E-commerce giant Amazon has now confirmed that it will be launching in Australia in the very near future, and will be offering both a retail and marketplace service for its customers. Although no official launch date has been confirmed, head of the Australian company Rocco Braeuniger has advised that it plans to be open for business in time for Christmas.
Amazon Australia will follow the company’s existing business models. The retail service will be managed by Amazon, and they will be responsible for setting prices, buying products and managing shipping and deliveries. Amazon market place will allow third party retailers to list their own products and manage their own deliveries in a similar way to eBay.
“More than half of Amazon products are sold over Marketplace,” Rocco Braeuniger said. Since announcing plans to launch Marketplace in Australia earlier this year, Amazon has already managed to sign up thousands of sellers. Australian consumers can already purchase goods from Amazon from overseas, but the new local warehouses will reduce delivery costs and make it more accessible for the public.
Will Amazon harm Australia’s retail industry?
It’s thought that retail stores, and particularly department stores will be hard hit by the launch. Amazon has a market capitalisation of $US460 billion, compared with Australia’s biggest retailers Wesfarmers, Woolworths, JB Hi Fi, Myer and Super Cheap having a combined worth of $80 billion. According to Morgan Stanley, the online store could have a massive impact on retailers, claiming that:
“We believe that Amazon won’t rebase prices in Australia — based on our analysis, Australian retail prices aren’t all that much higher than those in other developed markets. Australian retail prices have reduced considerably in recent years and are now only at slight premiums to the US, so we don’t see Amazon compressing Australian prices. The impact on retailers will be more of share loss and ensuing operating deleverage as consumers prefer the ease of ordering on Amazon with one-or-two-day delivery offered for free under Amazon Prime.”
Could this be a boost for small businesses?
Despite fears among large Australian retailers, many small businesses have welcomed the news. It’s believed that many of these retailers see the move by Amazon as an opportunity for them to grow, increase their sales and improve the level of service they can provide. It also offers them a chance to compete against larger businesses by reaching more customers.
Rocco Braeuniger, head of the company has already said that the move aims to help these types of businesses, claiming that “We want to be Earth’s most customer-centric company,” Mr Braeuniger told a crowd of about 500 people, comprising mainly small business owners wanting to list their products on Amazon. We will bring thousands of jobs into Australia, we will invest millions of dollars, and we will help sellers to access millions of customers here and globally.”