Amazon has officially launched in Australia
As of today, millions of products in over 20 categories ranging from clothing, shoes, beauty and homewares, to electronics, tools, toys and sports, are available for purchase on Amazon.com.au.
Hundreds of thousands of products are ready to ship from the online retail giant’s 24,000sqm warehouse in Dandenong South, including big name brands, such as Puma, Lego, L’Oreal and Sonos, and local favourites, like Bonds and Sol-Sana.
Meanwhile, thousands of Australian brands and businesses are selling items through Amazon Marketplace, including Mitch Dowd, Matt Blatt, Styletread and Costumes.com.au.
According to Amazon, this represents one of its biggest initial launches to date, with even more products, services and delivery options to come in the months and years ahead.
“Focusing on customers and the long-term are key principles in Amazon’s approach to retailing,” Amazon Australia’s country manager Rocco Braeuniger said in a statement.
“By concentrating on providing a great shopping experience and by constantly innovating on behalf of customers, we hope to earn the trust and the custom of Australian shoppers in the years to come.”
FBA and Prime still to come
Notably absent from today’s launch are Fulfilment by Amazon (FBA), a warehousing and fulfilment solution for Marketplace sellers, and Amazon Prime, a loyalty program that offers members unlimited free shipping on eligible products, video and music streaming services, access to exclusive products, among other benefits.
Amazon Prime is set to launch in mid-2018, while FBA is said to be coming soon.
Sellers that use FBA in other markets say it’s valuable for several reasons, including lower freight rates, thanks to Amazon’s economies of scale, and intelligent distribution.
FBA allows sellers to send their products to one warehouse and have Amazon distribute the right amount of products to other warehouses based on predictive analytics.
This ensures faster delivery nationwide, with the flow-on effect that sellers are more likely to be eligible for Amazon Prime and ‘win the buy box’, an add-to-cart shortcut associated with higher sales.
Amazon has not said when or where it plans to open other warehouses in Australia, but Braeuniger confirmed the company plans to invest hundreds of millions of dollars in the country and create thousands of new jobs.
The launch today confirms that electronics, fashion, sporting goods and toys will be among the hardest hit categories, with retailers like JB Hi-Fi and Harvey Norman bearing the brunt of Amazon’s arrival. Categories such as auto and grocery are unlikely to see an impact in the short-term.
The e-commerce giant is already selling several big toy brands, such as Barbie, Batman and Hot Wheels, for up to 30 per cent off the recommended retail price. Calvin Klein men’s and women’s underwear is up to 30 per cent cheaper on Amazon, and Sunbeam kitchen appliances are up to 20 per cent cheaper.
According to a recent UBS report, the e-commerce giant could steal 2 per cent of retail sales within five years of entering Australia, growing revenues from more than $400 million to about $3.5 billion by 2023.
But price is just one way Amazon gains a competitive edge. FBA and Prime are seen as key drivers of its success by creating a positive feedback loop between customers, traffic and sellers. Amazon refers to this as the ‘flywheel’.
As Braeuniger explained at a recent event for potential Marketplace sellers, the company’s focus on customer experience – through services like Prime – helps drive customer acquisition and retention, which in turn generates traffic, which makes the platform more attractive to sellers.
As more sellers sign on, the wider range attracts more customers, making the flywheel spin even faster.
Once these services are available in Australia, retailers may begin to see the true impact of Amazon.
Until now, the biggest question mark surrounding Amazon was its delivery offering in Australia, with some sceptics wondering whether the retail giant could support free same-day or even two-day delivery nationwide.
We now know that Amazon has partnered with several shipping carriers to offer a range of delivery options in Australia, depending on customers’ locations.
Those in Sydney, Melbourne, Brisbane, Adelaide and Canberra can pay $9.99 for priority delivery (1 business day) and $5.99 for expedited delivery (2-3 business days), while those in Perth and other areas of VIC, NSW and SA can pay $11.99 for priority (1-2 business days) and $7.99 for expedited delivery.
Free standard delivery (3-7 business days) is available on orders over $49, except in remote areas of NT, QLD, WA, SA and TAS, where delivery may take longer than 10 business days.
These delivery options are limited to orders sold and fulfilled by Amazon for now, but the e-commerce company said they will be available for more items in future, when Marketplace sellers are able to use FBA in Australia.
More delivery options, including Prime Now – a same-day delivery service in metro areas – are expected to become available in future.
While Amazon and many of its service providers have talked up the benefits of selling through Amazon Marketplace, there are also risks.
Sellers that don’t meet Amazon’s strict customer service requirements can have their account shut down without warning. And some sellers have been known to sabotage the competition by paying people to post a slew of negative reviews, triggering an account shut-down.
Another area of real concern for sellers is the possibility of competing directly with Amazon. The e-commerce giant is notorious for identifying best-selling products on Marketplace and launching a private label product in that space at a lower price.
One potential drawback that has not been discussed, however, is the competition from overseas brands and businesses. Just as Australian Marketplace sellers will be able to reach new markets through Amazon Marketplace, existing sellers in the US, UK, Europe and elsewhere, can now easily reach Australian consumers.
Once FBA launches, these sellers will be able to send stock to Australia, store it in Amazon’s warehouses and ship it to customers remotely. In many cases, they have years if not decades of experience selling on Amazon. And on a platform where reviews are everything, they could have a significant advantage over local sellers.