Amazon & Temu rivalry heats up in Australian eCommerce

Pattern has released its 2025 eCommerce forecast, highlighting significant trends set to reshape the online retail landscape in Australia.

The marketplace scene in Australia is expected to face substantial shifts as Amazon strategises to counter Temu's rapid growth.

The launch of Amazon Haul, a budget-friendly storefront, is anticipated to attract price-sensitive shoppers and present fresh competition to Temu and Shein. According to Pattern's research, while Temu's expansion has been consistent, concerns about product quality and the introduction of Amazon Haul could disrupt its market share.

"Amazon continues to demonstrate its commitment to innovation and adaptability in the Australian market," said Merline McGregor, Managing Director, Pattern Australia. "The launch of Haul is likely to shift shopper behaviour, as price-sensitive customers weigh Temu's aggressive pricing against Amazon's broader value proposition, including Prime delivery and benefits."

Social commerce is set to gain momentum in 2025, with platforms like TikTok Shop enhancing their click-to-buy capabilities, creating seamless shopping experiences. Australian consumers are increasingly integrating shopping into their social media habits, presenting brands with new opportunities to engage customers.

"Platforms like TikTok Shop are reshaping the top-of-funnel experience for brands," said McGregor.

"Brands must approach social commerce with a comprehensive strategy that includes highly engaging and authentic content tailored to platform-specific algorithms."

"Those who optimise their product feeds and maintain high-quality visuals will not only attract more clicks but also drive meaningful conversions. The ability to tap into real-time trends and leverage influencers will be critical for success in this space."

As marketplaces expand their influence, they are increasingly affecting how brands are perceived by consumers. This year, brands will need to enhance their channel strategies to protect their equity and build trust.

"Marketplaces are both an opportunity and a challenge for brands," noted McGregor.

"While they offer unparalleled reach and exposure, they also introduce risks like unauthorised sellers and inconsistent branding. To counter this, brands must implement robust monitoring tools to detect violations, uphold channel agreements, and maintain control over their messaging."

"In a crowded marketplace, consistency and authenticity will be what sets leading brands apart and helps them retain customer loyalty."

AI is expected to take a more prominent role in customer-facing applications this year, with tools like Soba introducing AI-driven purchase suggestions, advanced service chatbots, and personalised content creation. Retailers are likely to explore AI-generated images and videos, although such innovations may prompt new legislative measures.

"AI is evolving from backend operations to front-facing applications that enhance the customer experience," said McGregor. "In 2025, we expect to see brands leverage AI not only for operational efficiency but also to deeply personalise customer interactions. For instance, AI-driven styling tools could provide dynamic outfit recommendations, while chatbot advancements might finally close the gap on providing human-like customer service at scale."

"These innovations will not only improve the customer journey but also create opportunities for higher basket values and increased loyalty."

Australian brands are encouraged to invest strategically in emerging technologies, engage with innovative strategies, and manage marketplaces robustly to remain competitive and drive growth in the eCommerce sector.

"The Australian eCommerce sector is on the verge of significant change," concluded McGregor. "Brands that proactively align their strategies with key eCommerce trends will not only navigate the challenges ahead but also uncover new growth opportunities in an increasingly dynamic market."

"The key will be to strike a balance between innovation and strategic control to deliver both short-term gains and long-term resilience."