AtlasTrend’s investment team look at the ‘Amazon effect’ on Australian retailers since the world’s largest retailer launched down under. 

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After a heavily publicised launch of Amazon in Australia, the world’s largest online retailer quietly opened in December 2017 with little fanfare.

Some termed it as ‘Amazon Light’ without many of the features (particularly Amazon Prime) available in the U.S. and other major markets that makes Amazon such a unique shopping experience.

However, it’s obvious Amazon is launching in stages.

Along with continually adding to the number of products being made available on its Australian site, Amazon began offering businesses its Fulfilment by Amazon (FBA) service in February 2018.  FBA allows companies to outsource their warehousing, fulfillment and delivery to Amazon.

More recently, Amazon announced that it had signed a lease for its second Australian fulfilment centre in Moorebank, Sydney (the first is in Dandenong, Victoria) with plans to start operations in 2H 2018.

The timing coincides with the expected launch of Amazon Prime, the hugely successful subscription service that Amazon offers its customers.

For a flat fee each year, Amazon Prime members will get free delivery on all online purchases (in some cases within the same day), as well as free/subsidised rates in other Amazon services such as Amazon Video, Amazon Music and Kindle.

We believe this will be the real, substantive launch of Amazon in Australia given the success of Amazon Prime in overseas markets.

There are now more than 100 million Amazon Prime members globally, and research from Consumer Intelligence Research Partners shows Prime members spend US$1,300 per year versus US$700 for non-Prime members.

Most recently, Amazon has announced that all Australian shoppers will no longer be able to shop from its U.S. website and other international sites; users will be re-directed to its Australian site from 1 July 2018 onwards.

Ostensibly, Amazon is responding to the Australian Government’s new GST rules on all online purchases including from overseas, but it is also an attempt to grow the use of its Australian site as it ramps up and launches other services such as Amazon Prime.

In contrast, eBay announced they’re working on a way to collect GST on overseas sales from foreign sellers without restricting any sellers to the Australian public.

With a more established and loyal user base in Australia, eBay is wary of alienating customers and is instead doubling down to compete with Amazon and other Australian retailers.

It announced the launch of eBay Plus in June 2018, which will give users unlimited deliveries and returns on new items bought from its Australian retailers for an annual $49 fee – it’s effectively their version of Amazon Prime.

 

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