Latest / The Retail Podcast / Amazon’s New Surcharge, Re-Commerce Growth & The Retail Energy Shock | Five Things Friday APAC

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Amazon’s New Surcharge, Re-Commerce Growth & The Retail Energy Shock | Five Things Friday APAC · The Retail Podcast

• 0:00
  Hi, I'm Reef Quayle. I'm Managing Director of NRF
• 0:02
  AIPAC and this is Five Things Friday, AIPAC Edition.
• 0:17
  Hello. Hello.
• 0:18
  Hello. How you doing?
• 0:19
  Ewan's back. Whoo yeah, sorry about the last
• 0:23
  round, I just my calendar just went crazy.
• 0:25
  Yeah, we were so mischievous without you, Ewan.
• 0:28
  I just got told off. It was OK.
• 0:29
  I was. I'm used to it, so it's fine,
• 0:31
  yeah. We're going to dive straight in.
• 0:33
  Ewan, what's top of mind for you this week?
• 0:35
  I just want to quickly talk about how Amazon's announced to
• 0:39
  all the sellers that they will soon add a 3.5% fuel and
• 0:43
  logistics surcharge to the fulfilment fees.
• 0:46
  Now I, I think this, this is, this may be rewriting the rules
• 0:51
  of costs, you know, for years. Logistics is, is the platform,
• 0:54
  what the platform absorb, for example, they optimise it, maybe
• 0:58
  share a little bit, maybe competed on it for sure, because
• 1:01
  that's how efficient your platform is versus the other
• 1:04
  platform. It's actually kind of most of
• 1:06
  the time invisible to the customer, but now with this
• 1:10
  unbundle and pass through, I I think this this is now becoming
• 1:15
  systemic. This is now shipping is no
• 1:17
  longer a back end function. It is now, you know, core cost
• 1:21
  COGS, for example, and and platform on normalising this
• 1:24
  kind of variable pricing to all the volatility that we're seeing
• 1:28
  globally. So if the fuel goes up, the fees
• 1:30
  go up and if war disruptors, the fees go up.
• 1:33
  So I think this is something that is actually affecting more
• 1:37
  than just the e-commerce business.
• 1:38
  And I just want to, you know, very quickly remind as many
• 1:41
  people as possible to actually take heat is not something
• 1:45
  that's happening across the oceans from us anymore.
• 1:47
  It is happening right here and we got to talk about it, yeah.
• 1:51
  Interesting. I think that's for me that, you
• 1:53
  know, when you do something like Amazon does that it's category
• 1:56
  defining and, and redefining and, and if they've, they've got
• 2:00
  the power to do that because they have got such penetration,
• 2:03
  then others can then take advantage of that and then say,
• 2:06
  well, like if Amazon could do it, then that's OK for us to do
• 2:08
  it as well. So it, it, it's kind of really
• 2:10
  defining. It's and these are these are
• 2:12
  interesting times that we see these things happen.
• 2:14
  OK, Reef, what's top of mind briefly on yours?
• 2:17
  I think the, the, the thing about what's happening in the
• 2:20
  region now is customers are looking for value.
• 2:22
  They're trading down quite often and and private labels
• 2:25
  exploding. But one of the trends that's
• 2:27
  starting to emerge, which is already mature in the US and in
• 2:31
  Europe is, is reverse commerce or e-commerce, OK.
• 2:34
  It hasn't been as even as what we just expect.
• 2:37
  It's very, very mature or it's much more mature in, in, in
• 2:41
  North Asia particularly. And I mean, we're talking about
• 2:44
  in 2025, it was worth nearly $80 billion and compound annual
• 2:48
  growth rates of 10 to 12%. So it's good, it's double digit
• 2:51
  growth. And So what we're seeing here is
• 2:53
  really, you know, customers looking for place from for
• 2:56
  value, looking for value. And there's Australia, New
• 2:59
  Zealand is still, it's still not really that well established,
• 3:02
  but definitely in North Asia and Southeast Asia, it's starting to
• 3:04
  happen. The dominant category is in
• 3:06
  smartphones and electronics. And this is because these things
• 3:09
  have high upgrade cycles. And so there's constant resale
• 3:12
  of inventory, but also fashion is, is, is surfacing as, as
• 3:16
  something that we're seeing fashion resale and luxury.
