“Imitation is the sincerest form of flattery…”. Most people have heard the first part of Oscar Wilde’s infamous quote, but fewer have heard the caveat: “...that mediocrity can pay to greatness”.

It’s an uncomfortable truth that is playing out across retail logistics in Australia in 2025. Everyone is playing Amazon's game and Amazon is winning.

The playbook is familiar by now.

Amazon promises faster delivery. Many retailers follow suit. They invest in matching Amazon’s speed, often at significant cost. Amazon ups the ante and the cycle repeats.

It's an arms race that most retailers can't win.

In this week’s Delivered, Shippit’s Chief Product and Customer Officer, Inga Latham, unpacks the Amazon effect and the smarter play at a retailer’s disposal: using AI and data to understand what your customers actually want, then tailoring your approach to deliver on their needs.

TL;DR

• 82.8% of retailers are worried about the growing competition of Amazon and Temu - but playing these giants at their own game is a losing strategy
• AI democratises data insights, allowing retailers to ask strategic questions in conversational language and use data to build strategic, business- and customer-specific delivery experiences
• The smartest retailers aren’t engaged in a blinkered pursuit of delivery speed or the ghost of Amazon, they’re using AI to understand what their customers want - from reliability and accuracy, to flexibility and price

The Amazon effect

Last month, reports surfaced that Amazon - now the US’ second-largest employer - plans to automate 75% of its operation; potentially saving 30 cents (~0.45AUD) per item and enabling even faster delivery.

It’s a threat playing out globally, including here in Australia.

Since opening its first local fulfilment centre in Melbourne in 2017, Amazon has invested billions in Australia. When announcing a state-of-the-art fulfilment centre in Victoria earlier this year, its rationale was clear: to speed up delivery.

Amazon orchestrates everything from purchasing to warehousing to last-mile delivery through connected systems. It’s a budget and blueprint that is nearly impossible to match and the reason it might never be toppled from its perch.

“The best of breed is Amazon,” Inga comments. “In addition to a cohesive strategy, they have a vertical tech stack, so everything happens and is orchestrated in a connected system. And the rest of us are working to achieve the same outcomes in a cobbled together versus well-composed and orchestrated stack.

These global entrants are increasingly dominating the dreams and strategy sessions of local retailers. Our 2025 State of Shipping Report shows that four in five (82.8%) Aussie retailers are concerned about their ability to compete with Amazon and Temu - a stark jump from 54% in 2024.

The default for many retailers is to try and mimic Amazon’s rapid delivery speeds. However, what's easily missed in the rush to compete: even Amazon is stepping back from ‘faster at all costs for every product'.

“If you've shopped recently, you'll see they're now offering different choices,” Inga continues. “Does the customer really need it tomorrow? Can I offer them a better price if they wait two days? And are they willing to make that trade-off? Are my ‘house’ products (that I make a better margin off) positioned competitively in terms of delivery options and costs?”

These questions and choices can separate retailers who are surviving from those who are building sustainable competitive advantages. And increasingly, it's a question that data is positioned to answer.

The democratisation of data

Amazon's advantage isn't only infrastructure, it's data. Decades of purchase behaviour, delivery patterns, and customer preferences flow through integrated systems that learn and optimise continuously.

Baby Bunting is a fantastic example of a retailer that recognised the detail in the data.

Its priorities in recent years have been optimising online fulfilment, managing costs and improving customer experience.

By tapping into valuable data and insights, it was able to facilitate faster decision-making across supply chain, digital, finance, and CX functions - enhancing its customer experience, operational efficiency and fulfilment network.

However, for most retailers, the data disadvantage feels vast.

Our research shows only one in three Australian retailers regularly use delivery data to optimise their operations. That means two-thirds are failing to access mission-critical insights.

“You leave on the table the opportunity to grow your revenue, add more value to your customers, and to make yourself leaner in terms of cost,” Inga continues.

Today, AI-powered tools - particularly conversational AI like IBM Watson, LivePerson, Cognify or a growing army of competitors - are democratising data access.

“Business intelligence tools are notoriously tricky for people to get their heads around and get answers to their questions from,” Inga adds.

