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Amazon in Australia: the winners and losers

 

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The ‘disruptor’ tag has been a business buzzword for quite some time in Australia. From small start-ups to businesses looking for a facelift, all are competing for the coveted disruptor title.

While not a new kid on the block in any sense, the world’s largest internet retailer, Amazon, is set to cause the biggest disruption to Australia’s ecommerce sector in recent memory. The global giant is rumoured to be coming to our shores shortly and will shake up the retail landscape as we know it.

Most Australians associate Amazon with books and for good reason given that’s all they currently sell here. If you want to buy anything else you have to go to Amazon marketplaces such as the US or UK, but that’s all about to change in a big way.

Reports suggest Amazon will put down permanent roots here in Australia in the imminent future, with insiders speculating the business is currently scoping the country for warehouse spaces and could be adding to its arrangement with Parcelpoint to possibly increase the 1,000 pickup points they added in December 2015.

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When this full-service offering launches in Australia it will open doors for local and international ecommerce merchants, local businesses and individuals to sell to the Australian public.

Let’s have a look at some current facts and figures:

  • Amazon boasts 11 marketplaces across North America, Europe and Asia.
  • It has more than 300 million active customers who are located in 180 countries.
  • In 2015 Amazon’s network of 125 fulfilment centres delivered more than one billion items to customers around the globe.

So, who are the winners and losers of this potential new market entry?

Australian online marketplace sellers
Verdict: Very good news

Thousands of people have already realised the potential of Amazon, not only in making money for them but also in improving their lives. There’s no doubt existing local Amazon sellers will be keen to be the first merchants on Amazon Australia to ensure they get first mover’s advantage and benefit from the buzz of the new platform before competition increases. These ecommerce sellers also have the experience, products and relationships to really hit the ground running.

International online sellers
Verdict: Reasonably good news

Fulfilment by Amazon (FBA) means online sellers on the other side of the world can ship directly to Amazon’s Australian warehouses, often from China. FBA will then take care of warehousing and fulfilment. Australia’s population of less than 25 million may be small compared to the larger markets of Europe, the US, the UK or Asia, however it becomes another opportunity for sellers based internationally to tap into a nation of considerable wealth.

Australia possesses a somewhat high propensity to buy online, with 7,630,000 Australians aged 14 and above (almost 40 per cent of the population) buying one or more products via the internet in an average four weeks.  The Aussie dollar was also at parity or even valued higher than the US dollar between 2010-2013, which saw many Australians flock to internet retailers in the US and shape our online purchasing habits indefinitely.

Australian retailers
Verdict: Bad news

Large retailers like Harvey Norman and JB HI-FI will no doubt feel the pain of Amazon’s arrival. Think about the impact that Uber has had on the taxi industry—Amazon’s arrival will similarly shake the foundations of the retail industry in Australia.

While it is early days and nothing has been confirmed by Amazon, some analysts are predicting Amazon could generate up to $4 billion in the Australian retail market, taking a large chunk of the electrical goods market in particular.

This does represent an opportunity for smaller businesses to expand their business online as Amazon is commonly seen as an easy transition into the ecommerce space.

The local consumer
Verdict: Great news

Choice always means better prices and more options. Guaranteed delivery within two days makes this marketplace even more desirable. They even offer streaming services—and who doesn’t love a music streaming service? Australians have been taking advantage of marketplaces like eBay for years now, so adapting to Amazon won’t be difficult for many local consumers.

Final thoughts

At World First we have firsthand experience working closely with Amazon for more than five years. From helping Australians sell on Amazon to bringing their foreign currencies home and advising new sellers, we have seen the inner workings of the world’s largest online marketplace. Undoubtedly there are going to be winners and losers from the impending move and it’s going to shake up the market more than we have seen in many years. It’s going to be an interesting ride so buckle up and hold on tight!

Final Verdict: hold onto your hats

Ray Ridgeway is the chief commercial officer, Australia at World First. 

 

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