Will Amazon Australia succeed?

Questions are now arising about Amazon’s Australian debut this week.

Shoppers seem to be totally underwhelmed by the e-commerce giant going live in Australia on Tuesday, judging from the comments on social media.

“So Amazon has launched,” said one tweet. “The Aussie retailers breathe a sigh of relief as they realise that the range is awful and the prices are exactly the same. No competition here.”

#amazonaustralia is going to find out that without ‘genuine’ discounts Australians will stay away in droves. Every item I cross checked on other sites including AmazonUS were cheaper even w/crap exchange rate & postage,” said another tweet.

Australian shoppers discovered the prices aren’t that great. An iPhone 7 Plus 128GB costs $1199 at JB Hi-Fi compared with $1375 on Amazon. They can get a GoPro Hero 5 camera for $499 at JB Hi-Fi or $560 on Amazon. A Lenoxx 9-inch Twin Screen Portable DVD player, sells for $149. At Kogan.com and costs $172.38 plus $9.45 delivery on Amazon.

Amazon nonetheless yesterday responded to the negative publicity saying its launch had set a record with first-day orders on Amazon.com.au on Tuesday higher than for any other launch day in the company’s history.

But Scott Kilmartin, e-commerce specialist and retail consultant who is also the producer of the podcast series on Amazon, David versus Amazon.com said Amazon had chosen its Japanese platform which had taken longer to customize to the Australian market.. Also, it had issues indexing on Google.

“I would have thought they would have come out with really aggressive pricing. It was an opportunity for them,” Mr Kilmartin told Business First. “They didn’t.”

He also said they had not done anything in the media, allowing competitors Gerry Harvey to take up that space.

“The lack of pricing and presence in the media caused underwhelm,” Mr Kilmartin said.

Shares of JB HiFi and larger electronics retailer Harvey Norman Holdings jumped 5 per cent on Amazon’s debut.

Citi has described Amazon Australia as “patchy”.

“We expect Amazon will not be disruptive to Australian retailers this Christmas,” Citi said.

“Amazon’s not materially cheaper on a wide basket of items than the retailers,” Vertium Asset Management portfolio manager Daniel Mueller told Reuters.

“The retailers are rallying. It’s a realization that Amazon is not going to kill Australian retail, at least not today.”

It might just be a question of giving Amazon time.

But it clearly has its work cut out in a market where online sales account for less than 10 percent of the $300 billion retail sector.

Of course Amazon can do a lot of damage to the Australian retail sector. With $161 billion worth of revenue, compared to $2.6 billion at Myer, it has a lot more bargaining power. . And its logistics operation will do what local retailers can’t achieve when it introduces Amazon Prime.

But David Fickling at Bloomberg points out that Amazon ignored Australia for two decades while it flattened sectors of its core markets. Fickling also says that Amazon has struggled to expand into NAFTA and Asia’s biggest economies.

Then again, there’s always next Christmas.

 

 



Business First is a peer-to-peer magazine: written by CEOs and other high level executives, with interviews with some of the country’s best leaders.