Live CNBC Asia interview (Aug 25, 2017) with Matt Britton, CEO of Crowdtap, discussing Amazon's imminent launch in Australia. Britton argues Australian retailers should feel threatened because Amazon brings a broad consumer ecosystem (Prime, Alexa), and Australia has low e-commerce penetration (large growth potential). He advises brick-and-mortar retailers to focus on shareable physical experiences and suggests brands may need to embrace Amazon as a distribution platform. He contrasts Amazon’s consumer-focused, vertically integrated model with Alibaba’s marketplace approach, and comments on Amazon’s social product Spark and broader platform competition among Facebook, Apple, Amazon, and Google. Also notes risks of ad overload on social platforms like Instagram/Facebook.
Mark Britton is CEO of Crowdtap, of influencer marketing platform and he joins us live from Sydney. Great to have you on this morning. So we have seen Amazon expand into overseas markets like Japan, like India, and find success there. So how threatened should retailers over in Australia be by Amazon's impending arrival?
I can't imagine a situation where retailers would feel more threatened. You have a company coming in at full steam. You know, you have to understand that Amazon is not like other traditional e commerce retailers because they have an entire ecosystem. You know, they have prime, which hooks consumers on great free content. They have this now Alexa hardware ecosystem that's building the home. So they're really coming at a level of sophistication and really consumer empowerment that no company has ever come to at this stage. Australia as a market really only has 1.7% of GDP in E commerce, where America is twice that amount and Australia is only a tenth of the size. So there's so much room for growth and I think Amazon's really going to catch on like wildfire here down under.
So a lot of upside there in the market as it relates to E commerce there. How do you think retailers in Australia should be prepping? What should they be doing to try and compete with Amazon?
So I read this morning there's companies like Westfield, which is a shopping mall center and network here in Australia, trying to really up the ante on sort of entertainment and leisure type activities, experiences, physical experience is something that Amazon really can't provide. So if you're a retailer, you need to make your retail, retail environment and experience something that's shareable, something that's fun and goes above and beyond just the product that you sell. That's something that Amazon really can do. At the same token, a lot of traditional brands and merchants need to look at Amazon as sort of a real distribution platform for them. How are they going to build their ecosystem around Amazon versus trying to pretend like it doesn't exist and one day getting steamrolled by competitors that do embrace Amazon.
And what we've increasingly seen here in the region is, is this competition between Amazon and Alibaba. We see it here in Southeast Asia with Alibaba after the big E commerce player here to try and compete with Amazon as well. Size of the two for us.
So Alibaba and Amazon, slightly different models. Alibaba is a marketplace. So it essentially connects buyer and seller in a very easy way. Not that unlike an ebay, so to speak. Amazon on the other hand, has its own warehouses, its own distribution. So depending upon the size of business. If you're a small to medium sized business, you can really take advantage of Alibaba to sell your products directly to consumers is a great way for you to get online. Amazon, with its ecosystem that I spoke about earlier with prime free shipping, one click buying really swallows up the consumer in a whole different way. So I think Amazon has the ability to get a whole lot more momentum and grow a lot more quickly and really change the marketplace because it has much more of a consumer first mindset than Alibaba does, which I look at as much more of a merchant driven tool first.
Matt, I want to ask you about Amazon's recent launch or foray into social media. They launch this platform Spark, which kind of been described as a cross between Pinterest and Instagram. I have to wonder, you know, I saw this and I thought, well, Amazon already has enough eyes on their website. Why do they need more? What's the strategy behind launching this?
Well, really there's four companies that are essentially slowly, seemingly be taking over the world. Facebook, Apple, Amazon and Google. And they're all trying to get into each other's, you know, spaces. So you see Facebook getting into commerce. If you open up the Facebook app, you'll see one of the first things you see is your ability to buy products from other Facebook users. That's Facebook's first foray into commerce. Amazon conversely saying, well, we need to get more engagement, deeper engagement with consumers beyond just them looking at our platform at the bottom of the funnel. So they're trying to get into the social media space under the premise that consumers talk about their products as something that's an extension of their own personal brand. I'm personally not impressed by what Amazon's done with the social platform off the bat, but I really have no doubt that they're going to do everything they can to try to figure it out. You know, everybody's in the battle for attention. The more attention you get, the higher chance you're going to have to monetize that consumer. Amazon looks at Facebook as a threat as they do Apple, as they do Google and because of that they're getting into the social space. And you have to remember Google had Google plus, they tried to get into the social space as well. So they're all kind of convening and all trying to go for world dominance at the same time. It'll be interesting to see, you know.
We'Ve seen that move over on Instagram as well. You know, bloggers already tag what they wear. Now we're seeing that link to a site where they can shop. Is there concern of a backlash here though? Because, you know, I know I go to Instagram and think, I don't want to constantly be bombarded with ads. Ads here. Sometimes you just want to see it for what it is.
Yeah, I mean, you raise a great point. Facebook has a very big balancing act. They have continued pressure from Wall street for astronomical growth. And you know, they're only going to get so much more growth in usership in terms of the massive scale. They already have 2 billion plus users. So the way they're going to get growth is a increasing prices, which I think you're going to see very quickly from Facebook because there's just tremendous value for advertisers right now. So I think it's only a matter of time before Facebook raises prices for advertiser. And two, Facebook could show more ads. There hasn't been backlash on Instagram, so to speak. It's such a powerful platform. It's so important to this millennial generation, Gen Zs in terms of how they express themselves. But there's always that risk in terms of tipping the balancing point and having too many ads versus the amount of valuable content that consumers find on the platform.
Okay, Matt, good to get your insight. Matt Britton joining us from Sydney this morning. CEO of Crowt.
