Amazon underwhelms despite “landmark” launch
Several ASX-listed retailers that saw investors sell off company shares ahead of Amazon’s launch, including JB Hi-Fi, Harvey Norman, Myer and Super Retail Group, gained on Tuesday as consensus grew that Amazon may not have the impact so many expected.
These reactions stand in stark contrast to a statement issued by the e-commerce giant earlier today, which revealed that first-day orders on Amazon Australia were higher than for any other launch day in Amazon history.
According to the retailer, tens of thousands of customers visited the website during the first 24 hours and placed orders across all 23 categories.
Rocco Braeuniger, country manager of Amazon Australia, thanked Australian consumers for making it a “landmark day”.
“From early in the day, we experienced visitor numbers that far exceeded our expectations,” he said, adding that the company will be expanding its offering in the days and months ahead.
“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.”
Amazon Marketplace seller, Nathan Huppatz, founder of Costumes.com.au, confirmed to Internet Retailing that he saw a “reasonable” amount of sales yesterday, amounting to about 20 per cent of what the online retailer typically does on Ebay.
“It’s an encouraging start. We don’t have our full range of products listed either,” he said.
At the time of writing, Huppatz has not had any further sales – either overnight or this morning. But he noted that it’s “very early days”.
So why is there such a big gap between Amazon’s version of events (and its sellers) and public perception? Analysts chalk it up to high expectations about Amazon’s offer on price, range and delivery.
“The challenge that [Amazon] faced at a first point that there was just such a high level of expectation around their launch it was always going to be difficult to see how they were going to exceed that,” said Ben Gilbert, retail analyst at UBS.
“The delivery offer wasn’t necessarily that much more attractive, particularly in the context of JB Hi-Fi launching same-day and Shipster launching.”
But a deep dive into Amazon’s toy offering at launch shows it’s not always easy to compare Amazon’s offer to the competition.
According to data compiled by Ugam Analytics, Amazon launched with 47,650 toys, well over the 2,716 at Kmart and 2,174 at Big W.
When it came to specific brands, like LEGO, however, the discount department stores offered twice the assortment.
Then again, about half of the overlapping LEGO products were cheaper on Amazon than at either Kmart or Big W.
Huppatz said that while the retailer might technically have “millions” of products for sale, a large chunk are books and e-books.
Still, believes things will improve over time.
“For day one, no doubt it was probably one of their best launches. A lot of the retailers on Amazon Facebook groups were posting as their sales came in. There was definitely seller activity,” he said.
He also suggested that pricing will become sharper, as more sellers sign up.
“That competition between sellers will increase and prices will come down.”
Meanwhile, Gilbert cautioned that everything will change when Prime arrives next year.
“I’m not discounting the fact that they’ll have a big impact, I just think it will take time and the big game changer will be with Prime because when they get you into that point where you’re part of the Amazon ecosystem,” he said.
Mihir Kittur, co-founder and chief commercial officer at Ugam Analytics, agreed that retailers shouldn’t start celebrating just yet.
“While retailers may feel relieved with Amazon’s launch in Australia as subdued, they need to make sure not to get too excited with social sentiments on the first day of Amazon’s launch as it may be short-lived. Amazon is known to play the long game very well.”