After months of speculation we finally saw the launch of Amazon Australia in December 2017. The hype surrounding the launch was rather intense, with the Australian Financial Review (AFR) suggesting the arrival would “trigger the biggest shake-up in retail in a generation.”
Australia is a great market to tap in to, as in 2016 Australians spent about $20 billon online. Which was about 7% of the total retail sales, according to the AFR. Online sales are growing by over 10% annually. It could easily be the case that by 2020 online sales in Australia could be over $30 billon, with 1/3 of that spending through Amazon.
What is Amazon Australia?
Amazon Australia is the Australian version of Amazon US, a global marketplace with over 300 million active users in over 189 countries. Known for their cheap prices and fast shipping, Amazon began selling books and now sells ‘literally everything’ from electronics and clothing to groceries through Amazon Fresh.
Department stores dying?
With tech products expected to account for the majority of Amazon’s Australian sales, most analysts say the retailers feeling the launch hardest will be Australia’s big retailing department stores, companies such as Harvey Norman, Myer, David Jones and JB HiFi; due to Amazon’s focus on competitive pricing.
Benefits for small local businesses?
One of the platforms launched was Amazon Marketplace, which has a lot in common with eBay and Etsy. The main difference is its execution by Amazon, which gives local businesses the access to Amazon’s warehousing, storage and delivery services. It costs $50 a month to sell through Marketplace, with Amazon taking a commission of between 6-15% of the sales price, depending on the product category.
International exporting with Amazon?
Amazon could also give local businesses exposure to Amazon’s international customer base, not just within Australia. If Amazon provides Australian businesses with reasonable delivery cost options to send products to other Amazon distribution points in the world, there is a new and potential lucrative export market for Australian businesses on the horizon. The current cost to send products overseas from Australia is a limiting factor to the quantity of goods that small businesses are able to export.
It is going to be interesting to see how the launch of Amazon Australia will impact on the online retail sector.
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