By Kymberly Martin
As questions around operations remain.
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.
“How are they going to distribute big appliances to towns like Kalgoorlie or Cairns? We have a store in nearly every town in Australia so if Amazon has plans to set up warehouses in Australia how long do you think that will take to organise? How will they look after warranties?
“Amazon has never made money out of retail, it pays no tax and is the only business that has been going for 20 years and never made any money. It is the strangest business that was ever created.
“Amazon does not present a big issue for me. Everyone hikes it up that online is great but if you look closely at the figures there is not a lot of business coming through online among retailers in Australia,” Harvey said.
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.
Hammerman said he believes the online retailer will set up here in September.
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.
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.”
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.
A quick check of the Amazon appliances website and some familiar brand names appear including Samsung, Bosch, Haier, Honeywell and LG in kitchen appliances and iRobot, Electrolux and Bissell in vacuum cleaners, however house brands dominated.