What it means for local retailers.
March 1: Wesfarmers MD fears power of Amazon
Wesfarmers group managing director Richard Goyder has warned of the dangers of US online retail behemoth Amazon to local retailers. Speaking at a retail forum in Sydney, Goyder said Amazon will “eat all our breakfasts, lunches and dinners”, unless Australian retailers become more innovative and barriers to competition are removed.
“We’ve got big competition online and through a physical presence…we are in a disruptive, disrupted world,” Goyder told about 450 retailers at the Retail Leaders forum. Goyder said online retailers such as Amazon, Google and asos.com could trade 24 hours a day, seven days a week and 365 days a year, while Australian bricks and mortar retailers, including Wesfarmers’ Bunnings, Kmart, Target, Coles and Officeworks chains, were restricted by “archaic” trading hours and excessive regulation.
April 29: Amazon sales soar 28%
Amazon’s electronics and other general merchandise category sales grew 31% year-on-year in the international market, and 32% year-on-year in the North America market, which helped push net sales up 28% to US$29.1 billion in the first quarter.
Operating income was US$1.1 billion in the first quarter, compared with US$255 million in first quarter 2015. Net sales for the media category, comprising of video games and consoles, books, music, and more, increased by 7% in the international market and 8% in the North America market.
May 27: Second largest CE retailer
Amazon is now the second largest retailer of consumer electronics in the world, behind only Best Buy. According to TWICE Magazine’s annual Top 100 Consumer Electronics Retailers report, it is less than 17 years since Amazon launched its first online tech store.
In the process, the company has leapfrogged multitudes of mighty electronics merchants like Apple, Target and Sears, and twice.com argues that this helped vanquish others, like Circuit City and Sony Stores.
November 7: A retail expert perspective
Amazon will be opening its physical doors to Australian consumers in September 2017. Distribution centres and performance centres will be in every state with stores primarily in regional areas, and prices are expected to be as much as 30% cheaper than competitors, according to media reports.
Speaking to Appliance Retailer, Brian Walker from the Retail Doctor Group expects Amazon to be an “aggressive player” who will challenge existing retailers, particularly the independents and smaller retail businesses.
“Retailers will be forced to dial up their point of difference and customer service. They will need to invest their capital in the omni-channel offering, staff training, pre-sale activity and post-purchase activity to give consumers a compelling reason to shop with them,” he added.
December 7: Amazon Go creates unique shopping experience
Amazon has created market-leading technology so consumers no longer need to line up at the checkout – all they need is an Amazon account, supported smartphone and the free Amazon Go app. With its Just Walk Out Shopping experience, the Amazon Go app allows shoppers to simply enter the store, take the products they want, and go.
Its checkout-free shopping experience is made possible by the same types of technologies used in self-driving cars: computer vision, sensor fusion, and deep learning. Just Walk Out technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. When consumers are done shopping, they can just leave the store. Shortly after, their Amazon account will be charged and a receipt will be sent.
December 16: Gerry Harvey and others speak out
The prospect of Amazon bringing its online juggernaut into Australia is not giving Harvey Norman chairman, Gerry Harvey, any sleepless nights.
“I see them as a minor threat,” he told Appliance Retailer, “small electrical devices might be affected and it will probably affect a number of retailers and put them out of business but I cannot see Amazon taking on major appliances. Very few people buy our furniture and bedding online and only about 3% of our appliance sales are online so if they get half of our online business they will get 1.5%, but I don’t expect they would even get half.”
2nds World
When a giant like Amazon comes to a fairly small retail market like Australia it must have an effect, 2nds World managing director, Peter Hammerman said. “Do I think they will be disruptive, yes no question, but to what extend will depend largely on the support of local suppliers.
“I remember we got a bit nervous when Masters announced they were bringing in appliances which did not work for them. But I think Amazon is different. It is a very aggressive company with big pockets although they don’t seem to make money as the loss they announced for six months was US$256 million.
“The advantage we have in the market is that Amazon do not sell factory seconds, refurbished stock or premium brands, at least they have not in countries where they currently operate. At the end of the day, I don’t think they are after us, they have the sights set more on the food market, homewares and small kitchen appliances.
Rawsons Elite Appliances
Jon Pysing, sales director at Rawsons Elite Appliances told AR for Amazon to succeed in Australia it would need to have the support of the major appliance distributors. “It would need trading rights to sell on our turf,” he said.
“If you are the importer it will be necessary to hold all the approvals like certificates, warranties, etc. I think major appliance brands that are here already will take the view that they don’t need to deal with Amazon to distribute their product, although you might get the occasional supplier wanting to offload run-out models. Like Aldi, Amazon does sell in-house brands and occasionally named brands but most of what Amazon sells in America cannot be shipped into Australia,” Pysing said.
Myer
A Myer spokesperson said, “Today’s retailers have to be able to compete on a global stage, as technology shortens supply chains, opens up new markets, and empowers the customer. Myer is one of Australia’s leading omni-channel retailers, with a good understanding of the local market, a strong physical network to leverage into online retail and a much loved brand that resonates with Australian shoppers.”
Kogan
In a recent interview with AR, kogan.com CEO, Ruslan Kogan took a different view: “We see Amazon as a real opportunity to supercharge the growth of the Australian online sector and deliver more choice to Australian consumers. We are one of the biggest sellers on eBay Australia and would be one of the biggest sellers on Amazon if they were to open local operations.” Kogan acknowledged that online retail is still under-represented in Australia compared to other developed economies. “It’s predicted that the local online retail market will deliver 11.5% compound annual growth between now and 2019,” he said.