Amazon's arrival set to shake up Australia's retail sector I Australia: Will Amazon's magic work in its newest market? I Why the haters are wrong about Amazon Australia
AUSTRALIANS are unimpressed with the online giant’s much-hyped launch. But I’m convinced we’ll soon be addicted.
HONG KONG (CNNMoney) - Amazon has gone live Down Under.
The online retail giant launched in Australia on Tuesday, hoping to seize market share in one of the world's richest countries.
The Seattle-based company will let Aussie shoppers buy millions of products across 20 categories in the country, including electronics, toys and clothing.
Media speculation in Australia had strongly suggested Amazon would launch in time for last month's Black Friday and Cyber Monday shopping bonanzas. It may have missed those events, but it still comes in time for the busy festive season.
The U.S. company, which has a market value of nearly $550 billion, has pledged to invest hundreds of millions of dollars and create thousands of jobs in Australia.
The country's e-commerce market is growing at more than 13% per year and is expected to hit more than $20 billion by the end of 2018, according to research firm IBISWorld. That's still a drop in the ocean compared with the U.S., where the online retail market was close to $300 billion last year.
IBISWorld predicts Amazon will initially lose money in Australia as it focuses on getting a foothold in the market as quickly as possible.
Kim Do, an analyst at the firm, said she expects Amazon to offer prices as much as 30% lower than those at established Australian retailers.
Local companies are already feeling the heat from Amazon's entry.
Graham Cooke, an analyst at price comparison site Finder.com.au, said brick-and-mortar stores have been bolstering their online offerings ahead of the launch.
Amazon is also going up against existing Australian e-commerce platforms such as Kogan.com.
The U.S. company isn't offering all its premium services like Prime in Australia straight away. That reflects the difficulties of arranging deliveries in a country the size of the lower 48 American states -- but with less than a tenth of the population.
"While the company is known for same-day delivery, this could prove difficult in a country as big and expansive as Australia," Cooke said. Another issue is Australia's internet, which is among the slowest in the developed world.
Ahead of the launch, Amazon set up a huge distribution center near Melbourne, Australia's second-biggest city.
The tech giant is offering Australian shoppers free standard delivery on orders over 49 Australian dollars ($37).
Orders within big metro areas like Sydney can be delivered in a little as one working day at premium shipping rates, Amazon said. Delivery times in the country's more remote regions can run as long as 10 business days or more.
Online shopping isn't as popular in Australia as it is in some other countries. Figures from IBISWorld show that e-commerce sales make up just 7% of Australia's overall retail market compared with about 12% in the U.S.
Amazon has made its long-awaited entry into Australia, in a move that could have ramifications for the country's A$300bn (£171bn) retail sector.
Online shopping makes up a relatively small - but growing - proportion of retail sales in Australia.
Geography, poor infrastructure and firms slow to adapt to e-commerce have held the sector back.
Australia's retail industry association said Amazon would help local firms by providing a new sales platform.
Australian consumers could previously buy through Amazon's US site. From Tuesday they can buy locally, as the American retail giant has established a huge distribution warehouse on the outskirts of Melbourne on the country's east coast, home to most of the population.
The move should cut shipping costs and delivery times for Australian shoppers.
The arrival of Amazon has left some retailers bracing for a shake-up of the industry.
Shares of traditional retailers like department store operator Myer Holdings and electronics firm JB HiFi have fallen sharply since Amazon confirmed plans to enter the market in April.
Many of these companies have been slow to develop what retail analyst and chief executive of the Retail Doctor Group, Brian Walker, describes as an "omni-channel offer", linking their physical stores with websites and distribution channels.
Lagging technology
Online shopping makes up between 8% to 13% of total retail sales in Australia.
Among the factors frustrating growth of the sector has been poor access to high-speed broadband in parts of the country.
In the most recent State of the Internet survey, US internet firm Akami ranked Australia 50th in the world for internet speed.
The country's largest infrastructure project - the $49bn rollout of the National Broadband Network - has been hamstrung by delays, policy shifts and cost overruuns.
Australia's sheer land size coupled with low population density makes the logistics of retail delivery expensive. The country is the size of the mainland US, with one-thirteenth of its population.
Mr Walker said Australia was "not an easy country" for e-commerce businesses.
