This time next year we will have already had a months worth of the new Amazon, it claims will destroy the Australian retail industry. The e-commerce giant plans on launching in Australia as we know it elsewhere in the world with prices it claims will be 30% cheaper than local stores.
This doesn’t seem to simply be a marketing threat either, because a special briefing with the Australian Financial Review last week revealed that the company will be researching and collecting price points on everything before setting prices at a 30% discount. Their motto for Australia’s high prices is, “your margin is our opportunity.”
Amazon already has plans in motion to bring us more affordable products and services with a focus on electrical items, to give JB Hi-Fi and Harvey Norman a run for their money. Other sectors will also be in the firing line such as; media, sports, clothing, toys, shoes, car parts and office supplies for example.
The company will be building distribution and performance centres in every state of Australia next year. We can all expect the usual merchandise seen on other countries Amazon sites, plus Amazon Fresh will also be arriving at the same time. The person responsible for rolling out Amazon Australia said, “we are going to destroy the retail environment in Australia.”
I can already hear the shrieks of excitement from our deal hunters and money saving gurus. Australian retail margins are quite high compared to the rest of the world, with supermarket retail margins being among the highest in the world. If you have been jumping on the ALDI bandwagon for cheaper prices then you will be happy to hear that the CEO of Wesfarmers is also worried that if Australian retailers don’t smarten up their act, Amazon will have them for breakfast.
It’s all very good and well for the company to make claims such as those above, however, the greatest hurdle will be whether or not the Australian public recognise the brand enough to allow it to capture their dollars.
Citi Research estimates that this isn’t hot air being blown either and have forecast how Australian companies with high margins may be affected after the Amazon Australia launch. Tell us what your thoughts are on Amazon increasing its Australian offering.