Amazon is cementing its status as Australia’s largest online store, according to a leading expert who says other major retailers should be worried that 7.9 million Australians shop there.

Data published by Roy Morgan shows Amazon’s customer base ballooned 16 per cent over the 12 months to June 2024, with 1.1 million more people using the platform than last year.

Retail Doctor Group boss Brian Walker says the US-based e-commerce giant is on its way to joining the likes of Kmart and Big W as Australia’s biggest variety retailer.

“Amazon could be [among] Australia’s largest general merchandise retailers within the next five years,” Walker said, adding that some retailers, such as the recently collapsed Booktopia, are already buckling under the pressure.

“You’re in the gun barrel of them if you haven’t got a competitive offer that doesn’t rely on speed, range, price or convenience.”

Amazon ascendant

At $3.1 billion in annual revenue last year, Amazon Australia sits somewhere between Myer ($2.89 billion), Big W ($4.79 billion), and Wesfarmers’ Kmart Group including Target ($10.6 billion).

But while most of these retailers are struggling over increasingly tight consumer wallets, with sales growth grinding to a halt recently, Amazon has been experiencing rapid growth.

Roy Morgan’s data shows Big W saw no growth in its customer base last year, while Myer fell 1 per cent, Target sank 7 per cent and David Jones was down 5 per cent.

The only other retailers to record positive growth were Kmart (up 2 per cent) and JB Hi-Fi (up 4 per cent).

Kmart still has more customers than Amazon at 13.2 million over the year to June, but at its current pace of growth it will only take the e-commerce giant a few years to overtake the chain.

Big W will be overtaken first if trends persist. It had 11.2 million shoppers over the year to June.

Roy Morgan’s head of retail research Laura Demasi said the pace of Amazon’s growth signals a “big change” in the competitive landscape.

“The disruptive power of Amazon has been underappreciated in recent years,”Demasi explained.

This kind of growth trajectory puts all Australian retail brands on notice – especially now given its upcoming expansion into big box retail and the ultra-cheap market.

“If Australia is on track to mirror the US trend, where Amazon accounts for an incredible 37.4 per cent of all online spend, our retail landscape could look quite different in coming years.”

Competing with Amazon

Walker said Amazon has managed to embed its tried-and-tested loyalty model in Australian households without needing to build a bricks-and-mortar presence like other retail chains.

“They introduced the idea of merging retail technology and media; that’s been their greatest success,” Walker said.

“They’ve created a huge subscription base and have the technology to underpin it.”

That makes it difficult for other retailers to compete, because once a household has a Prime subscription there’s less reason to shop at other retailers and instead look on Amazon.

Walker said Australian retailers will need to look at how players like Walmart in the US have taken the fight to Amazon, leveraging their technology partnerships and huge store network.

“Walmart is the poster child for competing with Amazon,” he explained.

“[In Australia], it’s about creating different revenue models, such as Anko for Kmart and rethinking the classic business model.

“You need a right-sized mix of physical and online retail.”