Kmart, Big W, the giant box and the Amazon problem

Angus Kidman 4 January 2017

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If Amazon crushes Australian retailers, they'll largely have themselves to blame.

A parcel arrived for me from Kmart yesterday. You can see it pictured above. The two small packets of lightbox display letters you can see in the left-hand corner were literally the only thing in the box. They easily could have been sent in a standard C4 envelope or similar.

Yet for some reason Kmart's online operation decided that the best approach was to use a box that would have been large enough to ship a slow cooker. It's a waste of space, a potential source of damage as the contents bang around, and quite probably cost more than the $5 in postage I paid (since larger items are often charged by volume rather than weight).

The most charitable explanation I can come up with for this postal madness is that Kmart had exhausted its postal supplies and this was the smallest piece of packaging it had to hand. But sheer incompetence is also a potential explanation, and that doesn't bode well for Kmart or any of its rivals, given the ongoing rumours that retail giant Amazon.com is planning to dramatically expand its Australian presence.

We've discussed the likelihood of those rumours before, and until Amazon makes an official announcement, speculation can only take you so far. But one thing Amazon is renowned for is warehouse efficiency. It's not going to waste time and truck space with a gigantic box when a much smaller one will do. And if it does need to use a slightly larger container, it will make sure there's packing material in there to prevent damage.

That makes for a more efficient business and a better customer experience, and that's the level that Kmart and its ilk will need to rise to if they don't want to see Amazon destroy their online prospects. Whether they'll manage that is another matter.

To be fair, some have more pressing problems. Rumblings this week suggest that Woolworths, fresh from flogging its petrol stations to BP, is now considering selling off Big W as well. However, before that's a realistic prospect, it needs to stem the losses from the discount department store (Big W is expected to lose as much as $32 million this financial year). Target is facing similar problems.

That makes Kmart the most successful of the chain discount department stores locally right now, and hence the one with the best chance of smartening up its act before Amazon officially arrives. My advice? Start with a bigger envelope supply.

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears Monday through Friday on finder.com.au.

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