"It's geographically spread out [and] it's relatively expensive for shipping and freight."
Retail woes
The retail sector has seen other challenges.
Bricks-and-mortar retailers have been struggling amid tough competition, and price discounts have failed to entice customers facing low wage growth and high levels of debt.
Australian Retail Association executive director Russell Zimmerman said small businesses have seen rising costs and increased global competition, as well as the challenges of the "24-hour market place".
But he believes Amazon's Marketplace - which has more than 300 million active users - could provide a lift to the Australia sector.
The platform will offer "millions" of products from well-known Australian brands, as well as smaller local business selling on the Marketplace platform.
"The majority of Australian retailers view Amazon's platform as a supplementary channel to their current retail offering," he said.
Still, not all have been impressed with Amazon's first day's trade. Local media reported complaints of limited product range and uncompetitive prices.
OPINION
AMAZON Australia has launched after enormous hype to a distinctly underwhelmed reaction from sceptical Aussies. Potential customers have taken to social media to complain about the higher or similar prices to other retailers, the lack of range and ugly interface.
But I’m here to say you’re all wrong.
As a former resident of the UK, where Amazon launched in 1998, I can vouch for the fact the e-commerce website is one of the most reliable shopping destinations in the world.
And while web-savvy Australians have become adept at finding other sources for our most coveted products, the online giant really does make life considerably easier.
I don’t want to be an apologist for a corporate giant facilitating our heedless consumerism, but let’s face it, we’re already troublingly materialistic. And Amazon can actually help you waste less time shopping.
Amazon has chosen its initial battlegrounds carefully. Look for impressive deals on international beauty brands, cult homeware, popular kids’ toys, gadgets and computer games and consoles.
A Katy Perry Covergirl Matte lipstick is $13.92 on Amazon or $17.95 at Priceline. A FoodSaver Fresh 6-Piece Container Set is $62.25 on Amazon and $82.75 on eBay.
Huggies Ultimate nappies 4-5kg (75-pack) are $28 on Amazon and $33 at Woolworths.
A three-pack of cult product Korean Honey Butter Chips is $11.25 with free shipping on Amazon, or $6.58 + $11.85 postage on eBay.
Mattel Games’ popular Bloxels toy is selling for $29.97 with free delivery, but $55.90 on eBay. A Fisher-Price My First Thomas & Friends train is $12.97 on Amazon and $15 at Kmart.
PlayStation 4 game Call of Duty WWII is $39.99 + $5.56 on Amazon and $69.00 + $6.95 shipping from the Gamesmen. A Nintendo Switch console is $399 on Amazon compared with $499 at Target.
But Australians have slammed the launch as a “wasted opportunity” with “ridiculously high” prices compared with stores such as JB Hi-Fi, Officeworks, Coles or Booktopia. Shoppers pointed out you can buy an iPhone 7, Kindle Paperwhite, Samsung hard drive, Pete Evans cookbook or a Lenoxx DVD player significantly cheaper at other stores. In the extended build-up to its launch, Amazon touted up to 30 per cent cheaper prices, and that clearly isn’t always the case.
TOP DEALS ON AMAZON AUSTRALIA
• Maybelline New York The Blushed Nudes $16.19 + free delivery if you spend $49 compared with $21.99 at Chemist Warehouse.
• Fitbit Flex 2 $66 + free delivery compared with $89.95 at Fitbit.
• Mattel Scrabble $16.97 + free delivery if you spend $49 compared with $25 + $9.95 shipping at eBay.
• FIFA 18 for Xbox One $39.00 + free delivery if you spend $49 compared with $74.99 + free delivery at ozgameshop.com.
• Star Wars Battlefront II for PS4 $39.00 + free delivery if you spend $49 compared with $55.00 + $4.99 delivery at Mighty Ape.
• Final Fantasy XII The Zodiac Age PS4 $28.00 + free delivery if you spend $49 compared with $30.99 + $1.99 shipping at ozgameshop.com.
• Samsung 23L Microwave 1000W ME83D-1W $112.26 + $15.50 delivery compared with $135.00 at Winning Appliances.
• Philips Food Processor 750W model HR7762/90 $126.48 + free delivery compared with $ 136.34 at Billy Guyatts
No comments
Post a Comment