Amazon Eyes Australian Grocery Sector

E-commerce titan Amazon has taken action on its interest in Australia’s grocery market, with the renewal of the trademark for its supermarket chain at Australia’s office of intellectual property in December, according to Business Daily.

In addition to this, Amazon also registered its checkout-free store, Amazon Go, with IP Australia in May 2017, and it has also for the past decade held an Australian trademark for its Amazon Fresh business.

While Amazon’s Australian launch may appear to have been lacklustre, make no mistake, it’s looking towards expanding its presence here, its market share and its categories, and that includes grocery.

While the Amazon failed to confirm whether or not grocery would be launched in Australia when an Amazon spokesperson spoke to Power Retail in November, its recent actions clearly tell us that grocery is something that it is definitely considering.

On Tuesday, Woolworths CEO Brad Banducci was talking with tech startups in New York, which will likely benefit up its tech hub WooliesX and better prepare it for an Amazon defence strategy.

Coles and Woolworths currently dominate the online grocery sales industry in Australia, which a report from investment bank UBS says isn’t expected to be affected much should Amazon decide to make moves on grocery locally, The report outlines reasons such as high delivery costs in Australia, our supermarkets’ tight relationships with suppliers as well as strength in store networks.

This is despite the earthquake-sized shock the grocery retail sector underwent in June when Amazon announced it was buying organic grocery chain Whole Foods Market, making it its biggest acquisition yet on the grocery market, and the largest in its retail history.

Amazon’s acquisition of Whole Foods indicated a change in the e-commerce giant’s way of thinking and its interest in revving up its omnichannel capabilities. It’s a strong indication of its global intention of increasing its revenue base and given its recently renewed grocery trademarks in Australia that is cause for concern for our grocery sector.

While some analysts maintain that the extensive supply chains and strong physical store network of Coles and Woolworths would help ensure groceries remained strong when/if Amazon starts trading in Australia, there is nothing stopping them from doing a similar Whole Foods Deal here.

There is speculation that Amazon could enter into a joint venture with Metcash-owned IGA supermarkets.

“Amazon clearly wants to be in grocery, clearly believes a physical presence gives them an advantage,” Wedbush Securities analyst Michael Pachter told Bloomberg when the Whole Foods deal was announced.

“I assume the physical presence gives them the ability to distribute other products more locally. So, theoretically, you could get five-minute delivery.”

Moves by Coles and Woolworths in the last year suggest similar thinking around this, where both supermarkets have taken steps to increasingly expand their online presence. Coles opened its first online-only dark store in inner-city Melbourne in June 2016 and IBISWorld expects more of these to be opened over the next five years. Meanwhile, quietly unveiled its new e-commerce platform last year, and it’s expected to open four new dark stores for online order fulfilment by the end of 2018, in defence of Amazon.

In 2017, both supermarket giants also began rolling out click-and-collect and trialling a raft of delivery options. In August, Coles started a home delivery trial with hi-tech taxi service, Uber, then in September, it added another twist to its online order delivery service, teaming up with bicycle delivery service Deliveroo, to offer 30-minute grocery home delivery on online orders.

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