• 3:18
  And that's been very much led by Gen Z.
• 3:21
  So we're seeing Gen Z is emerging as a dominant
• 3:23
  demographic. And so that's happening.
• 3:25
  And then the last part of this is really we're seeing real
• 3:29
  change the way this is LED in, in in Europe and in North
• 3:32
  America. It's led by the customer.
• 3:34
  But unlike the US policy is a major growth driver in Asia.
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  So what we're seeing now is government's going well, this is
• 3:41
  the next generation of, of, of commerce.
• 3:43
  So there's actually being policy made in, in, in in North Asia
• 3:47
  particularly, which is seeing that leading the re commerce
• 3:50
  charge as well as the consumer having having a conscious few
• 3:53
  more. OK, cool human, coming back to
• 3:55
  you for your second one. Yeah, I was just going to show
• 3:58
  initially when I was planning for this episode, I was just
• 4:00
  going to show this picture. I was just going to really very
• 4:04
  quickly talk about return policies, which is, you know,
• 4:07
  the battlefield of e-commerce, right?
• 4:09
  It's a really powerful conversation about how it is
• 4:13
  about trust, about the online return rate is almost 2030% and
• 4:18
  physical retail is half of that. And then returns are expensive.
• 4:21
  But then today, because of what's happening in Iran,
• 4:25
  because of all this, it's not just about being uncertain
• 4:29
  anymore, right? So it's not, it's about
• 4:32
  suddenly, it's about cash preservation, it's about trust
• 4:36
  preservation. It's about when something
• 4:38
  critical or when something, a major catastrophe like this is
• 4:42
  happening. Who is talking about return and
• 4:44
  what does that mean? So customers are more and more
• 4:47
  likely to order because they want to feel good about it and
• 4:49
  more and more likely going to return.
• 4:52
  But when you do have a really bad return policy because you're
• 4:56
  not thinking about it and because it suddenly spiked up
• 4:58
  and you're not thinking through it, that experience is going to
• 5:01
  stay with the customers a lot longer than we can imagine.
• 5:03
  Yeah. So I thought that was something
• 5:05
  that we should really look into. 100% I love it.
• 5:09
  OK, Reef, how about you final one?
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  I've got one a little. Mine's a bit sad actually.
• 5:13
  It's a bit of AI talked a little bit about KMD last week, but
• 5:17
  we're seeing the rationalisation of what's happening in the
• 5:19
  retails B to B space in terms of events and also in, you know,
• 5:23
  insight and sales events. Last Monday, the power retail
• 5:27
  and click frenzy business went into liquidation in Australia.
• 5:30
  Now power retail was founded in 2010 by a guy called Grant Anna
• 5:33
  and it's been a bit of a mainstay of the mainstay of the
• 5:36
  the Australian retail ecosystem for a long time.
• 5:39
  And I mean the All Star bash is 1000 person the water, probably
• 5:43
  the biggest retailer water I'd go to.
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  There's an insights and research and analyst type business as
• 5:47
  well. And so that's, that's very, very
• 5:50
  sad. Then also click frenzy.
• 5:51
  Click frenzy is a sales event business.
• 5:53
  So you know, thinking, thinking January 20, June 26 in China
• 5:58
  with, with, with sales or double 11 or Black Friday, Cyber
• 6:01
  Monday. Click frenzy in Australia was
• 6:03
  the first to do sales events and fund it with advertising and
• 6:06
  sponsorship. So it's, it's, it's quite a
• 6:09
  turning of a tide. And so for me, I think I mean
• 6:12
  the power retail business, which is the B2B business, I think is
• 6:15
  a reflection of how over leveraging a lot of the SAS
• 6:18
  players are and how when the share price tanks and on the
• 6:21
  NASDAQ, everybody, everybody sneezes them.
• 6:24
  And, and, and some of the people in the mature markets like
• 6:26
  Australia catch a cold because it's, you know, these people
• 6:28
  pull back quite aggressively to protect the share price.
• 6:31
  So I think that I think that it's, I think that probably, you
• 6:34
  know, a small, small and medium sized business which has been
• 6:37
  very much impacted by what's happening around the world at
• 6:40
  the moment. OK, cool.
• 6:41
  Well, listen, we've got 5 minutes left approximately.
