Amazon AU Debut Underwhelms, But Watch Out Australia

On Tuesday, Amazon launched its operations into Australia selling “millions” of products across 23 categories – this initially brought a mixed bag of feelings amongst retailers, including scepticism, excitement and dread.

Yesterday, the country saw online consumers take to social media to voice their underwhelmed feelings, with shoppers pointing out collegial pricing and bland offerings.

This has left local retailers relieved as speculation and predictions around Amazon undercutting local prices by 30 percent were proven wrong, with Amazon’s prices more expensive on some merchandise and cheaper on others.

Not only were range and price disappointing, Power Retail noticed a pair of shoes listed in Amazon’s cookware category.

The negative backlash doesn’t seem to have deterred Amazon, however, with the company contacting Power Retail this morning saying its retail offering is what really showed promise on day one of its Australian launch. “Yesterday was day one for our retail offering in Australia. We will be working hard today and in the long term to continue to enhance our offering and to provide customers with an ever-increasing selection of products at low prices,” said Rocco Braeuniger, country manager of Amazon Australia.

amazon Australia lacklustre launch debut

 

amazon Australia lacklustre launch debut

 

Some retail experts believe that while Amazon’s short-term impact may be sluggish, it will create a slow burn into the Australian retail economy, so it’s only early days.

Paul Greenberg, founder of NORA, says that the company’s lack of communication to the media and dismal PR has created “mismatched expectations” for consumers.

I have been on the record as saying that Amazon’s dismal lack of communication with the Australian media, industry, industry groups and consumers will lead to mismatched expectations, especially amongst customers. And this is proving prophetic. Consumers were expecting too much, benchmarking their expectations to the full-service offers of the US and Europe,” explains Greenberg.

“And the negative Amazon PR will run throughout the Christmas and new year period. Nonetheless, whilst we have all overestimated Amazon in the short term, in the long term they will rise to the occasion and change the Australian retail landscape.

Vocal opponent of Amazon and executive chairman of Harvey Norman, Gerry Harvey, spoke on Network Seven’s Sunrise morning show yesterday saying that he was sceptical about Amazon’s claims to be the cheapest and to deliver in time for Christmas.

“Who would order something online two weeks before Christmas?” he questioned. Harvey says he’s not scared of Amazon as his company doubles down on its physical presence, recently opening two new stores in Singapore and Malaysia. “We’ve got Amazon against us over there. We’ve got Alibaba… two or three others. Our sales are going up. We are here to take Amazon on.”

Harvey, however, does say that local retailers could be in trouble if Amazon does “predatory pricing” where they go out and sell at a loss to send retailers broke. He also criticized Amazon’s failure to pay taxes as a result of never making profits over its 23-year history.

In addition, Harvey  said while some of its suppliers have stuck with Harvey Norman, some have gone onto supply to Amazon. Harvey confirms the retailer will be matching prices with Amazon provided it’s not “way under cost”.

One thing’s for sure – Amazon’s launch into Australia is still very early days. As more sellers join its marketplace, the product range and categories it offers locally will grow and prices will get more and more competitive. Volume in sellers is where Amazon’s power lies, and as this increases, it’s pricing algorithms will kick into gear, and that’s when the real traction in market penetration will begin.

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