Analysts say Amazon could begin trading in Australia starting tomorrow
Amazon’s entry into the Australian market could be closer than expected, a market research report states.
The online shopping giant may have released an email to its third-party sellers to prepare for an Australian soft launch by 2pm on Thursday, business information research group IBISWorld reveals.
IBISWorld says this could support the speculation that the company will start trading this Black Friday (November 24) or Cyber Monday (November 27).
The company is poised to take advantage of increased pre-Christmas spending, with local retailers on “high alert”, IBISWorld analysts state.
Also read: Will Amazon’s arrival change Australian T&L landscape?
Amazon’s imminent arrival into the local market is set to shake up the retail sector, with the company planning to offer huge discounts, IBISWorld senior industry analyst Kim Do says.
“The company intends to challenge domestic retail prices by offering items for 30 per cent less than domestic retailers,” she says.
“This is expected to appeal to price-conscious Australian consumers, and is likely to affect local retailers that have found it difficult to adjust to a shift in consumer spending behaviour over the past five years.”
Amazon is likely to drive growth in the Australian e-commerce sector with an estimated 13.5 per cent annual growth over the five years to 2017-18 to reach $20.1 billion, IBISWorld data suggests.
“Although Amazon has largely kept its plans for the Australian market under wraps, IBISWorld expects Amazon will be prepared to make initial losses to help it gain market share within Australia’s online retail sector as quickly as possible,” IBISWorld states.
Do suggests that Amazon Australia will focus on offering low prices, extensive range and fast delivery.
However, its ‘prime shipping’ service may not be feasible in the Australian landscape in the short to medium term, she adds.
“…to be successful in Australia, Amazon’s current business model will need to be adapted to the Australian market,” Do says.
“For example, Australia’s large geographical size and dispersed population will lead to higher distribution costs compared with Amazon’s home market in the United States.”
Also read: Amazon presages change and opportunity says CP’s Hooper?
IBISWorld data suggests that department stores and electronic goods merchants could be the two worst-hit retailers, with industry revenue expected to decline by an annualised 0.9 per cent over the five years through 2017-18.
While Amazon is expected to disrupt the local retail sector, anaysts believe its entry will also bring some positive changes to Australia’s e-commerce landscape, including increasing the uptake of online shopping.
Currently, Australian online sales account for an estimated 7.4 per cent of total retail spending, but by 2022-23 this figure is expected to nearly double, IBISWorld data suggests.
Researchers believe that Amazon’s arrival can push innovation among local retailers through “digital transformation, logistics optimisation and multichannel platforms”.
An earlier independent study carried out by CouriersPlease (CP) supports this view.
The CP study revealed that 59 per cent of the 193 online retailers that took part in the survey saw Amazon’s entry as a chance to expand their reach across Australia and beyond.
Amazon can also provide retailers another platform to sell their goods, the research notes.