This is where AI fundamentally changes the equation - making sophisticated data analysis available to all retailers, not just those with dedicated data teams.

Consider the impact when a logistics manager or eCommerce lead can ask, in plain language, ‘which customers consistently choose premium delivery and generate higher margins?' or ‘Which of my delivery options drive the best repeat purchase rates?'.

This is a growing standard across industries. Consulting firms like McKinsey and PwC have rolled out conversational AI tools to enable consultants to query decades-worth of internal knowledge, research, reports and generate immediate answers.

These aren't hypothetical questions. They're the strategic queries that separate reactive cost management from proactive revenue optimisation. And for the first time, they don't require a data science degree - or the might of Amazon - to answer.

Understanding your customers, not (only) copying Amazon

As retailers seek to grow, they shouldn’t be focused exclusively on questions like ‘can we do what Amazon does?’ but instead ‘what do our customers want, can we cater to that and how do we differentiate ourselves?’.

“Really understanding what different customer expectations might be around your products and adjusting your logistics choices and spend is a game people should be playing,” Inga comments.

Understanding requires the two-thirds of retailers currently leaving data on the table to start using it strategically;

• Which customers genuinely need same- or next-day delivery versus those who'd accept standard timeframes for a better price
• How delivery expectations vary by, for example, product category, customer segment, basket value
• Whether investing in premium delivery options creates loyalty compared to just eroding a retailers’ margins
• How delivery options drive conversion optimisation

This level of insight and segmentation was always theoretically possible. AI makes it practically achievable, at scale, in moments and days rather than months.

Retailers can optimise for their specific customer base and product lines rather than chasing a one-size-fits-all standard set by a global competitor with completely different economics, infrastructure and customer demographics.

Wherever they determine, Inga stresses, they must assess the logistics with the customer experience in the same breath.

“[Retailers should measure] what the customer experience of the logistics choices they've made is. Just saving costs can leave you in a very precarious position in terms of customer experience. And on the other hand, you may be investing a lot in logistics to create a very high-end customer experience that isn't actually required.”

When retailers can successfully balance both, and align their logistics decisions to what their customers value, delivery stops being a cost to manage and starts becoming a differentiator. The retailers who treat delivery as a customer experience will unlock advantages that pure cost-cutting won’t.

The (growing) cost of getting it wrong

The stakes have never been higher. Poor delivery isn't just a minor inconvenience - it's a customer retention and acquisition crisis in disguise.

Two-thirds of Australian shoppers won't return to a brand after a poor delivery experience.

Meanwhile, customer acquisition costs continue to climb. Google search ad spend is increasing, and many retailers hurt their conversions by failing to provide accurate delivery estimates.

Retailers aren’t losing customers because they didn’t offer next-day delivery, they’re losing them by offering vague ‘five to seven business day’ windows, rather than precise estimates like ‘expected Friday, 19 December’.

“Using historical delivery performance data, we can tell people when an order is really going to arrive versus relying on a static range from a carrier,” Inga says.

“We believe that giving that real-time delivery estimate at the point of purchase decision for a merchant will actually increase their conversion. Retailers are realising how important making and meeting that promise is.”

There's another shift underway that makes delivery experience even more critical. Increasingly, tens of millions of consumers are using AI to discover brands.

AI platforms analyse customer sentiment, reviews, and social media mentions, before making recommendations to customers. That means your delivery reputation - scattered across Reddit threads, Google reviews, and social media posts - becomes part of the data that AI uses to decide whether to recommend your brand.

Great delivery experiences generate positive sentiment that feeds into AI recommendations. Poor experiences create negative sentiment that gets algorithmically amplified.

The gap between winners and losers accelerates.

The best path isn’t always fastest, it’s smartest

For some retailers, fast delivery is paramount - but it shouldn’t be the default.

This isn't about abandoning speed or service quality. It's about strategic precision and investing in delivery experiences that your customers want, not just following the leader because it worked for them.

Threading together these connecting systems, data, decisions, and departments into a coherent customer experience is exactly what AI makes possible at scale.

The choice facing Australian retailers is whether to compete by copying Amazon’s playbook or compete by building something tailored to your customers, capabilities, and product.