚ Mike ‘‘MOD’’ O’Donnell is a professional director and consultant. His Twitter handle is @modsta and he needs to get better at GST.