She'll be right: Amazon to launch in Australia

  • News
  • April 24, 2017
  • Courtney Devereux
She'll be right: Amazon to launch in Australia

Digital retail giant Amazon has officially announced its launch into Australia. Retailers fear the worst as the billion-dollar company settles in for the long haul.

That’s right, after months of speculations, warnings, and begging, Amazon has officially decided to hit Australian stores in a move retailers are not so keen on.

The company is looking at locations for its first logistics facility, as well as finding a new CEO to launch into the region.

The threat to Australian retailers is stark. In the US Amazon, which started corporate life as a bookseller and now is known as “the everything store”, accounts for more than half of every new dollar spent online.

The new Australian Amazon location will bring thousands of new jobs to the area, which is expected to be either Sydney or Melbourne.

It is planning to launch its first service, Amazon Marketplace, a sales, and logistics system for third-party retailers, as early as this year. The company has also invited local retailers to join it as a third-party seller.

In a report released by Amazon late last week, the company plans on bringing in millions of dollars in additional investment, low prices, vast selections and fast delivery. Everything consumers love.

The arrival of Amazon Marketplace is expected to see much as half of the earning for leading retailers like Harvey Norman and JB Hi-Fi transfer to it. 

Since the announcement four days ago, Harvey Norman, Myer, JB Hi-Fi, Super Retail Group and Retailer Association stocks have all dropped.

At this year’s Global Food Forum, Woolworths chief Brad Banducci said Amazon’s likely touchdown should focus the attention of rival retailers on the importance of convenience for shoppers and its power to direct discretionary spending.

“It has been here for many years and has been a robust competitor,” Banducci says. “However its official arrival does focus the mind wonderfully on another megatrend — extreme convenience — and the need for us to provide the convenience our customers are demanding, or they will focus on alternatives like Amazon.”

Kindle, owned by Amazon, opened its Australian online store in 2013 and now has almost 1000 employees.

The concern about the move into Australia raises worries only for the pre-existing market there. Regardless, Amazon is gearing ahead to solidify itself with Australia’s AU$300 billion sector, but what does this mean for the New Zealand retail sector?

Ben Goodale, JustONE managing director, says the concern about the Amazon opening will most likely be forever.

“There will be tension about what it will mean, followed by the impact of the actual arrival and launch of services, and then the ongoing impact as they flex their offering,” says Goodale.

“It will be interesting how they scale it – Australia is a big country and they are just talking about one distribution centre at this stage. Arguably it is good for smaller Aussie manufacturers and niche retailers to leverage the marketplace offering.”

In the New Zealand scheme of things Goodale says it is unlikely the retailer will venture over anytime soon but we may still benefit from the business opening over the ditch.

“[it’s] a bit like IKEA having a blueprint that makes NZ unworkable, Amazon’s entry here in the near future seems unlikely. However, there will probably be some impact in terms of more Kiwis ordering from Amazon in Oz. As NZ Post offers quite a sophisticated service in partnership with Australia Post.”

Now, Amazon looms as a potent threat to local retailers already suffering from a dire trading environment marked by aggressive price wars and skittish consumer confidence.

Even though we here in New Zealand are often the last to receive most large corporations, according to Goodale, it is inevitable that they will end up here.

“Arguably, it shakes things up and ensures competitiveness in the market and an ongoing investment in customer experience and service which can only benefit the consumer.”

To pave the way for its arrival, Amazon has over the past few years locked away hundreds of trademarks to cover its burgeoning retail operations and has reportedly sought office space and approached leading retail, supply and merchandise executives with job offers.

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