• 6:44
  I want us to have a little bit of a debate, but I'm going to
• 6:46
  throw a positive in there rather than just being a negative
• 6:49
  because that's my and, and just a little bit of a back story.
• 6:53
  This podcast started when I was at Microsoft and I wanted to
• 6:57
  talk about the pandemic. And Microsoft said you can talk
• 7:00
  about the pandemic, but our lawyers are not going to
• 7:02
  indemnify you to talk about the pandemic, but go and talk about
• 7:06
  it on your own, you know, wherever you want LinkedIn, we
• 7:09
  will support you, but we cannot be giving advice to retailers.
• 7:13
  And they were super, super kind. And that's when I set up the
• 7:15
  podcast just before the pandemic.
• 7:18
  Why? Because I wanted to talk about a
• 7:19
  conversation that I could see that was going to happen because
• 7:22
  that's my job. I look at the future and
• 7:24
  understand. And I wanted to tell retailers,
• 7:27
  hey, look, here's the problem, but here's the opportunity,
• 7:30
  right? Because it's not all negative.
• 7:33
  And where we are right now, ecommerce, according to Google,
• 7:37
  is roughly 6.42 trillion across the globe, right?
• 7:41
  Individually for retailers, I've not heard anyone say unless
• 7:45
  they're only online pure online that they're only more than 20%
• 7:50
  of their business. It's hovered around 2025%
• 7:53
  anywhere from 15 to 25% right unless they're a pure play
• 7:57
  online player. And so I want us to keep that
• 8:00
  frame in mind and I also want to keep us the frame in mind of you
• 8:07
  both mentioned it. Well, so mentioned in terms of
• 8:10
  renewable, in terms of this re commerce mentality, moving
• 8:14
  towards a more sustainable future, which means products.
• 8:17
  And there's already retailers, right?
• 8:19
  So today there are retailers that have non petrochemical
• 8:23
  products. They have T-shirts that are made
• 8:25
  from banana skins. They have underwear that's made
• 8:27
  from bamboo shoots. There is a whole economy out
• 8:31
  there of untapped resources that we are going to maybe have to go
• 8:36
  through a transition. Why am I trying to lay up the
• 8:38
  positive? Because the negative actually
• 8:41
  seems quite worrying. And there's a video that I
• 8:44
  definitely recommend for you to watch from a credible
• 8:47
  journalist. So this isn't one of those
• 8:49
  conspiracy theories called Max Fisher.
• 8:52
  And the general premise of what he talks about on the video is
• 8:56
  that oil in its current trajectory travels around the
• 8:59
  globe at the speed of a bicycle around 10:50 mph.
• 9:04
  Now, maybe he's out by a couple of miles.
• 9:07
  Maybe it's a little bit faster, but it goes incredibly slow.
• 9:10
  What does that mean? That means the reason why we've
• 9:12
  all been, you know, lulled into this false sense of security is
• 9:16
  everything S OK, because we've we've got the oil coming in and
• 9:19
  over the last month the oil has been coming in drip, drip, drip.
• 9:23
  And now we're getting to the point of no return.
• 9:25
  So again, we're talking about 20% of the global economy.
• 9:29
  But for some of the regions in AIPAC, it is more right?
• 9:33
  There are more heavy, like Japan may be more heavily dependent
• 9:37
  than for example, Europe, but in Europe we will have 20% less
• 9:41
  full stop. And what I want to do is say,
• 9:44
  hey, look, given that we know that this is a fact this I'm not
• 9:48
  hopefully there isn't any things that I'm stretching.
• 9:51
  What are the plans to shift away from a dependent energy source
• 9:56
  that can allow us to succeed and and grow into the future?
• 10:01
  Because there's a shock that's going to come.
• 10:03
  So that, you know, my point here is get ready for the shock, but
• 10:07
  also how are you going to transition away from something
• 10:11
  that even if the, the straight opened up today, the, the fields
• 10:15
  have all been quite battered with different, different
• 10:19
  tactics on energy sources. We're not going to bounce back,
• 10:23
  right? So we're going to go into a
• 10:24
  prolonged energy shock. How are you going to come
• 10:28
  through this? And that's, that's all we've got
• 10:30
  time for him. But I wanted to sort of deliver
• 10:33
  for quick commentary on you in thoughts.
