Amazon launches in Australia
After months of speculation, Amazon is up and running in Australia as of this week.
The launch on December 5 comes later than expected but just in time for what the Australian Retail Association tips will be a $50 million retail Christmas pie.
So, after months of watching, waiting and worrying, here’s what the retail industry is hankering to know…
Virtual doors are open
The world’s biggest e-commerce retailer opened its Australian doors on Tuesday this week, offering consumers access to millions of products across 23 different categories of goods.
The product range spans consumer electronics, sporting goods, home improvement items, and clothing and accessories that will be shipped from its Melbourne east warehouse.
The retail model features its own product offerings along with access to the Amazon Marketplace, where local retailers sell their goods through the Amazon website.
The Sydney Morning Herald explains, with 23 product categories, “the Australian launch is broader than in some other markets it has launched in, which include Spain, Canada, the United Kingdom and Ireland, Italy Brazil and Japan”.
And the company’s Australian head Rocco Braeuniger has told consumers they will continue to add more products and services regularly.
“We hope to earn the trust and the custom of Australian shoppers in the years to come,” Mr Braeuniger said.
With Australia’s vast distances, delivery speed has been a big consideration for the retailer. In the countries where their services have made a huge impact on local retail, swift delivery has been a decisive drawcard.
Amazon has now settled on a model that sees customers pay $9.99 for next day delivery to Sydney, Melbourne, Brisbane, Adelaide and Canberra. Meanwhile, customers in Perth and regional areas of Victoria, NSW, and SA will pay $11.99 for delivery within two days.
A slight delay
All eyes have been watching the Amazon space for months, speculating when the retailer would finally kick off its Australian campaign.
At an Amazon Marketplace Seller Event on November 13, Amazon Australia Boss Rocco Braeuniger confirmed the e-commerce behemoth would be ready to open in Australia “soon”, but stopped short of releasing any specific date.
Pundits predicted the timing would coincide with Black Friday sales, an event that’s gaining increasing traction in Australia. However, Black Friday came and went with no sign of Amazon opening its virtual doors.
The question then became would they cash in on the festive season and manage to enter the retail landscape in time for Christmas?
It was the subject of much speculation, with conflicting reports as to whether Amazon would be ready to embrace the busiest time of the retail year.
On November 30, News Limited reported the retail giant was inching closer to launch, and had advised local sellers to finalise their listings as testing on the site continued. It followed a soft launch the Thursday prior during which a select group were invited to test the site and peruse the wares on offer.
But according to Lifehacker, an insider revealed Amazon was planning to go live in Australia on November 24, but was plagued with technical issues.
“Speaking at a WPP Client Education Event in Melbourne on November 29, Jason Mahoney, Managing Director ANZ of market research firm Kantar Retail, revealed that the reason for Amazon’s “failed” launch last week was due to glitches in its backend,” Lifehacker reported.
“During his presentation, Mahoney noted that he was expecting a 2017 launch, but only if it happens in the next week or so. Otherwise, he suspects they may pull the pin on going live this year.”
While testing continued behind the scenes, Amazon was busy spending the cash, reportedly paying $7 million to secure 2.11 hectares of vacant land in Sydney’s southwest in addition to its existing warehouse in Melbourne’s Dandenong South.
The bottom line for retailers
Gartner Research analyst Thomas O’Connor told News Ltd many Australian retailers had been anticipating Amazon’s launch, and expected it to affect Christmas spending.
“There’s been a number of organisations expecting Amazon to launch between Black Friday and Christmas to make sure they’re able to capture that general merchandise spend,” he said.
“The fortunate thing for Australian retailers is they’ve had a lot of time to prepare.”
Woolworths was among those readying for an imminent threat, announcing it may open “dark stores” designated to packing and shipping online orders. Meanwhile Woolworths Chairman Gordon Cairns warned Aussie suppliers they risked “cutting their own throat” if they sold to Amazon.
“If they go onto Amazon, then Amazon cuts the prices substantially,” Mr Cairns said. “What that forces other retailers to do is to reflect on whether they should be stocking the brand if they can’t do it and make money.
“They can end up cutting their own throat. Before they step into the breach, they should perhaps consider what the long-term ramifications are,” he said.
But others tip Amazon’s entry to the Australian market will have less impact than expected.
“Australia’s lucrative retail market has always been attractive to overseas competitors,” a commentary in the News Daily noted.
“Not all of which live to tell the tale of their Downunder adventures. Australian retailers are some of the best in the world, and new competitors enter at their own peril.”
This year the ARA expects online Christmas shopping will rise by 3.96 per cent, with shoppers purchasing most of their gifts online. Whether Amazon will be the major winner from that new trend remains to be seen as the countdown continues to Christmas.