• 10:36
  Yeah. So for me, I think the retailer
• 10:38
  that it's the quickest to say we understand your life, we know
• 10:42
  what you're going through, we adjust with you.
• 10:44
  Retailers are very quick to build stress dashboard Taylor
• 10:48
  that is really thinking about inflation aware journeys, the
• 10:51
  trigger CRM for example, and ensuring that the trigger points
• 10:55
  that is looking at how the customer is spending and what
• 10:58
  kind of things that means will change them.
• 11:00
  I think those will come out tops and those will come out winners.
• 11:03
  Is it going to be purely just online versus offline?
• 11:07
  I I think it's not about the physicality anymore.
• 11:10
  Of course it's going to be affected because you know, if
• 11:12
  you could save that much more buying online, but then online
• 11:15
  also mean it needs to be delivered to you.
• 11:16
  So how are we going to relook at the way aside from changing what
• 11:21
  how we are packaging, aside from looking at what we are putting
• 11:25
  out there to replace some items for example, the whole idea
• 11:29
  needs to be attitude wise, what are you going to do to go with
• 11:33
  the flow? Love it, love it.
• 11:34
  Really good brief. I think, I think a lot, I mean
• 11:37
  for me, I mean I can talk to Australia and I can talk to, I
• 11:40
  mean it's really quite lumpy around the region in terms of
• 11:43
  what's happening with fuel. But I think for me, the thing
• 11:46
  that's we're seeing in Australia is we have supply.
• 11:48
  We don't have a lot of refining happening online.
• 11:51
  But I think I think what we'll see is, you know, a governmental
• 11:55
  change. We are a big country with not a
• 11:56
  lot of people. And so there's already
• 11:58
  conversations in the four stages of where we are.
• 12:00
  We're at stage 2 in terms of and, and in three and four, fuel
• 12:04
  gets reprioritized for farming, food production, transport.
• 12:08
  And so, and there's already conversations about working from
• 12:11
  home again, It's, it's, we're going back to COVID.
• 12:13
  It's pretty interesting. And so when you've got that
• 12:16
  governmental legislative context and the, and they're really
• 12:19
  aligning the status rate, but we weren't aligned during COVID.
• 12:22
  I think what we're going to find is our context is going to be
• 12:25
  set by government and then retailers are going to have to
• 12:27
  react and each market's going to be different depending on their
• 12:31
  fuel supply and and their imperatives.
• 12:33
  So Australia, you know, so, you know, each market is going to
• 12:37
  have different requirements, different, I mean, you know,
• 12:40
  well, Philippine, Philippines, what, 17,000 islands, you know,
• 12:43
  it's a little bit different. You know, Australia is a really
• 12:45
  big country with not a lot of people, right?
• 12:46
  And we always got 15,000,000 people.
• 12:48
  So I think we're going to see retailers watching government
• 12:52
  responses and actually going, well, how am I going to operate
• 12:55
  to the optimum in the context that I'm presented in?
• 12:57
  I can only deal with the cards I've been dealt, so to speak.
• 13:00
  Yeah, I think. Now I love it and it's a really
• 13:02
  important point that none of this is broad brush because the
• 13:05
  region is so diverse. And as you were saying, you know
• 13:08
  what, there's island nations, there's big landmass nations and
• 13:12
  there's landlocked nations as well.
• 13:14
  Yes. And so, well, no, not, none of
• 13:17
  us are going to be naive enough to say, hey, this is the the
• 13:20
  sort of look across uniform across the region.
• 13:23
  I think the thing that I'd like to close with, it's a fantastic
• 13:26
  opportunity to look at your renewable strategy, to look at
• 13:30
  the other energy sources that produce products that produce on
• 13:33
  materials and think is, is now a good time to look at shifting to
• 13:38
  these sort of renewable sources. And and long you and you know in
• 13:41
  terms of standing shoulder with the customer and consumer,
• 13:45
  making sure that you know you're shoulder to shoulder with them
• 13:48
  as we move into this new phase. OK, that that's it.
• 13:52
  Hopefully it was. Nikki, Alex.
• 13:54
  It was an interesting conversation for us to have.
• 13:57
  Thank you. And until next week.
• 13:58
  Oh, you got balloons. Oh, look at that.